Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Greek tragedy deserves a global audience
The Greek government has promised to slash its fiscal deficit from an estimated 12.7 per cent of GDP last year to 3 per cent in 2012, says the FT’s Wolf. Is it plausible that this will happen? Not very. But Greece is merely the canary in the fiscal coal mine. Other eurozone members are also under pressure to slash fiscal deficits. What might such pressure do to vulnerable members, to the eurozone and to the world economy?
Analysis: China, the internet and the missing link
China has developed its own cyberspace, writes Beijing correspondent Kathrin Hille. It is growing less like the internet in the rest of the world, not more like it. And it is not just due to the baleful presence of a vast and highly flexible censorship apparatus; the formative forces of “.cn” also include cultural preferences and social structures very different from the west’s. Google itself has often struggled to adapt to these differences.
Economists Forum: Does Russia belong in the Brics?
In economic development, Russia is superior to the three other Bric nations – Brazil, India and China, writes Anders Aslund, senior fellow at the Peterson Institute for International Economics and author of “Russia’s Capitalist Revolution”. Odd as it may seem, Russia’s foreign policy strengths are holding back the country.
Lex and the Citi
Citigroup has certainly had its share of rock and roll. But after more than two years of noise, now it is time to build a business – while still, of course, winding down another. Having survived its anni horribiles, Citi still must deliver on its new start. Its vision for the future, however, no longer looks like a flight of fancy.
The Short View, video: Good times for junk bonds
Times have never been so good for junk bonds, says John Authers. In the second week of this year, $11.7bn in high-yield offerings came to the market, the record set in November 2006. This does not sound like good news. While junk’s popularity is not the clear evidence of a new bubble that it first seems to be, junk yields are now barely a percentage point above the pre-crisis low of 7.58%. It would be alarming to see the appetite for junk improve for much longer. Text version, here.
Lombard: Cadbury investors have had a good battle
After months of hostilities, Kraft’s chief executive Irene Rosenfeld caved in and put £11.6bn on the table, enough to secure the coveted candy box that is Cadbury. Jubilant Cadbury shareholders pushed the share price up 3.5%. Tears poured and spleen was vented in Bournville, home to Cadbury’s factory. The prime minister weighed in to warn the US food group not to cut jobs. All that’s missing is someone to snap up the movie rights.
Money Supply: Debating the Phillips curve
Researchers at the SF Federal Reserve Bank have published a report arguing that, in serious downturns (but not in normal times), the beleaguered Phillips curve proves useful, writes Simone Baribeau. The curve shows an inverse relationship between employment and inflation – a concept which garnered increased scepticism, inside and outside the FOMC, as researchers struggled to find empirical evidence showing the link.
Insight: John Plender – Remove the punchbowl at the party, now
No doubt the flak directed at all those private bankers who “don’t get it” about bank bonuses is well deserved, writes the FT’s Plender. Yet the central bankers seem to be escaping very lightly in the post-crisis dust up. For while incentive structures in banking exacerbated the credit bubble, they were a much less potent cause of trouble than central bank behaviour across the world.