Comment, analysis and other offerings from Thursday’s FT,
China’s stimulus shows the problems of success
To achieve a sustainable rebound, China needs to strike a fine balance between crisis management and structural reforms, writes Yu Yongding, a member of the Chinese Academy of Social Sciences and a former member of the monetary policy committee of the Chinese central bank. If China fails to tackle its structural problems, including its export dependency, high investment rate and wide income gaps, growth is unlikely to be sustainable. It is in China’s and the world’s interests to see the necessary measures are adopted with conviction.
The Short View: Dan McCrum
Investors appear increasingly optimistic about the strength of the global recovery and are prepared to upgrade assumptions for previously shunned sectors. But markets are showing diminishing levels of excitement in response to improving economic news – figures on Wednesday showing the biggest monthly rise in July US home sales in a decade, for example, failed to prompt the joy that greeted earlier signs of stabilisation. If recovery is now taken for granted, investors may soon wish they were back at the beach.
Lex on Natixis
When it comes to finance, Nicolas Sarkozy has three subjects at the front of his mind. First, a burning desire to curb bonuses paid to bankers. Second, to turn Paris into an international financial centre. And third, a belief that no systemically important French lender should fail. Here his most immediate concern is Natixis, whose long-running troubles may explain his views on the first two.
Overmighty finance levies a tithe on growth
The protracted debate over how to clean up after the financial crisis — and how to reform our accident-prone financial system to prevent another such episode — is stuck on the problem of how to regulate markets without undermining the benefits they bring, writes Benjamin Friedman, economics professor at Harvard University and author of The Moral Consequences of Economic Growth. What is sorely missing is any real discussion of what function our financial system is supposed to perform and how well it is doing that job — and, just as important, at what cost.
Editorial comment: Edward Kennedy, the lion who knew to strike a deal
Both US political parties can learn from Edward Kennedy — a flawed man who achieved so much — that the willingness to strike a deal is no contradiction to having principles, but a condition for realising them.
Iceland shows the dangers ahead for all
In the build-up to the global crisis of 2008, tiny Iceland was a canary in the mine, a leading indicator of wider vulnerabilities, writes Robert Wade, professor of political economy at the London School of Economics and author of Governing the Market. Now, amid growing optimism about global recovery, Iceland may again be a leading indicator of trouble ahead.
View of the Day: The Swiss franc
The Swiss National Bank’s latest bulletin sheds light on the franc’s resilience in the face of central bank selling, rebounding equity markets and challenges to the country’s banking laws, says Mansoor Mohi-uddin, UBS managing director of foreign exchange strategy.
Analysis: Change in Japan?
Things are bad for a ruling party when its re-election campaign features an apology from the prime minister for poor leadership and a promise by a party heavyweight and former finance minister to stop drinking, write Mure Dickie and Michiyo Nakamoto. That, however, is the sorry situation of Japan’s once-mighty LDP, now teetering on the brink of a potentially devastating election defeat on Sunday at the hands of the opposition Democratic party.
Insight: Henny Sender – Regulatory protectionism won’t stop shocks
In Lords of Finance, Liaquat Ahmad’s look at international finance in the 20th century, there is a wonderful scene in 1913 London where the British government contemplates the fact that Lloyd’s of London has insured the ships of the German merchant marine. Such interconnectedness wasn’t enough to prevent the First World War but one could argue that the greater the links, the less likely is armed conflict. Globalisation may have its drawbacks but so does its opposite.