Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Europe loses its Lisbon hiding place
The end is in sight. Fingers crossed, after eight painful years, the European Union may at last succeed in rewriting its rule book. Passage of the Lisbon treaty will sweep aside the continent’s troubles. Europe can turn its mind to things that matter. So the story goes.
Impresarios on the board are a bad sign
Nell Minow, editor and co-founder of the Corporate Library, writes: Opponents of post-meltdown reforms to corporate governance are trying to hold back change by focusing on Washington. The US Chamber of Commerce is spending $100m (€69m, £63m) to try to defeat any substantive reforms. They are missing the point. No matter what happens in Washington, the market is forcing through significant and pervasive reforms.
More capital will not stop the next crisis
Raghuram Rajan, professor of finance at the Booth School of Business at the University of Chicago writes: The Group of 20 wants banks to have more capital. As one element of a broad range of regulatory reforms, this is unexceptionable. However, if it is to be the main reform, with others playing only supporting roles, we should worry.
Samuel Brittan: A cool look at the current deficit hysteria
The British political classes are going through one of their occasional bouts of masochism, with party leaders vying with each other on the theme of who can cut public spending faster and more effectively. Spice is added by talk of leaks and secret plans; and ideology by arguing about the balance between tax increases and spending curbs. My own bottom line is that all this is in response to a largely imaginary budget crisis.
Editorial comment: The IMF has a new lease of life
The financial crisis of 2007-09 has many losers. But it has also had winners. As the annual meetings of the International Monetary Fund and World Bank begin in Istanbul, we need to recognise that the so-called “Bretton Woods twins” are among these. If they did not exist, we would have to reinvent them and would almost certainly fail to do so.
Lex on US auto sales
After US auto sales reached multi-decade lows in the first half of the year and were then juiced by the “cash for clunkers” scheme in late July and August, some analysts thought going cold turkey in September would be horrific. Instead, it was just bad, with the seasonally-adjusted annualised rate (SAAR) of sales only the second worst of 2009 besides February’s 9.1m. By contrast, August’s taxpayer-stimulated SAAR of 14.1m would have been merely respectable prior to the recession.
Insight: Consistency in credit ratings
Deven Sharma, president of Standard & Poor’s, writes: S&P has met with scores of investment institutions recently and their response tends to be similar. First, they want credit ratings to be relatively stable. Investors appreciate that ratings can change during a cycle, as our view of future creditworthiness evolves. But they wish to avoid excessive volatility, especially of higher ratings.
Willem Buiter’s Maverecon: A stronger US economy requires a weaker dollar
The US dollar will mainly have to depreciate, if a long spell of over-capacity, high unemployment and low growth is to be avoided, vis-a-vis the currencies of the roughly 50 percent of the known economic universe that we call emerging markets and developing countries. China is the largest of these, but amounts to only about 6 or 7 percent of global GDP.
Lombard: Investors’ biggest worry about BAE is uncertainty
News that investigators would press for criminal charges against BAE Systems for “offences relating to overseas corruption” lopped 4 per cent off the defence company’s share price on Thursday. At first sight, the fall looks overdone. BAE denies allegations it paid bribes to win business.