Comment, analysis and other offerings from Monday’s FT:
Editorial: Son of Tarp
The moment of truth for the Obama administration arrived on Tuesday when Tim Geithner, Treasury secretary, unveiled a plan for rescuing the US financial system, where the global crisis began. After many false starts under their predecessors, President Barack Obama and Mr Geithner had one chance to show this time was different. Sadly, this ill-defined plan is not different enough.
Lombard: Banks need more fools
MPs should know better than most that experience sometimes counts more than exam results – after all, what qualification do elected politicians require? – and that neither can protect against the dangers of group-think. And while proven numeracy and common sense might have reduced the number of bad decisions by the banks, whole battalions of chartered bankers could not have prevented the crisis that engulfed the sector.
Insight, Nicholas Brady: we need a good idea, not a perfect one
Underlying our economic problems today is a functioning economy, albeit one buried under massive layers of debt and leverage. Certainly symptoms of just how dire things have become are the banks’ toxic assets and the public’s unsustainable mortgages. But the real problem is the mountain of debt that has to be worked off before normalcy can return.
PJ O’Rourke: Adam Smith saw it coming
“A dwelling-house, as such, contributes nothing to the revenue of its inhabitant,” Smith said in The Wealth of Nations. “If it is lett [sic] to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue.” Therefore Smith concluded that, although a house can make money for its owner if it is rented, “the revenue of the whole body of the people can never be in the smallest degree increased by it”.
John Kay: Seperating the buccaneers from the meticulous
The Obama administration’s plan to limit the remuneration of employees of publicly supported financial institutions to $500,000 has the simplicity of genius. A limit on pay is an effective way to reinstate the Glass-Steagall Act’s separation of commercial and investment banking.
Paul Marshall: Now we know the shorting ban was a mistake
The one great benefit of the UK’s ban on short selling financial stocks, which ended on January 16, is that it provided the perfect laboratory in which to assess the policy’s merits. The conclusion is unequivocal – it was a mistake.
Willem Buiter, Maverecon blog: Accounting according to Barclays
Either accountancy rules in the UK are generically nuts, or Barclays PLC’s accounting conventions are idiosyncratically nuts, or both are (nuts, that is).