Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: The recession tracks the Great Depression
A paper by professors Eichengreen and O’Rourke shows global industrial output tracking the decline in industrial output during the Great Depression horrifyingly closely. The question is whether today’s unprecedented stimulus will offset the effect of financial collapse and unprecedented accumulations of private sector debt in the US and elsewhere.
George Soros: The three steps to financial reform
Soros warns against over-regulation. “Having gone too far in deregulating – which contributed to the current crisis – we must resist the temptation to go too far in the opposite direction”, he writes.
John Kay: The slow drip of the ‘faster’ payments system
We have just passed the first anniversary of the introduction of a “faster payments system” by British banks. The system is still only partly operational. Progress in introducing everyday financial transactions to the electronic age remains glacial.
Finnish PM: Europe will need to raise taxes in harmony
Matti Vanhanen, prime minister of Finland, writes that after the recession, we will have to reduce elevated public debt-to-GDP ratios if we are to cope with the expenditure pressures that will come with the ageing of the EU’s population. This will require tight control and, in many countries, painful cuts.
Editorial comment: BBC needs surgery
Lord Carter’s proposal cuts to the heart of the problem: the BBC cannot be allowed to become a monopoly provider of public content and this liberalisation, if extended, would allow plurality of provision without the current reliance on vulnerable cross-subsidies.
Lex on bond bear markets
As higher bond yields make financing more expensive and make earnings yields less attractive by comparison, investors have less reason to buy stocks.
FT Letters: ICE Trust and risk management
Dirk Pruis, President, ICE Trust US, writes that the FT’s characterisation of the risk management regime employed by ICE Trust as “modest” and “forgiving” is incorrect. The clearing house has significant default resources, substantial margin requirements that must be satisfied daily, and places an obligation on clearing members to meet capital shortfalls in the event of a default.
Markets Insight: The flawed wisdom of crowds
John Plender, FT columnist and chairman of Quintain, writes that the conventional wisdom of academic investment theorists is taking a terrible beating in the post-bubble era. Rightly so, in the case of the efficient market theory, which now gives rise to growing scepticism.