Comment, analysis and other offerings from Thursday’s FT,
John Gapper: How America let banks off the leash
Barack Obama came to office with members of his administration quoting the adage of Paul Romer, the economist: “A crisis is a terrible thing to waste.” But it has wasted the financial crisis. This week, the last two large banks to receive capital injections from the US government at the height of the crisis in October 2008 agreed their exit with the Treasury, writes Gapper. Citigroup and Wells Fargo have chafed under the rules of the troubled asset relief programme (Tarp) and are returning $45bn in order to roam free.
Luigi Zingales: A tax on short-term debt would stabilise the system
The idea of imposing a tax on financial transactions, also called the Tobin tax after the economist who first proposed it, is back in vogue, writes Zingales, Robert McCormack professor of entrepreneurship and finance at the University of Chicago Booth School of Business. It has strong political appeal, catering to demands to punish banks for the crisis they have bestowed. It satisfies the political need to do something to avoid a repeat of the crisis. And, at a time of fiscal crisis, it provides an easy way to raise revenues without increasing income taxes. Last Friday, European Union leaders urged the International Monetary Fund to consider such a tax.
David Pilling: Beijing finds fine words for its old enemy
Xi Jinping, the man widely tipped to succeed Hu Jintao as China’s president in 2012, dropped in on Japan’s emperor this week, writes the FT’s Pilling. Though such visits are normally arranged months in advance, Beijing gave just a couple of days’ notice, the equivalent in imperial-etiquette terms of loudly banging on your neighbour’s door at 3am asking to borrow a cup of sugar. A request by Yukio Hatoyama, Japan’s freshly installed prime minister, that an audience be granted even at such short notice, was criticised by some in Japan, particularly on the right. They saw in it a willingness by the new left-of-centre government to kowtow to Beijing.
Editorial Comment: BA on the brink
The British Airways cabin crew dispute combines high drama and hard truths. Behind the legal action and last-ditch talks that dominate the coverage are two underlying certainties: the BA business model needs fixing, and staff pursuing a strike are putting their own job security at risk. The airline sector is peculiarly vulnerable to industrial action: the profit lost in every flight cancelled can never be regained, and the operator can face additional costs if it must compensate disappointed passengers.
Lex on Credit Suisse
Another Swiss bank has fallen foul of the US authorities. This time, Credit Suisse will pay $536m to settle claims that between 1995 and 2007 it defied US sanctions by handling payments for Iran and other blacklisted states. To be fair, the Swiss bank disclosed the probe in its 2007 annual report. But it will have to charge an additional SFr445m before tax against fourth-quarter results. It is the fourth non-US bank to reach a US agreement.
Analysis: Russia: Shift to the shadows
T he Russian aphorism that “the Kremlin has many towers” is a comment not just on its architecture but on the rivalries that pervade the regime that sits within it – maintaining an outward veneer of autocratic rigidity but roiling nonetheless with bureaucratic turf battles.
Monsey Supply: The Fed’s long good-bye
For investors trying to estimate when the Fed will raise interest rates today’s statement was a non-event. The Fed upgraded its assessment of economic conditions, but did not radically revise its view of the trajectory of growth going forward and left its discussion of inflation unchanged.