Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Bankers, bonuses and the market: plus ça change
So what’s different? As the financial crash fades in the memory, the question most frequently asked, and infrequently answered, is how permanent will be its imprint. To my mind, the answer is obvious. Everything has changed; and, of course, nothing has changed.
Samuel Brittan: Whatever happened to imbalances?
Do you remember all the fuss about international imbalances? China, some of the emerging countries, the oil exporters, Germany and Japan were building up huge current account surpluses, while the US, the UK, Australia, some other European countries such as Spain and Ireland, and central and eastern European countries were enormously in deficit.
Insight: Andy Xie — Is China due a reality check?
The United States had 1929, Japan 1989, and south-east Asia 1997. Will China face a similar moment of reckoning a few years from now? The question is crucial, not just for those investing in Asia today, but for the wider global market. For as investors around the world reel from the recent financial crisis, many have clung to the idea of a Chinese boom, as the one bright spot of hope in an otherwise grim world. The trouble is that history suggests that much of this optimism may be misplaced.
Financial regulators must take care over capital
Jacques de Larosière, co-president of Eurofi, writes: There is a growing consensus that financial institutions should be more adequately capitalised, that the pro-cyclical bias of the present combination of accounting and prudential rules should be reduced, and that liquidity should be strengthened. But these are general objectives. They now have to be translated into appropriate reforms. In this respect two issues loom high on the agenda: how to design a safer system that would avoid the major weaknesses of the recent past; and how to make sure that the new measures are consistently implemented worldwide.
Editorial comment: Public needs more bank for its buck
Strong third-quarter results make this a good week for bankers’ bonuses: Goldman Sachs set aside $5.35bn, almost one-half of revenues, for compensation. Stay tuned for another swell of public outrage. The FT is usually content to treat bonuses as a matter best left to a company’s owners and its employees to work out. But in the case of banks, the public has two good reasons to be annoyed.
View from the Top: Julian Robertson, hedge fund manager
Julian Robertson, the legendary hedge fund manager and a founding father of the modern hedge fund industry, started Tiger Management Group in 1980 with just $8m in assets under management – a far cry from the more than $22bn he eventually commanded in the late 1990s.In a video interview with FT.com this week, Mr Robertson expressed concerns about the sustainability of Chinese interest in US debt and said he approved of higher taxes for wealthier individuals in the current environment. Edited highlights appear below.
Lex on equities and inflation
Investors with only moderately addled memories will remember chatter common to the rallies in the late-nineties and mid-noughties. Many said loose monetary policy was no longer transmitting itself into higher wages and consumer prices. Rather, inflation was appearing in asset classes such as equities and property. Of course, this confuses monetary phenomena with bubbles. But do not be surprised if similar arguments return now that low interest rates are coinciding with rampant equity markets and the odd sign of life in housing.
John Authers’ The Short View: Dow landmark
The latest landmark for the Dow Jones Industrial Average, which passed 10,000 on Wednesday, should be taken seriously for one reason and one reason only: other people are taking it seriously.
The search for a fresh recipe
Sarah Murray, FT contributor and author of `Moveable Feasts: From Ancient Rome to the 21st Century, the Incredible Journeys of the Food We Eat, writes: While the soaring food prices that sparked riots in many countries are no longer in the headlines, the global food system is still in turmoil. Experts say last year’s food crisis was simply a wake-up call, signalling a new era in which rising prices, increasing volatility and growing food insecurity present daunting challenges for policymakers and development organisations.