Comment, analysis and other offerings from Thursday’s FT,
Jim O’Neill: Tough talk on China ignores economic reality
In the past few weeks, Washington has upped the rhetoric concerning China and its currency. Coming at a time when there are a number of other sensitive issues facing the US-China relationship, it is not obvious to some of us why Congress is so excitable about this issue. With the biannual decision of the US Treasury on whether to name China as a currency “manipulator” due on April 15, it is far from clear that all this noise is helpful to anyone, says O’Neill, chief economist at Goldman Sachs.
Patrick Honohan: A plan to restore Ireland’s banks to health
The shadow that has hung over Ireland’s banks for the past 18 months is lifting, writes Honohan, governor of the Central Bank of Ireland. Though much remains to be done in consolidating the fiscal adjustment, and restoring and maintaining wage competitiveness, the path is clear. This week’s package of banking policy measures is an important milestone of the recovery.
View of the Day: David Shairp – Don’t fear the rates rise
Investors should not fear the shift towards policy tightening by Asian central banks, says Shairp, global strategist at JP Morgan Asset Management. He acknowledges that Asian markets may suffer short-term jitters. “But over the longer horizon, a proactive stance by Asian central banks at this point is surely a good thing for regional equities,” he says.
Market Insight: Watch out for sovereign debt black holes
Will the next step in the credit crisis centre on sovereign debt? And what would that mean? David Roche and Bob McKee, authors of ‘Sovereign Discredit!’, argue that high levels of sovereign debt will, at best, mean significantly below-trend economic growth over the rest of this decade. At worst, there will be a series of sovereign debt defaults that will ricochet through some leading economies and plunge the global economy back into recession.
Book Review: Michael Lewis’ ‘The Big Short’
At the very moment when – thanks to trillions of dollars in taxpayer bail-outs – Wall Street seems to have righted itself and returned to the work of generating billions of dollars in revenue in opaque ways and then paying half of it in the form of bonuses to its overcompensated employees, Michael Lewis’s new book comes along to stir up the simmering pot. Yep, it’s time to throw another tank of petrol on the Wall Street pyre.
Analysis: UK politics – Calmly into a crucial contest
Britain’s opposition Conservative party is in a state of high anxiety. It has not seized power from Labour at a general election since Margaret Thatcher marched into Downing Street more than 30 years ago. The general election is there for the taking but, as the party’s opinion poll lead has slipped, Tory nerves have frayed.
Money Supply: Wait. What are the Fed’s holdings exactly?
[Roll of drums, spotlight on the New York Federal Reserve] And the answer is: 161 pages of pretty incomprehensible documents. The question, asked by politicians and investors, was: what securities does the Fed hold as a result of its multi-billion dollar rescues of Bear Stearns and AIG during the crisis?
Lex on trading margins
On some football field-sized trading floors you could barely see the far wall through the heat haze. Yet even during the glory years, most investment banks struggled in “flow businesses” such as interest rates, foreign exchange and cash equities. Unless you were in the top three or four in a particular product, forget about it. Many banks wasted fortunes trying to get there.