Comment, analysis and other offerings from Thursday’s FT,
The US may be growing — but by barely more than 1 per cent per annum; and with Europe and Japan little better, it now looks as though the bungee-jump economic recovery from last year’s abyss has lost its momentum, writes Magnus, a senior economic adviser to UBS. Monetary policymakers should draw up plans not to hike policy rates but to define explicitly the circumstances under which they would expand quantitative easing again. Monetary policy is judgment, not science. Better, if necessary, to print money and be damned, rather than tighten policy and be damned.
Larry Tabb: Fixing equity markets is not such an easy task
Investors have been running away from the US stock market in droves. Equity volumes are about half or less than the historic highs reached at the March 2009 market bottom, writes Tabb, founder and chief executive of Tabb Group. But laying blame for this state of affairs at the feet of this market structure would be like blaming the reservation system at a restaurant for its fading popularity. Sure, a better process would help, but there are plenty of other reasons why we choose to dine elsewhere. So what then is at the heart of our fading equity markets? The first chink in the armour is purely demographic — baby boomers.
David Pilling: Long march to renminbi convertibility
If you’ve been paying attention you’ll know that RMB now stands for Ronald McDonald Bonds. This month, the American hamburger chain became the first non-financial foreign company to issue debt denominated in the Chinese currency. That has led some to believe that Beijing has started an experiment whose eventual aim is internationalisation of the renminbi and its establishment as a reserve currency to compete with the dollar. But that would be an enormous leap — and we are nowhere yet, the FT columnist argues.
Lex on BHP Billiton’s cash in hand
If BHP Billiton’s $39bn bid for PotashCorp was a flash of the black Amex, Wednesday’s full-year results were a more comprehensive reminder of the group’s awesome spending power, writes Lex. No other private enterprise on earth could realistically contemplate what BHP is attempting to do to PotashCorp of Saskatchewan. On a rough calculation, BHP could lift its 16 per cent premium over the target’s pre-bid share price to 40 per cent before straining its pro forma ratio of net debt to ebitda. So should it pay up? It will almost certainly have to, if it wants to persuade shareholders to tender.
News analysis: Focus sharpens on Fed chairman
The spotlight on Ben Bernanke, Fed chairman, will be even brighter than usual when he opens Friday’s Jackson Hole conference of central bankers with a half-hour speech on the US economic outlook, the FT’s Robin Harding writes — because that outlook is steadily worsening. In his speech Bernanke is unlikely to rule anything out in Fed policy, because if the economy does worsen, the Fed is likely to try a bit of everything. But he may reflect a rough consensus in the Fed that the main tool would be restarting asset purchases.
Accountancy column: Chance for change as decade-old double act exits
Due to an unexpected turn of events, not just one, but both of the top jobs in the accounting world – chairman of the US Financial Accounting Standards Board and the international standards setter – are simultaneously up for grabs, writes the FT’s Rachel Sanderson. However, what has looked like a problem may yet become an opportunity.
FT Energy Source: Oil-drilling in the Arctic? Blame the bankers
Nothing like the words “Arctic” and “oil drilling” to get the environmental campaigners excited. Add banks to the mix, and you have the perfect mix for a modern day witch-hunt, writes Masa Serdarevic. The latest targets are Cairn Energy and the Royal Bank of Scotland — the bank has made loans to Cairn’s drilling plans in Greenland. Never mind a curious lack of outrage over Cairn’s other projects in India — nor that Greenland’s government supports Cairn’s presence.