Comment, analysis and other offerings from Friday’s FT,
Adam Posen and Nicolas Véron – European banking needs a state-led triage body
The Bank for International Settlements has just announced that national governments have done too little to clean up their banking problems, and it is right. The European Summit concluded that there can be no fiscal federalism to transfer funds between banking systems, were they to require recapitalisation. That is reality. It seems difficult to craft a policy responding to the first while abiding by the second. Yet, all recent systemic banking crises in developed countries (including the US savings and loans, Sweden and Japan in the 1990s) have only been solved when there was a government-led triage process, with state intervention to resolve the cases of insolvency.
Gillian Tett – Insight: the human factor
The other day, a senior figure in the US government showed me some pieces of old paper he has taken to keeping in his pocket. These scraps, he solemnly explained, were used for jotting down words or numbers which he needed to remember or communicate to other officials – such as sensitive data about banks or the budget. Now, you might wonder why he needs such scraps, given that we are supposed to live in a brave new digital age. After all, paper is a fragile and inefficient way to keep notes or communicate to a wide pool of people, compared with a blackberry, say.
Martin Wolf: Much ado about central bankers
Will no one rid me of this turbulent central banker? Gordon Brown, the UK’s prime minister, may be asking just that when he learns of yet another critical comment from the governor of the Bank of England. For Henry II, king of England in the 12th century, the troublemaker was Thomas Becket, his own choice as archbishop of Canterbury. For Mr Brown, it is Mervyn King, whom he has reappointed to an equally impregnable position. The parallel is clear: central bankers are cardinals in the cult of monetary stability. Becket was murdered. Mr King will not suffer that fate. But a later king of England brought the church and his archbishops to heel. Could the Bank suffer a similar fate?
Mohamed El-Erian: American jobs data are worse than we think
What if the US unemployment rate rises above 10 per cent and stays there for an extended period? This is a question that is not being asked enough, even though it entails yet another historical anomaly that will further complicate policy formulation and open it up to greater political interference. The unemployment rate is traditionally characterised as a lagging indicator and, as such, is viewed as having limited predictive power. After all, unemployment is a reflection of decisions taken earlier in the cycle so the rate always lags behind the realities on the ground – or so says conventional wisdom.
John Authers’ Short View video: Jobs downer
It is just as well the monthly release of US payroll was brought forward to a Thursday to avoid the Fourth of July weekend. The data would have marred the festive mood.
View of the Day: The coming inflation
Markets are “too sanguine” about longer term inflation risks, says Joachim Fels, chief global fixed income economist at Morgan Stanley. “It may seem absurd or at least premature to worry about inflation risks,” says Mr Fels, noting that market-implied 10-year inflation expectations for the US and the euro area were less than 2 per cent – lower than actual inflation over the past decade.
Lex on UK mobile phone consolidation
Please hold the line, a rival operator will be with you shortly. Vittorio Colao, Vodafone chief executive, can expect a fight if he makes an offer for T-Mobile UK, the country’s fourth-ranked mobile phone group. It did not take long after news of Vodafone’s interest in its struggling rival broke on Monday to hear that Telefónica’s O2 and France Telecom’s Orange were looking at possible combinations, too. The prize: big cost savings and a dominant position in one of Europe’s most competitive telecoms markets.
Lombard: Standard Chartered needs Peace
They searched far. They searched wide. They considered more than 50 candidates. But in the end, Standard Chartered’s directors chose as chairman a man with no direct commercial banking experience.