Comment, analysis and other offerings from Tuesday’s FT,
The global financial system is again transfixed by sovereign debt risks, writes Altman, who served as deputy Treasury secretary under President Clinton. This evokes bad memories of defaults and near-defaults among emerging nations. But the real issue is not whether Greece or another small country might fail. Instead, it is whether the credit standing and currency stability of the world’s biggest borrower, the US, will be jeopardised by its disastrous outlook on deficits and debt.
Stefan Stern: Confusion clouds the shareholder value debate
Would all those chief executives who do not want to create value for their shareholders please raise their hands, the FT columnist asks. Nobody? I’m glad we could agree on something. But from here on, the consensus breaks down. The apparently simple label of “shareholder value” is understood and interpreted in a surprisingly varied number of ways.
Analysis: Accounting — carried forward
Being able to compare accounts across borders has become a holy grail for the world’s accountants as well as many investors and financial analysts, the FT’s Rachel Sanderson and Jennifer Hughes write. But the world financial turmoil drew particular attention to one fundamental question: how to measure what an asset is worth.
Editorial Comment: Swaps showdown
A year has passed since the Group of 20 leaders meeting in London swore to regulate the global financial system so it would not blow up again. Neither Europe nor the US has managed to pass reform. Still in the balance are the future rules for derivatives trading. But in the US, a showdown is at last in sight, as the Senate’s finance reform bill turns to the issue.
Gideon Rachman: Anger erupts for a volcanic exile
There are loads of us all over the world, the FT columnist writes. Volcano exiles. As I sat around in Tel Aviv over the weekend – gloomily surveying the dwindling options for getting back to Britain – I took a twisted sort of comfort from the stories of friends in similar or worse predicaments. My reaction to volcanic exile has been a bit like the bereavement cycle – grief, anger, denial, acceptance.
Lex on US bank results
The $300bn-odd question remains, Lex writes: what are normalised earnings for banks post-meltdown? The most important factor is underlying profitability. The problem with estimating a bank’s core earnings power is that they are still giving off mixed signals.
Lex on the airline industry
Unprecedented is a big word. But, Lex adds, it may now be an appropriate word to describe the airline industry chaos resulting from the volcanic ash cloud over Europe. The disruption is worse than after 9/11. And it is affecting a business that is only marginally profitable in the best years.
FT Brussels Blog: Europe’s volcanic ash crisis is just a drag
Europe’s volcanic ash emergency is, if I may say so, a lot of hot air rather than a genuine threat to the economy, the FT’s Tony Barber argues. It means that a couple of million people failed to show up at work on Monday – but so what? To us Europeans, there’s nothing so unusual about that.
FT Money Supply: Bernanke on Repo 105
The Fed didn’t know about Repo 105 and if it had, it wouldn’t have cared. That, the FT’s Simone Baribeau writes, pretty much sums up Ben Bernanke’s planned testimony to the House Financial Services Committee tomorrow.
John Gapper’s Blog: Magnetar comes out fighting on synthetic CDOs
Before the Abacus synthetic CDO that led to Goldman Sachs being accused of securities fraud came the CDO deals associated with Magnetar, the Illinois-based hedge fund. Now Magnetar has come out fighting against press claims that it helped stoke the US housing bubble in a letter to investors, the FT’s Gapper writes.
FT Video: Short View on structured finance
The structured finance and securitisation markets are in the spotlight again after US regulators charged Goldman Sachs with fraud, the FT’s Aline van Duyn says.