Comment, analysis and other offerings from Friday’s FT,
Lex: Fiscal to arms
A fiscal tsunami is soon to wash across the globe with barely a ripple of dissent. That is in spite of oceans of conflicting economic research on whether fiscal packages actually raise output during downturns.
Opinion: The bank must bring lenders together
President of Queen’s College Cambridge John Eatwell and David Pitt-Watson, senior adviser to Hermes Equity Ownership Services, write: This problem would have been familiar to John Maynard Keynes. Insufficient attention has been paid to the core insight in Keynes’s analysis – that recession is essentially the consequence of co-ordination failure.
Editorial Comment: A plan to spend – and pay it back
Barack Obama is not yet in office but is already working hard to persuade US taxpayers and the Congress that an enormous fiscal stimulus is needed, and quickly. Mr Obama is right, both about the scale of the problem and the urgency of getting the new plan in place.
Analysis: Going south
Until a few months ago, as financial and economic turmoil gripped the industrialised world, Latin America was suffused with optimism that it would escape the worst. Yet across the continent, the crisis has brought about a large-scale destruction of wealth.
The Short View: Ending the run on sterling
In the very long term, the Bank of England’s decision to cut its bank rate to 1.5 per cent was a historic admission of defeat. Money has not been cheaper since the bank was founded in 1694. But in the short term, the effect of the cut was more complex. There is a chance that it helps end the recent run on sterling.
View of the day: House prices and equities
Peter Tasker of Dresdner Kleinwort says house prices in the UK and the US are historically high relative to equities – only in Japan is the price of both asset classes at multi-decade lows relative to GDP. A significant characteristic of the post-2000 housing bubbles that have been such a prominent feature of the global financial landscape is the lack of correlation with equity markets.
Messy question of toxic assets still needs an urgent answer
Don’t let your credit put you in a bad place.” This sound advice comes from the US Treasury department, which is tackling financial illiteracy among young Americans and encouraging them to “control” their credit. The slogan is appropriate for a much wider universe than the 18 to 24-year-olds at which it is aimed.