Comment, analysis and other offerings from Monday’s FT,
Clive Crook: America’s monumental job losses
Unemployment in the US is high not just by its own past standards but by international standards, too, which is doubly strange, writes the FT columnist. Figures also show a startling rise in long-term unemployment. Terms for the stickiness of high unemployment such as hysteresis and sclerosis have preoccupied students of Europe’s economies. They have not come up so much in relation to US joblessness, but this may change.
Robert Reich: Two cheers for the Senate finance bill
Two cheers for Senator Christopher Dodd and Senate Democrats who, along with four Republicans, have passed the most sweeping reform of financial markets in 80 years, writes Reich, a former US Labor secretary and professor of public policy at the University of California at Berkeley. But it is clear that the bill needs toughening. The interesting question is why the president, who says he wants to get “tough” on banks, does not insist on more. Two cheers is not good enough.
Wolfgang Munchau: Bad debt threatens Europe’s strongest
Is the eurozone insolvent?, asks the FT columnist. In the past few weeks, we have all focused on the solvency of Greece, Spain and Portugal. But we never seriously questioned the solvency of those who actually guarantee all those southern European debts.
Editorial comment: Small step on long road to safe finance
Irresponsible financial regulation in the US has a good claim to being the main cause of the crisis, says the FT. In its efforts to clean up the mess, however, the US leaves Europe in the dust: first by prying open bank balance sheets and forcing them to take capital injections; now by entering the final straight of legislating regulatory reform. But even reconciling the reform bills of the two chambers of the US Congress is merely a first, insufficient, step.
Comment: How to increase US exports to China
President Barack Obama has previously said that the US needs to make a decision on labelling China a “currency manipulator”. Such a statement is not what has come to be expected by China and has been deemed entirely unacceptable, write Huo Jianguo, president, Chinese Academy of International Trade and Economic Co-operation, and John Milligan-Whyte, chairman, Center for America-China Partnership. When officials from both sides meet in Beijing on Monday for their latest dialogue, they will certainly have plenty to talk about.
Lex on Australian rates
Australia is tightening too hard and too fast, cried the naysayers. Six interest rate rises in eight months is reckless, they said, given the eurozone’s slow puncture and faltering demand in Japan, the US and UK. Yet the evidence so far suggests policymakers have called it about right.
Tony Jackson: Bonuses and the widening pay-gap
Some two-thirds of senior UK civil servants, the new UK chancellor George Osborne said last week, received a performance bonus last year, says the FT’s Jackson. He finds that odd, and so might most of us, writes Jackson. Indeed, we might suspect it is essentially a back door to wage inflation.
Money Supply: Can’t spot an asset bubble?
Donald Kohn, the outgoing Fed vice chairman, told an ECB meeting on Friday: “Judging when an asset is getting away from its fundamental value is almost impossible”, writes Simone Baribeau. It’s a step away from William Dudley, New York Fed president, calling for the Fed to take a more proactive approach towards asset bubbles. But how hard are housing price bubbles to identify? Looking at US housing prices over the past few decades, it’s not immediately obvious why a bubble would be hard to spot.
BeyondBrics: Chinese revaluation and global recovery
Several Latin American leaders have sided with the US to support calls for a revaluation of the Chinese renminbi, write Eduardo Lora and Alessandro Rebucci of the Inter-American Development Bank. The reasoning is that a stronger renminbi will lead China away from exports and toward domestic consumption, while giving the rest of the world and Latin America a competitive boost. But an ongoing study by the IDB and Cambridge university suggests the opposite.
Economic outlook: Focus remains on eurozone
Attention is likely to remain firmly fixed on the eurozone this week as the wider economy starts to feel the impact of market jitters over the eurozone’s fiscal crisis, writes Jack Farchy. But data on the UK economy may give politicians and voters a small crumb of comfort, with a likely upward revision in first-quarter GDP on Tuesday.