Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: The risks posed by get-rich geeks
An entire week has now passed since the extraordinary, tumultuous crash and rebound of the US equity markets, writes the FT’s Tett. But, although regulators and policymakers have been crawling all over these events with a toothcomb for seven days, the only thing even more remarkable than the drama of those events is that their trigger remains a mystery.
Martin Wolf: The economic legacy of Mr Brown
The UK has a coalition government between the Conservatives and the Liberal Democrats. Having called for such an outcome, I am happy with the result, writes the FT columnist. This coalition is more likely to grapple effectively with its grim inheritance than any alternative: it not only has a decent majority, but with nearly 60 per cent of the vote in the election, it has the legitimacy it needs. Yet before the government starts, we should ask just why its inheritance is so grim.
Tommaso Padoa-Schioppa: Euro on the right side of history
Ideology and culture matter, and may be decisive in the battle for the euro, writes Padoa-Schioppa, president of Notre Europe, Europe chairman of Promontory Financial Group, a former Italian finance minister and former member of the ECB’s executive board. Over many months, a mighty army has advanced on the citadel of the euro crying: “It will never work!” The citadel fights for the good cause (saving Europe’s monetary union), but its persistent credo, which has for too long kept it disarmed, still prevents it from going all the way with the necessary reform. At stake in this struggle, ultimately, is the ideology of the omnipotent nation-state.
Analysis: Hedge fund rules to redefine the industry
After more than a year of wrangling, the EU’s first effort to regulate hedge funds and private equity – the delightfully titled Directive on Alternative Investment Fund Managers – is reaching a critical phase. On Monday, a powerful European parliamentary committee will take the first vote on the proposals. The ferocity of the industry’s efforts have left an unpleasant taste in Brussels. Above all, the debate has underlined how crucial Brussels has become to the financial services sector as regulators try to reassert their grip and balance two different visions of the financial system.
Lex on fool’s gold
When financier George Soros called gold “the ultimate bubble” earlier this year, many observers falsely interpreted it as a cue that the great speculator was eschewing the barbarous relic. Instead, he bought exposure and has made a tidy profit so far. The difference between Soros and the decidedly less-smart money that has helped push gold to a record high this week is that he has the proper historical perspective. Gold has only enriched those who have known when to sell it to a greater fool.
The Short View: The eurozone’s misfiring bazooka
The eurozone’s bazooka appears to have misfired, writes The Short View’s new columnist, James Mackintosh. A €750bn (£640bn) weekend bail-out was intended, as Angela Merkel, German chancellor, put it, to “defend our common currency against attacks”. The initial bang shocked markets into good behaviour but as the trading week wears on investors have become distinctly less impressed. The problem for the euro is that it is damned either way.
Beyond Brics: China and western MNCs on a collision course
Google’s bust-up with the Chinese government earlier this year is just the first sign of a looming battle between western multinationals and Beijing.
Money Supply: An’extended period’, no strings attached
The message from senior Federal Reserve officials on Thursday was not to read too much into their pledge of keeping interest rates low for an “extended period”. With doubts still lingering about the health of Europe’s banking system and potential spillover effects to the rest of the world, forecasters have on balance pushed back expectations of the first tightening of US monetary policy. It seems unlikely that Thursday’s speeches by Donald Kohn, the vice-chairman, and Narayana Kocherlakota, president of the Minneapolis Fed, did anything to reverse that.