Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Europe’s plot to take over the world
Fortified by its new foreign-policy structures, the Union is staking a claim to be taken seriously as a global superpower. David Miliband, Britain’s foreign secretary, says: “It shouldn’t be a G2 of the US and China. There should be a G3 with the European Union.” But what happens in Brussels — or even in trilateral dealings between the US, China and Europe — is a sideshow. The real key to Europe’s global ambitions is the Group of 20.
Michael Skapinker: Real leaders do not swim with the shoal
Left to choose her own mate, a female guppy will opt for a brightly coloured orange fellow — unless she notices that the other girls are going for a slightly less orange male, in which case she will too. She will even be prepared to dump a previously selected bright orange mate for a duller one.
Editorial comment: Picking through economic wreckage
After every disaster, relief that it has passed is tempered by the need to come to terms with the scale of destruction. This economic storm is no different. Now that the recession seems over, the time has arrived to survey the wreckage and chart the path ahead.
Lex on global monetary conditions
Few things point to the absurdity of economic forecasting more than “experts” disagreeing over whether the US faces inflation or deflation. Whichever your side, it seems that the latter view is winning of late. In the past fortnight, 10-year Treasury yields have fallen 30 basis points. So-called break-even inflation rates — the difference between, say, nominal yields on five-year government bonds and real inflation-linked yields of the same maturity, which indicates the direction investors expect prices to head — have been drifting south since mid-September.
The Short View looks at the rally correction
A minor correction following the remarkable rally of the past six months is no surprise. The data was consistent with a continuing improvement in activity that co-exists with increasing joblessness across virtually all sectors of the economy. The gap between new orders and inventories – the key driver of the hoped-for “restocking boom” – also appears to be narrowing.
Markets Insight: Long-term stocks win through
Jeremy J. Siegel, Russell E. Palmer professor of finance at the Wharton School, University of Pennsylvania, writes that for the ten years ending last December, stocks have offered a negative 3.15 per cent real return for US investors, constituting the fourth worse ten year period since 1871. This had led many to question whether the mantra “Stocks for the Long Run,” is still right for investors.
Analysis: Iceland’s steamy waters
Iceland, previously among the world’s richest nations per head, had become the worst-hit victim of the global credit crunch: a laboratory study in how a toxic mix of financial deregulation, free-flowing international capital and a reckless band of “Viking raider” entrepreneurs intent on conquering the world could bring a country to its knees. As such, its progress towards recovery represents another experiment — this time in how to rebuild a shattered economy.
Money Supply blog: Trichet and the euro
Jean-Claude Trichet, European Central Bank president, has been stepping up his warnings about the euro’s strength. But you would be forgiven if you hadn’t noticed. Trichet has added another Delphian dimension to his pronouncements – which is making everyone work harder to decide what he really means. “If you are looking for change, you have to look at the commas and slight changes in words,” Erik Nielsen, European economist at Goldman Sachs, told me.