Comment, analysis and other offerings from Wednesday’s FT,
John Authers: Is it back to the Fifties?
The crash has forced professional investors and academics to question the theoretical underpinnings of modern finance. The most basic assumptions of the investment industry, and the products they offer to the public, must be reconsidered from scratch.
Martin Wolf: Successful bank rescue still far away
The crisis has broken the American social contract: people were free to succeed and to fail, unassisted. Now, in the name of systemic risk, bail-outs have poured staggering sums into the failed institutions that brought the economy down.
Germany’s economics minister on a new era of accountable capitalism
Karl-Theodor zu Guttenberg writes that since the government usually lacks the necessary expertise and personnel to run companies on a large scale, we should work on exit strategies before intervening.
Editorial comment: China’s plan to end the dollar era
As Mr Zhou says, a reserve supercurrency could be created through further issuance of the International Monetary Fund’s Special Drawing Rights – the IMF’s in-house reserve asset. Married with other necessary reforms, this plan would also empower the IMF to act more flexibly. Good.
Lex on world trade
Given that trade was growing at a 6 per cent clip only 15 months ago, the fall is so abrupt that some now worry about the return of Smoot-Hawley, the US tariffs law that made the 1930s depression Great.
Willem Buiter’s Maverecon blog tackles the Geithner plan
The first thing that struck me is how little money the Treasury appears to be putting in. On reflection, this is not surprising. The government simply has no money in the kitty to recapitalise banks or purchase toxic or bad assets on any scale.
Lombard: Lloyd’s shows value of discipline and diversification
The insurance market now preaches the virtues of underwriting discipline at every opportunity. Its results on Tuesday were a case in point: an underwriting profit despite the third-worst year for catastrophes.
FT Video: View from the top with Alessandro Profumo
The UniCredit chief discusses the future of European banking