Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Britain’s dismal choices – how to share the losses
The UK is poorer than it thought it was. This is the most important fact about the crisis, writes Wolf. The struggle over the distribution of the losses is going to be brutal. It will be made more so by the second most important fact about the crisis: it has had a huge effect on the public finances. The deficits are unmatched in peacetime.
Martin Taylor: On innumerate bankers
In all the fuss about bank bonuses, we have heard about labour market “realities” (from the bankers), and moral and political philosophy (from everybody else), notes Taylor, chairman of Syngenta and former CEO of Barclays. We need to think more about simple arithmetic. All business people know that if you run out of cash you are toast. Bankers, as providers of cash to others, understand this but just do not believe it applies to their own business.
Lex on the Greek deficit
Greek prime minister George Papandreou’s speech about acting to slash his country’s soaring budget deficit neither played well at home – a nationwide strike is threatened this week – nor abroad. Investors continue to sell the country’s bonds and stocks. That said, the risk of a default remains remote, although Greece will have to take pain, either now or later.
John Kay: Innovation is not about white coats
Apple is the most innovative consumer products company of the last decade. It has redefined how people listen to music, blindsiding both music publishers and established electronics manufacturers. And it has reinvented the telephone. Yet, Apple’s achievement is not the result of its technology
Insight: Ann Lee – international watchdog needed
One of the biggest lessons of the financial crisis is investment bankers cannot be trusted, writes Lee, adjunct professor at New York University and a former investment banker and hedge fund partner. Self-regulation and “principles-based” regulation failed in theory and practice. These bankers have gained too much influence in the governments and entities supposed to be regulating them. Financial regulation should be assigned to an international board consisting of the largest investors in financial securities.
The Short View: Corporate defaults
Moody’s says a widely watched measure of 12-month global corporate defaults reached 12.7 per cent in November, up from 3.2 per cent a year before. Many forecasters – including Moody’s – expect the rate to drop sharply next year. The improvements reflect two factors: economies have bounced back on central bank actions and stimulus programmes, and investors have been willing to buy bonds again. But there are also some serious worries.
Money Supply: Fed exit strategy – five questions
The Fed has only just begun strategising on issues related to its exit strategy and has not yet decided on a concrete plan, writes the FT’s Krishna Guha. This underscores the fact that the Fed does not expect to be raising rates soon. But consider these five questions, and some tentative answers…
Energy Source: Climate experts’ forum – the Kyoto question
Debate over whether to forge a new agreement or use the Kyoto protocol is dividing developed and developing countries at Copenhagen. Are developing countries justified in insisting that the Kyoto protocol be the basis for a new agreement? Read what EnergySource’s panel of experts have to say.
Jeffrey Sachs: How to hold the rich to their word
With days remaining in the Copenhagen climate talks, the rich have finally begun to discuss climate financing for the poor. The negotiating round has gone on for two years with little serious discussion on financing and other topics, a gaping failure of rich-country politicians who do not want to bother with unpleasant details. This will not do. Climate financing needs a formula.