Comment, analysis and other offerings from Friday’s FT,
Mohamed El-Erian and Ramin Toloui: How to fill the gaps left by dollar decline
It has become fashionable to speculate on the future of the US dollar as the world’s reserve currency, write El-Erian and Toloui. Amid an average 10 per cent decline in the past six months, analysts have tended to favour one of two conclusions. Some argue that, since you cannot replace something with nothing, the dollar’s global role is secured. Others feel that America’s medium-term prospects are now inconsistent with such a role.
Gillian Tett: The clearing house rules
In theory, I still believe that clearing houses could — and should — make the derivatives world safer, writes Tett. In practice, though, they could also end up creating new dangers if they are not put on a sound footing, particularly if the fact that no clearing house has ever failed before creates a false sense of complacency.
Martin Wolf: Time for a debate on immigration
Alan Johnson, UK home secretary, has recently admitted that the government has been “maladroit” in its handling of immigration. This is British understatement, says Wolf. It has been dishonest: it has pursued a radical policy, with profound consequences, on weak grounds, without serious debate – and has been able to get away with its dishonesty because immigration is the “third rail” of politics. Few wish to discuss the topic openly. But some discussion is essential. Present policies have big implications. These should be evaluated and discussed openly. That is the democratic way.
Lex on the Bank of England printer jam
The Bank of England will inject a further £25bn into the economy, mainly through purchases of gilts. The quantitative easing programme is soon to hit the £200bn mark, more than 13 per cent of gross domestic product. The bank’s hyperactivity reflects the fact that it controls the only lever left to policymakers; the bleak state of the public finances gives zero scope for fresh fiscal stimulus.
Editorial Comment: Central banks still stepping on the gas
Central banks in Washington, London and Frankfurt have done what was expected of them by keeping policy rates unchanged. It was the only sensible thing to do. The US and parts of Europe may have returned to growth, but the recovery is brittle and rates of production still leave resources woefully underemployed. Inflation is subdued everywhere — even in the UK, where consumer prices, in spite of sterling’s fall, are up a mere 1.1 per cent in a year.
Letters to the Editor
- Come on, Gordon and Alistair, you won’t even miss it
- Things are getting better every day
- Still baffled by these bail-outs