Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Goldman should be allowed to fail
It might sap some resentment if taxpayers could see that Goldman’s bonuses were a form of equity partnership, and that the bank would be allowed to founder in any future crisis, writes John Gapper. Alternatively, Goldman could keep its old riches and newfound official status, keep on taking more financial risk, and try to square the circle by convincing people that it is a utility that operates in the public interest. But that might be a struggle.
Qin Xiao: China must keep its eyes on the exit
China, like much of the world, is breathing a sigh of relief that economic disaster has been averted, says Qin Xiao, chairman of China Merchants Group and of the Asia Business Council. Better-than-expected macro-economic data are driving growing optimism. But government officials and businessmen should not delude themselves: going back to pre-crisis ways would be a serious mistake.
Insight: Scope remains to circumvent derivatives bill
The House financial services committee in the US last week approved a bill to overhaul the structure and regulation of the massive OTC derivatives business, write Robert Engle, of the Stern School of Business and 2003 winner of the Nobel Prize in Economics, and Viral Acharya, also of the Stern School. The bill has the potential to reduce the likelihood and severity of future financial crises. But in its current form, it leaves loopholes that a healthy financial sector will find all too easy to arbitrage round.
John Authers’ The Short View: A government-aided rally
We are halfway there. FTSE’s developed markets index has now regained half of its losses since it peaked in October 2007. Having fallen 59.7 per cent, it is now down only 29.7 per cent from the top. This brings the index back to its level of September 17 last year — the day panic broke out after the AIG rescue. What should we make of the landmark?
Lombard: Kraft-Cadbury stand-off is ‘all about air’
Wednesday’s Q3 figures from Cadbury were as shiny as Willy Wonka’s shoes, but they did not depart much from the line the UK confectioner has always toed: that it does not need to put on a “song-and-dance” act to see off Kraft CEO Irene Rosenfeld, writes Andrew Hill. The truth is, until Kraft sugars its bid, Cadbury is wise to keep its cocoa powder dry. Only once Kraft reveals its hand will investors get more substance and less air. C’mon, Irene.
Editorial comment: Brazil’s tax on portfolio inflows
Though investors offended by Brazil’s move to impose a 2 per cent tax on portfolio inflows have let both Brazil’s stock prices and real slip, this was a good choice by the government, says the FT. Justifying it as exchange rate management, however, is starting at the wrong end of things. A successful Brazil will have to live with a strong real. The tax does not alter that fact, but it helps keep the task manageable.
Lex on Mervyn King and the Bank of England
Two things are clear from the Bank of England governor’s call to split taxpayer-backed narrow banks from their casino subsidiaries, notes Lex. First, it is bad for the City and for UK banks that Mr King is out of step with the government, the FSA and the global consensus on systemic reform. Second, investors rightly see little chance he will prevail: UK bank shares did not budge. Even if George Osborne, shadow chancellor, sympathises with Mr King, he would be mad to go it alone.
View from the Top, video: Hans-Paul Burkner
The chief executive of Boston Consulting group says the current crisis is the time to make tough decisions, and that no business can return to a pre-2007 model. He advises chief executives to drastically re-think their business approach and market positioning.
Energy Source: Fun and Games in EU climate financing
Two major sticking points in the lead-up to a Copenhagen agreement seemed to be settled, but two big issues remain, says Kate MacKenzie: 1. How much money rich countries will give poor countries; and 2. Whether the US Congress will approve an emissions target in time.