Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Safe signals from Buffett’s train deal
In the annals of double-edged compliments, Warren Buffett’s description of his planned $27bn acquisition of Burlington Northern Santa Fe as an “all-in wager on the economic future of the US” ranks highly, writes the FT’s Gapper. If the best expression of America’s economic future is a railway operator dating back to the mid-1800s, then growth investors might be advised to look instead to China, India or Brazil.
Dirk Bezemer: ‘Dear Top Economists… Lending must support the real economy‘
Economists have been mulling over the shape financial reforms should take, notes Bezemer, a fellow at the Research School of the Economics and Business Department, University of Groningen. Robert Shiller wrote in the FT in defence of “financial democracy”, arguing that a wide range of financial products allows everyone to access liquidity and insure against risk. A week earlier, Paul Krugman pinpointed in the New York Times the way bankers are paid as the focal point of reforms. The problem with these discussions is that they introduce red herrings. Dear top economists, the problem is debt. Any solution that sidesteps this is a non-starter.
Insight: Hugo Bänziger - Safety net for money market funds
The decision in September by the US Treasury to withdraw its guarantee programme for money market mutual funds went largely unnoticed, despite the financial industry remaining firmly in the regulatory and media spotlight, writes Hugo Bänziger, chief risk officer at Deutsche Bank and a member of the bank’s management board and group executive committee. The lack of attention may not be surprising — the economic picture is improving and the risk of further major failures has receded significantly. But it is a stark contrast to when the guarantee programme was implemented.
The Short View: Credit outlook
Picture a bond investor who started his career in the 1960s, writes Aline van Duyne. Last year, after the bankruptcy of Lehman Brothers, nearly every extra cent he had built up by taking credit risks was wiped out. Now, a year later, most of those “excess returns” — the amount of money made relative to sticking money in government bonds — have actually been gained back. In light of such a rollercoaster ride, October’s credit market performance seems quite pedestrian. Is there scope for more gains?
Online Q&A: Tipping point for markets?
Have we, as some analysts believe, reached a tipping point at which it has become impossible for key central banks to remove easy policy without causing market disruptions? Charles Diebel, head of rates strategy at Nomura, will answer readers’ questions on this issue on Monday, Nov 9. Post a question now at ask@ft.com, or click on the above link.
Lex on media recovery Is that a twitch? Faint signs of life in advertising along with cost-cutting helped US media companies, including Viacom and Time Warner to post better-than-forecast third-quarter numbers. But with “free” content out of fashion in the post-slump era, the question now is who will pay for what. Rupert Murdoch, boss of News Corp, wants to charge for all online newspaper content.
Video interview: Emerging markets regulators and climate change
SN Power, the Norwegian renewable energy group, has just signed a deal with Tata Power to set up hydel power projects in India and Nepal. Nadia Sood, South Asian regional head for SN Power, discusses the regulatory challenge of working in emerging markets and her hopes for the Copenhagen climate change summit.
Special report: Investing in Brazil
This comprehensive report examines the strides that Brazil has made in recent years and the pitfalls ahead as the South American giant strides towards the 2016 Olympics in Rio de Janeiro. See also FT.com’s video interview with Brazilian president Luiz Inacio Lula de Silva.
