Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Squeeze the leviathans of finance
If you have not been concentrating for the past few months, you may think that nothing much has changed in the world of finance. Banks such as JPMorgan Chase and Goldman Sachs have reported large profits for the second quarter, helped by big fixed income trading revenues, having repaid the equity injections the US government made in them last autumn.
David Pilling: Japan shrinks from the American embrace
In a dangerous region still echoing with wartime rancour and groaning under the strain of shifting economic and military fortunes, it will be in the interest of both countries to hold their postwar clinch for years, if not decades, to come.
No time to waste in reforming German banking
Klaus Zimmermann and Dorothea Schäfer, president and research director of Financial Markets at DIW Berlin, the German Institute for Economic Research, write: It is not just American policymakers who are letting a great crisis go to waste. Things are not much better in Germany, where this crisis ought to have led to the long-overdue reform of the banking sector — the consolidation of the Landesbanken.
Editorial Comment: Ratings beaters
The agencies are resisting bans on the issuer-pays model, in spite of the perverse incentives that model presents as long as issuers have a greater need for good ratings than for accurate ones.
Lex on Morgan Stanley
What do you call an investment bank that doesn’t love risk? Insert your own punchline — Wednesday’s answer was Morgan Stanley. The investment bank has failed to compete by taking on balance sheet risk. The danger is it rediscovers its risk appetite as markets stagnate again .
Willem Buiter’s Maverecon on Islamic finance principles.
If too much debt and too little capital are (part of) the problem, then the conversion of debt into equity is (part of) the solution.
Jonathan Guthrie: Is the car industry running on romance
Behind the wheel of a car every man feels like an alpha male — or at the very least a beta male if it is a Mondeo. The reality is otherwise.
Insight: Long road back to normality
James Barty, head of macro strategy at Arrowgrass Capital Partners LLP, a multi strategy hedge fund, writes: One of the key issues investors have to make a decision on in the next couple of years is what the likely profile for inflation is going to be and how it will affect their investment decisions.