Comment, analysis and other offerings from today’s FT,
Editorial Comment: Wanted: borrower of last resort
Inflation is dropping like a stone. Just as it shot up when commodity prices soared, it is now tumbling. Unless oil and other raw materials stage a surprising recovery, annual price growth may even turn negative in some rich countries. On a monthly basis, US consumer prices fell by 1 per cent in October
Opinion: Britain will pay for Brown’s fiscal boost
Nigel Lawson, chancellor of the exchequer from 1983 to 1989, writes: The outlines of today’s pre-Budget report have already been extensively leaked. What remains to be revealed is the precise size and detail of the proposed fiscal “boost”, the Treasury’s latest estimate of the alarmingly large budget deficit to which it will contribute, and the means by which the public finances will be rescued at a later date — after the next election, needless to say.
Bring back the link between gold and the dollar
Richard Duncan, author of the Dollar Crisis, writes: The events of September 2008 — the nationalisation of Fannie Mae, Freddie Mac and AIG; the disappearance of the investment banking industry in the US; and the Bush administration’s $700bn bailout to save what is left of Anglo-American capitalism — demonstrate that the 37-year experiment with fiat money and floating exchange rates has failed catastrophically.
Tony Jackson: Recession flames fanned by debt-capex combination
Every day we hear of capital spending being axed worldwide, by miners, builders, oil companies, retailers and so forth. Quite right too, you might think. With demand collapsing and borrowing unobtainable, what else are companies to do? There may be a more systemic reason. It seems increasingly clear that in the debt bubble years, capital expenditure across the developed world was much higher than needed. The result was a capex glut.
Editorial Comment: A team of talents
Barack Obama is poised to announce his key economic officials, and it seems there will be little cause for complaint. He has chosen not a team of rivals but a team of all the talents, and this is much to be welcomed.
Lex on curves in the wrong places
Yes, you too America can have perfectly flat yields in less than 12 months — hundreds of satisfied fixed income strategists guarantee it! The big question for US government debt investors next year is whether the yield curve will inch ever flatter, or a steepening trend will prevail. Trouble is, the decision is not quite as simple as choosing one profile over the other. Those straining for a flatter yield curve can either bet that short-term interest rates are going to rise or that long-term rates will fall. Equally, the steepening camp can play both ends of the market
Lex on Hong Kong reform
Citic Pacific suspends its own shares for two weeks. PCCW does likewise. Meanwhile, the minibonds scandal – in which tens of thousands of private investors saw their savings wiped out by the Lehman bankruptcy – drags on. It has been a rough few weeks for Hong Kong’s Securities and Futures Commission, its primary market regulator.
Interactive Graphics: US bond futures price spike
As spooked investors rush to move out of equities, the US 30-year bond price saw an extraordinary spike on Thursday, November 20. Jamie Chisholm explains what happened with graphics.