Comment, analysis and other offerings from Friday’s FT,
Martin Wolf: Tax the windfall banking bonuses
Windfall taxes are a ghastly idea, writes Wolf. They are a sop to prejudice, a burden on risk-taking and a form of arbitrary confiscation. No sensible person should support them. So why do I now find the idea of a windfall tax on banks so appealing? Well, this time, it really does look different.
Gillian Tett: Philanthropy and bank bashing
The fact Goldman is setting aside $500m — or some 3 per cent of its planned bonus pool this year — might be interpreted as an effort to quell the current bank-bashing and consign it to the past, writes Tett. Not for nothing did Mr Blankein say “sorry” for previous mistakes by Goldmans (and others). While that logic might explain part of Blankfein’s motives, it is almost certainly not the whole tale. For, insofar as the move was really triggered by philanthropy — and, as my colleague Francesco Guerrera wrote on Thursday, it will also help the bank meet government rules — it may not be the current round of banker-bashing that is worrying the bank
William Donaldson and Arthur Levitt: Tackling systemic risk is no job for the status quo
A buoyant stock market and glimmers of recovery are dispelling many of the more dire scenarios for the economy, write Donaldson and Levitt, both former chairmen of the Securities and Exchange Commission. Despite the intensity of the financial storm that has just passed, there appears to be a waning resolve to address the larger lessons learnt about systemic risk. Policymakers, perhaps out of a sense of misplaced optimism, seem increasingly ready to concede the inevitability of future bubbles and a status quo approach to their handling — that is, leaving it to existing regulators. We need more.
Liu Mingkang: China can build on the base of its sound banks
More than a year after the bankruptcy of Lehman Brothers and the ensuing financial market turbulence, we are at a critical crossroads, writes Liu Mingkang, chairman of the China Banking Regulatory Commission. I think the post-crisis path will be bumpy, mainly because bail-out programmes have not been implemented in the right sequence. We can see the cart has been put before the horse: money has been pumped in continuously to cover the risks and ease the panic, but we are still far from cleaning up the balance sheets of western financial institutions.
Editorial Comment: Anti-anti-dumping
It is not just all good things that come to an end. Some bad ones do too. On Thursday, European Union trade officials rejected a plan to extend the “anti-dumping” duties levied on shoe imports from China and Vietnam. Even so, the episode points up the opaque and arbitrary nature of EU trade laws.
Lex on commodity prices
Like leaf blowers, commodity analysts seem pointless and full of hot air. Investors might have at least expected some respite when the resources bubble burst last May. In spite of buy recommendations across the board (if everyone in China bought a refrigerator, etc), the price of oil, copper and cotton halved. But it has taken less than a year for noise surrounding commodities to reach full volume again.
Lombard: Colgate-Reckitt: a kitchen colossus that makes sense
If confectioners want to get bigger it seems entirely plausible that those selling toothpaste, indigestion medicine and spot treatments should do likewise. On that basis, the market frisson about a potential merger between the UK’s Reckitt Benckiser, whose household and personal care portfolio includes Gaviscon and Clearasil, and US toothpaste king Colgate-Palmolive has a certain logic.
FT Video: View from the top with Robert Zoelick
The World Bank president talks to Chyrstia Freeland, about President Barack Obama’s recent trip to China and the effects of the Chinese currency being pegged to the dollar.