Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Rumours of the dollar’s death are much exaggerated
It is the season of dollar panic. These panic-mongers are varied: gold bugs, fiscal hawks and many others agree that the dollar, the dominant currency since the first world war, is on its death bed. Hyperinflationary collapse is in store. Does this make sense? No. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.
Analysis: ‘His finest moment’
One year ago, Gordon Brown was being hailed by many as the saviour of the world’s banking system. On October 14 2008 Hank Paulson, the US Treasury secretary of the time, announced a rescue plan for America’s stricken banks. Germany, Italy, France and Spain had just done the same. All the initiatives had something in common: they looked very similar to the move announced a week earlier by the British prime minister. In the intervening 12 months Mr Brown has staggered from one domestic problem to another; opinion polls suggest he could be out of office by next summer. It is a far cry from the mood a year ago when he was hailed as “a superhero” or “Flash Gordon”.
The Future of Investing: Why Libor concerns persist
London Interbank Offered Rates, or Libor, are at record lows for dollars, euro and sterling, leading many pundits to say that they cannot fall much further. Three month Libor rates have fallen almost to the levels of base rates in the US and the UK — and below base rates in the eurozone. The question now is, at what point will they start rising again?
Lex on Swedish banks
Investors are taking Baltic jitters in their stride. A $2.2bn rights issue by Swedbank, Sweden’s fourth-largest bank by market capitalisation – its second in 12 months – was nearly twice subscribed. Admittedly, it was priced last month at a 40 per cent discount to the theoretical ex-rights price. But its subscription period coincided with concerns over a possible devaluation by Latvia – to which Swedbank is heavily exposed – and Latvian government proposals to cap the liability of mortgage-holders.
Money Supply: Kohn the dove
Very dovish remarks by Don Kohn [on Tuesday] I think. He pushes back against FOMC members who warn about uncertainty over the size of the output gap – saying these arguments have only a “grain of truth” – and says inflation expectations are more likely to fall than rise.
Insight: John Plender — New investment shifts eastwards
If there are winners from the financial crisis, many of them are, by common consent, in Asia. With the US economy punctured by Wall Street, China is widely perceived to be the global top dog designate. On this view, not only has the geopolitical balance shifted eastwards but portfolio flows will follow suit. Welcome to the new investment reality.
John Authers’ The Short View: The strange beast of the FTSE 100
The Bank of England’s governor Mervyn King notoriously commented last month that a weaker pound would be “helpful” in rebalancing the UK economy. But at present both sterling and UK stocks are driven by forces that have little to do with the country’s economy.
Editorial comment: Dragon and Bear
Just in case Washington gets too comfortable with the idea it has got Russia back onside, Vladimir Putin, Russia’s prime minister, was in China Tuesday to keep the US on its toes. Barack Obama has certainly made progress in “resetting” the relationship with Moscow. The US president has already reaped some rewards in terms of Russia’s more accommodating line on Iran. But Mr Putin’s visit to Beijing, coinciding neatly with US secretary of state Hillary Clinton’s own trip to Moscow, underlined that Russia has other options.
Letters to the Editor
- Best to sell assets in the good times
- Real reform is not about promoting activists’ interests