Comment, analysis and other offerings from Monday’s FT,
Jürgen Stark: The idea of Euro-paralysis is an illusion
The financial crisis has shaken the global economy to its core, writes Jürgen Stark, a member of the executive board of the European Central Bank. It has exposed the fragility of the foundations of private finance: opaqueness, hazard and sometimes fraud. The crisis has also revealed the weaknesses of public finance, both in the euro area and in other industrialised countries. In the euro area it has proved to be a watershed for collective reflection. It has spurred self-reform.
Lex on fearful markets
Investors have turned against Ireland, notes Lex. Between August 3 and August 12 the spread on its sovereign credit default swaps rose by 41 per cent, to 282 basis points, according to Markit. The problem was not local. The most recent news has not suggested any change in the encouraging trends in gross domestic product and prices. Rather, Ireland was caught up in a new wave of fear. The nation’s sovereign spreads widened in tandem with those of Germany, the UK, Italy and France, and with the Markit index of European senior financial debt: all up by more than a fifth in the same period.
News analysis: Funds look to dangers of US deflation
Investors are divided over what will happen next: can the US economy be stopped from sliding into another recession – the feared “double-dip”? Can the Fed prevent Japanese-style deflation, a period of falling prices associated with economic stagnation, from taking hold? Or might the easing lead to rampant inflation later, ask FT reporters.
Editorial Comment: Euro’s locomotive is puffing again
It is fortunate that, when the end of the eurozone was said to be near, nobody thought of telling the economy. Blissfully unaware of the nightmares haunting financial markets, politicians and, we admit, the media, eurozone economies got down to work and grew by 1 per cent in the second quarter, smartly outpacing the languid US growth rate of 0.6 in the same period.
Analysis: Germany on a roll
When Peter Löscher, Siemens’ chief executive, told the Financial Times in May last year that Germany would emerge from the recession to “spearhead a fresh wave of industrial revolution”, it seemed a rash prediction. At the time, Europe’s largest exporting country was in the middle of its deepest recession in more than 60 years. Just 15 months on, Mr Löscher’s vision is becoming reality, writes the FT’s Daniel Schäfer.
On London: Where next for sterling as stocks rally?
There was a time not so long ago when it was hard to stop Mervyn King opining on the pound, writes the FT’s Jennifer Hughes. He generally noted how the falling pound should boost exports and help the economy. This week then, it was easy to sense some underlying frustration in the Bank’s latest quarterly inflation report when it observed that net trade had in fact reduced UK growth over the past nine months.