Comment, analysis and other offerings from Tuesday’s FT,
Terrence Keeley: Now let us stress-test the central banks
Though their details deserve debate, the underlying logic of the US and European commercial bank stress tests is irrefutable, writes Keeley, senior managing principal, Sovereign Trends, LLC. That logic now needs to be applied (hypothetically) to the world’s central banks.
Westminster: The “very green” bank lending paper
Government officials told the FT over the weekend that Monday’s bank lending paper would be “very green” – essentially laying out a set of problems rather than solutions. And so it has proved, says Kiran Stacey.
Martin Wolf’s Exchange: The political genius of supply side economics
The future of fiscal policy was intensely debated in the FT last week, writes the FT’s Martin Wolf. In this Exchange, he says, “I want to examine what is going on in the US and, in particular, what is going on inside the Republican party. This matters for the US and, because the US remains the world’s most important economy, it also matters greatly for the world”.
Money Supply: When does quantitative/credit easing work?
This interesting new NBER working paper by Vasco Curdia of the New York Fed and Michael Woodford of Columbia University will likely feature on Ben Bernanke’s reading list as he ponders both the options for further Fed easing (should it be necessary) and the Fed’s eventual exit strategy from easy policy, notes the FT’s Robin Harding.
News analysis: Debt-exchange recovered cash grows
Investors are recovering more money from troubled companies by using so-called distressed debt exchanges that avoid the need for bankruptcy, according to rating agency Moody’s, write FT reporters.
Energy Source: Tony Hayward, unlucky to be the fall guy?
With BP poised to announce the departure of chief executive, Tony Hayward, Ed Crooks, the FT’s energy editor, talks to Daniel Garrahan about how tainted Mr Hayward’s legacy will be by the disaster in the Gulf of Mexico and what impact the oil spill will have on BP’s second quarter results on Tuesday.
Investor’s Notebook: Jonathan Golub – Banks’ moves threaten to hamper growth
Efforts by big US banks to shore up their balance sheets may act as a “stealth tightening” that could hamper the broader economic recovery, says Jonathan Golub, US equity strategist at UBS.
Market Insight: Jim McCaughan – European tests may not calm capital markets
That only seven out of 91 European banks failed the stress tests is not surprising, says McCaughan global CEO of Principal Global Investors. There was not a lot of stress in the tests. The key missing stress was the likelihood of sovereign rescheduling, or partial default, from several European countries, most probably including Greece and maybe Spain and Portugal.
Lex on Chinese banks
Now that’s a stress test, quips Lex. Reports suggest the Chinese banking regulator reckons the nation’s lenders may struggle to recoup about 23 per cent of the Rmb7,700bn ($1,100bn) they’ve lent to investment vehicles owned by local governments (LGIVs).