Comment, analysis and other offerings from Friday’s FT,
Insight: Gillian Tett – The sweet fix of CoCos
Could a nice cup of Cocos be the sweet fix that regulators desperately need to solve the “Too Big to Fail” problem? That is a question being furtively whispered right now, on both sides of the Atlantic, writes Tett.
Analysis: An eclectic aviary
There are real differences between Federal Reserve hawks and doves, writes Krishna Guha, and they will come to the fore again if the conditions set out in the Fed statement start pointing in different directions – for instance, very high unemployment coupled with a rise in inflation expectations. What then makes a hawk or a dove? These are not fixed conditions. Policymakers shift camps over time, for various reasons. But some elements of the debate stand out.
Samuel Brittan: Simple truths about the economy
The truth is sometimes simple, however elaborate the detail, writes Brittan. The main feature of the world economy over the past few years has been the growing savings surplus of China and other Asian countries. Until recently it was offset by consumer borrowing in the west, especially in the US and the UK.
Philip Booth: Ethics alone will not prevent financial crises
Many commentators have suggested that the root of the financial crisis is ethical, writes Booth, editorial director of the Institute of Economic Affairs. As such they have called for a renewal of virtue in financial markets. While virtuous behaviour may well lead to better outcomes, attention to ethical issues alone will not resolve the problems that caused the crash.
Lex on peak gold
Rare, malleable and immune to corrosion, gold made an ideal source of money before the development of modern currency. The impulse to hoard bullion as a hedge against inflation is one that many seem to find hard to resist, but the notion that the world is running out of the stuff is not. Yet that was the suggestion by the president of Barrick Gold, the world’s largest producer, who spoke this week of “peak gold”, sparking headlines about the world running out.
View of the day: Leigh Skene – China’s control over the dollar
China has “far more control over the price of the dollar than the US”, says Leigh Skene, an associate at Lombard Street Research. Although some of the US currency’s weakness since March can be attributed to greater risk appetite and “carry trades”, there is a better explanation for the drop in the dollar, he says.
News analysis: JGB flood looms for Japan
Japan’s equity markets have long been marked by a sense of “us and them” — or a gulf between how domestic and foreign (or gaijin) investors view events, write Lindsay Whipp and Gillian Tett. This winter this gaijin-domestic split is playing out in the arena of Japanese government bonds too.