Comment, analysis and other offerings from Tuesday’s FT,
Return of the old ways of thinking threatens recovery
Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, writes that we are at the point of maximum confusion in the multi-year transition of the global economy, markets and policymaking. We have left the global growth regime that was driven primarily by debt-financed consumption in the US, but we have not as yet reached a position of more balanced, albeit anaemic, growth.
Michael Skapinker: Slipping out for a cigarette has its benefits
The proportion of American adults who smoke has fallen from 42 per cent to under 20 per cent over the past 50 years, the American Journal of Public Health said in July. This suggested, the journal wrote, that the US was halfway through a 100-year war on cigarettes. Now, Thomas Farley, New York’s city health commissioner, has resolved to fight on the beaches. Mr Farley wants to end smoking on beaches and in parks, to add to the city’s ban on cigarettes in bars, restaurants and workplaces
Philip Stephens: Time for Gordon’s last throw of the dice
Go on Gordon. Gamble. Enough of prime ministerial hesitation. Break the habit of a lifetime. Throw the dice. Pick up David Cameron’s challenge to go head to head on television. Better still, say you want three pre-election debates not one. There is nothing left to lose.
Not yet out of the Bretton Woods
In Pittsburgh, leaders made a fine pledge to make the G20 “the premier forum” for co-ordinating policy for the global economy. If they are sincere, the first order of business is to share power within the Bretton Woods institutions.
Lex on US savings
A recent paper by the International Monetary Fund shows a one-to-one inverse relationship between so-called “asset income” and the money people save from their pay cheques every month. The richer you feel, the less you save.
Willem Buiter’s Maverecon: What can be done to enhance QE and CE in the UK, and who decides?
Quantitative easing (QE - the purchase of government securities by the central bank, financed through increases in base money) in the UK is not working. I should have written “not yet”, for posterior coverage reasons, but I’m running out of patience with a policy that (a) has been ineffective for the half year of its existence and (b) can be easily modified to make it more effective. Credit easing (CE - the outright purchase of private securities by the central bank) in the UK really hasn’t been tried.
Money Supply Blog: IMF and currencies
The IMF is not going to bottle out of talking about currencies when it reports back to the G20 on balanced growth. So Dominique Strauss-Kahn, the IMF MD, tells me. That makes perfect sense in economic terms, but I doubt Beijing will be thrilled to hear it. China gets the need for rebalancing but remains deeply suspicious about how this process will work.
Insight: Emerging market label is obsolete
Marko Dimitrijevic, founder and chief investment officer of Everest Capital, writes that the term “emerging markets” is obsolete. Emerging markets represent half of the world’s economy, their financial markets are large and liquid with volatility, corporate governance and government policies very similar to developed markets. These traditional distinctions between emerging and developed markets, once pronounced, have disappeared.
Analysis: Wanted — new model for markets
If the efficient markets theory needs to be abandoned, the effect on investing will be profound, writes John Authers. More important still is what will come to replace it. Efficient markets borrowed from mathematics but that is now widely regarded as an oversimplified and often downright misleading theory that fostered the cavalier confidence leading to the crash.
