Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Clearing up the future of futures
The US government and the European Commission are trying to fix the most glaring problems in the OTC derivatives market. Both of them want the bulk of derivatives to switch from private OTC contracts to being cleared centrally, and perhaps traded on exchanges. The systemic benefits of moving the bulk of derivatives contracts to clearing houses are significant. Government and regulators should not sacrifice such gains by granting loopholes they will regret.
Future of Investing: John Authers – back to business as usual?
A year after the financial disaster of 2008, the search is on for investing’s winners and for its casualties. There are surprisingly few of either, says Authers. If a drastic reshaping of the investment industry has been averted for now, some permanent changes in the way that fund managers invest, and in the way that retail investors ultimately behave, seem likely.
The future of investing: When the wisdom of crowds becomes the madness of mobs
Technology has changed the very definition of passive investing, which used to be synonymous with market cap-weighted portfolios of a fixed set of securities, writes Andrew Lo, Harris & Harris Group Professor at the MIT Sloan School of Management and Chief Investment Strategist of AlphaSimplex Group. It reminds us that in financial markets, as in nature, necessity is the mother of all invention
Future of Investing, video: Interview with Benoit Mandelbrot
John Authers talks to the 85-year-old Yale mathematician on his now 40-year-old theory of why efficient markets collapse, and why new theories on price movement discontinuities are needed after the credit crunch.
The party organiser: Who controls China?
As the Communist party on Thursday marks 60 years in power, a body, little known even within China, known as Zhongzubu — the Central Organisation Department — has emerged from the country’s economic upheaval of the past three decades as indispensable to the party’s hold on power.
Lex on ascendant ETFs
Darwinian analogies are sorely overused in business but they describe perfectly the ascent of exchange-traded funds, says Lex. Smarter and nimbler than their 70-year-old competitor, traditional mutual funds, they are winning the battle for investors’ savings.
Editorial comment: Shining a light on the banks’ deep hole
Bad news fills the pages of the Global Financial Stability Report, published on Wednesday by the IMF — though the message is more bad than it is new: the financial sector’s dire state is essentially unchanged since the IMF’s previous report half a year ago. Telling truth to power takes courage, for which the IMF has not always been known. It must keep displaying its new-found boldness.
View of the Day: The ECB’s next move
Contrary to bond market expectations, the European Central Bank is likely to tighten policy before either the Federal Reserve or the Bank of England, as deflationary forces could persist in the US and UK while easing quite rapidly in Europe, argues Dhaval Joshi, chief strategist at RAB Capital.
Letters to the Editor
- Remove incentive to speculate
- Ancient wisdom is lost on Brussels
- Tax land values, not properties on it