Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: After the storm comes a hard climb
Is the world economy on its way out of the crisis? Has the world been learning the right lessons? The answer to both questions is: up to a point. We have done some of the right things and learnt some of the right lessons. But we have neither done enough nor learnt enough. Recovery will be slow and painful, with substantial danger of relapses.
Analysis: Wall Street – back to old school
A handful of high-profile bankers who built their reputations at Wall Street’s biggest institutions have turned to “boutique banking”, based on the belief that big banks are alienating clients who need strategic advice. And now, as some of the big banks’ higher-margin businesses lie in shambles, the boutiques’ efforts are bearing fruit — suggesting companies are, indeed, willing to pay for old-fashioned independent advice.
Insight: John Plender – A flawed model is preserved
The future shape of banking is becoming clear after the announcement this week of the European Union’s proposed revisions to its rules on bank capital and the Basle Committee’s revisions to the capital frame- work. Far from delivering a more utility-like banking system, the regulatory response to the financial crisis is designed broadly to preserve the big bank business model, but with tougher capital penalties on banks’ own-account punting and less pro-cyclicality.
Editorial comment on capital proposals
Wisened by the abysmal banking losses financial regulators failed to foresee, the European Commission has fired its latest volley of reform proposals. Had they been put in place some years ago, they might have done a lot of good. But better late than never.
Lex on Goldman Sachs
Slurp — the great vampire squid strikes again! That now-infamous description of Goldman Sachs (in Rolling Stone magazine) is a tad hysterical. But it takes some sucking power to extract $3.4bn of quarterly net income within a year of a full-throated banking crisis. With Goldman’s shares close to levels before Lehman Brothers collapsed, you’d be forgiven for wondering if 2008 ever happened.
John Authers’ Short View: Inflexion points
The credit crisis has dragged on for two years now. Its inflexion points have come to be denoted by shorthand. “Whitney Day” was when a bearish note about Citigroup by analyst Meredith Whitney sparked a sell-off of US banks, ending the bull market for good in October 2007. Exactly a year ago, Bastille Day was the moment the oil market peaked, then crashed. Both events still resonate. On Monday, Ms Whitney released a recommendation to buy the investment bank Goldman Sachs. The market impact? On Monday, stocks, led by banks, had their best day since May. Yesterday, after the results, bank stocks stalled again.
News analysis: Focus gives Flowers a headache
The first time Chris Flowers invested in Tokyo-based Shinsei Bank in 2000, he went on to personally make about $1bn in what was considered one of the best deals of all time. Now a proposed merger between Shinsei and a second Japanese bank, Aozora, announced this month, represents an opportunity to salvage a disastrous second investment in Shinsei by Mr Flowers of Y200bn ($2.15bn) in 2007. The bank’s share price has since slid and losses have multiplied.
John Kay: Managers doomed to repeat the mistakes of history
After the Japanese attack on Pearl Harbor, a young man called Tex Thornton was appointed to manage a statistical control group for the US Air Force. Thornton recruited a group of individuals like himself — smart, self-confident and very numerate — who were nicknamed the “Whiz Kids”. They brought order to the chaos of US military logistics.