Comment, analysis and other offerings from Wednesday’s FT,
The Fed must time a good exit
Randall Kroszner, Norman R. Bobins professor of economics at the University of Chicago’s Booth School of Business and a former governor of the US Federal Reserve, write: Seventy-three years ago, a sharp tightening of monetary policy stopped the robust recovery that had been in train since 1933, precipitating a ‘double-dip’ contraction in 1937-38. Today, central banks must not repeat this premature exit mistake.
The Short View: The Fed and interest rates
Nobody is expecting the US Federal Reserve to change its target Fed funds interest rate on Wednesday from 0.25 per cent. But there has been a flurry of speculation that the Fed will hint that the “exit strategy” from its loose monetary policy will come sooner than once thought. A better view on exit strategies, however, might come from Norway’s Norges Bank, which also meets Wednesday.
Lex: Money versus credit
The Fed is displaying monetary myopia in its choice to emphasise ‘credit easing’ over ‘quantitative easing’. Despite much discussion about the Fed’s exit strategy, the really tricky part of extricating oneself from extraordinary policies is not the how but the when.
- Online Q&A: Bjorn Lombog
Lomborg, author of ‘The Skeptical Environmentalist’, now believes reaching an agreement at Copenhagen is vital.
His organisation, Copenhagen Consensus, is also publishing a series of reports on the cheapest ways to tackle climate change. Lomborg will answer readers’ questions today, Wednesday, Aug 12, at 2pm BST (9am EST). Post questions by clicking on the link above.
Pay what you like, but within your means
Hector Sants, chief executive of the UK’s Financial Services Authority, writes: There is now consensus among regulators and practitioners that inappropriate remuneration practices contributed to significant losses at financial institutions and therefore to the severity of the current market turmoil. The recognition that behavioural drivers are a legitimate focus for regulators and must rigorously enforce their view is central to the FSA’s revised approach to supervision.
Insight: Building resilience to shocks
The current policy?debate over strengthening the financial system fails to address key elements of the crisis: the asset-backed securities market collapse, financial markets interdependence and a largely pro-cyclical regulatory framework, writes Hugo Banziger, chief risk officer and a member of the management board of Deutsche Bank . We must shift the debate to these factors and not let the symptoms of the crisis overshadow the causes.
Editorial Comment: Bringing fair play back to Britain
UK authorities seem finally to begin feeling embarrassed that other countries deter UK corporate wrongdoing more effectively than do Britain’s own laws . The government’s anti-bribery bill will properly codify the offences of paying and receiving bribes — a great step forward from current permissiveness. A joint committee has held hearings on the bill. The faster the government takes its advice, the sooner UK businesses will be living up to theirs.