Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Why it is still too early to start withdrawing stimulus
“Our unprecedented, decisive and concerted policy action has helped to arrest the decline and boost global demand.” Thus did the finance ministers and central bank governors of the Group of 20 leading high-income and emerging economies pat themselves on the back over the weekend. They were right. The response to the crisis was both essential and successful. But it is still too early to declare victory.
John Kay: ‘Tailgating’ in financial markets puts us all at risk
On Thursday at noon the Bank of England’s monetary policy committee will announce its decision on base rates. Suppose I think the rate will stay the same, and the market expects it will rise. At 11am I make a trade that reflects my judgement. I am right, the market is wrong, and I make a profit – perhaps a large one.
Editorial comment: Chocolate wars
Cadbury is a British institution. The nation’s affection for it – like that of America’s for Hershey’s – is bound up with the generations of children whose teeth have been gently decomposed by its sugary chocolate. For European chocolatiers – whose product contains more cocoa – Cadbury is a typically British aberration; for many Britons, Cadbury’s chocolate is simply the taste of home.
Lex on the ratings game
During the boom, the computer always seemed to say “yes”. Automated credit scoring, where available data was crunched to spew out the likelihood of a consumer defaulting on a loan, meant only a few nuggets of information – a name, an address – were needed for a bank to price a loan and post an offer direct to someone’s doormat. Adherents claimed that this system was at least as effective as person-to-person banking. Still, a reliance on automatic credit scoring evidently failed to measure most of the risks that banks took on during the credit heyday.
Insight: Jeffrey Golden – We need a world financial court with specialist judges
Do we need an international tribunal for complex financial market disputes and sophisticated, cross-border financial crimes? Should we be recruiting or training specialist judges, asks Golden, who is special US counsel and has been global derivatives practice senior partner at Allen & Overy.
Letters to the Editor
- Ratings are rules now not opinions.
- Cadbury deal is part of a sorry trend.