Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Western awe and domestic anxiety, a tale of two Chinas
Amid the avalanche of summer reading crashing on to my desk falls another hefty tome about China’s re-emergence as a global power. The theme is familiar: the present century will belong to Asia in general and to China in particular. The book’s title, When China Rules the World, permits none of the doubts and vacillation about the future course of events that often afflict this columnist.
Gillian Tett: US property market central to economy
It was a turn in the US property market that triggered the financial crisis. And while many other financial disasters have since followed, the state of the US property market remains crucial to the banking world as a whole. For not only does the health of the US consumer — and thus economy — remain tied to housing, but western bank balance sheets are tightly tangled up with property too.
Terrence Keeley: Central bankers return to gold and dollars
The global head, sovereign client services at UBS writes: So what has been learnt? The first lesson has been that asset diversification entails risks not well-suited for central banks’ other, more pressing, responsibilities. In moments of crisis, correlation and diversification arguments break down: only the most liquid instruments are useful. As profit maximisation is subsidiary to the role of safeguarding financial market stability, central bankers are reconsidering the proper amount of diversification for their portfolios
Samuel Brittan: A new guide for the perplexed
At one of many recent roundtables on “the crisis” a well-known historian called upon economists to abandon the gods of their profession. If only there were still such gods. There are not even clearly defined schools of thought. A typical discussion will consist of a series of overlapping points of view, leaving the innocent listener at best “confused at a higher level”. What follows is an attempt to outline the main issues. It is inevitably subjective and selective.
Martin Sandbu: Markets mayhem puts spin on statistics
Until the end of last year, Chinese exports came in every month 20-30 per cent higher than a year earlier. Then, in the last two months of 2008, year-on-year growth was approximately zero — and in January it plunged to -15 per cent and has stayed around -20 per cent since. You might interpret those figures as saying that Chinese exports stagnated at the end of 2008, went over a cliff in January and have been tumbling ever since. But you would be wrong.
View of the Day by Neil Shearing: Benefits of IMF bailouts
The Capital Economics analyst writes: Central and eastern European countries that have been forced to turn to the IMF for emergency funding could emerge from the current crisis in much better structural shape than their supposedly less risky peers, writes Neil Shearing of Capital Economics.
Home loan squeeze hurts UK builders
Mortgages are the lifeblood of the housing industry, writes the FT’s David Fickling, and analysts fear that until lending recovers the sector could be locked into a cycle of anaemic earnings or losses. When mortgages are hard to come by, individual home owners can postpone a move. But housebuilders must sell to survive.
John Authers’ Short View Video: Gilts and oil
How much can markets be relied upon to stabilise themselves and how much help do they need from governments and regulators? The positive spin at present is that if markets succumb to fear of economic stagnation, this should reduce the price of commodities and of money (through reducing the yield on bonds). This will help create the conditions for a recovery.
Lex on junk bonds
As investors scour the globe for green shoots, one unequivocal sign of recovery would be a resurgence of the Asian high-yield bond market. When times were really good, junk-rated issuers pumped out tens of billions of dollar-denominated deals.