Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Why 9/15 changed more than 9/11
America commemorates two grim anniversaries this month: 9/11 and 9/15. Almost a decade has passed since the Twin Towers attacks transformed America’s relations with the world; two years since the collapse of Lehman Brothers and the beginning of the financial crisis. My guess is that it will be the financial crisis that ends up looming larger, the FT columnist argues. For a start, the financial crisis has made Americans realise that the “China challenge” is not something for the distant future – it is happening here and now.
Glenn Hubbard: It is time to dance to a new long-term tune
On September 15, 2008, the music stopped when US officials allowed Lehman Brothers to fail, writes Hubbard, former economic adviser to President George W. Bush and dean of Columbia Business School. But Lehman’s demise was not just a focal point of the crisis – it was a watershed, highlighting long-ignored structural problems in the both the US and the global economy. Our collective over-emphasis on policy for the short term over long term in the era before Lehman’s fall has returned to haunt us, however.
Management: Tasked with tidying up Lehman
From Tom Bolland’s Canary Wharf office there is a clear view of 25 Bank Street, the former European headquarters of Lehman Brothers, the FT’s Jennifer Hughes writes. The surroundings are appropriate. While most of the financial world now considers Lehman to be long gone, for Mr Bolland and a group of former employees in London, the bank is still their job as they work with the administrators to unravel its complex operations.
News analysis: Europe’s liquidity habit is hard to shake
After the collapse of Lehman Brothers in late 2008, the ECB started matching in full eurozone banks’ demand for liquidity for periods of up to a year, the FT’s Ralph Atkins and David Oakley report. But opportunistic borrowing accompanied the ECB’s emergency support, and some banks have been unable to shake the habit, especially in peripheral countries.
Market Insight: Happy 50th birthday, Opec
As the Opec oil cartel celebrates its 50th anniversary, the club can reflect over its recent success, the FT’s Javier Blas writes. Amid the worst economic crisis since the Great Depression and a savage reduction in oil demand, the cartel has, against the odds, fruitfully anchored oil prices at $75 a barrel. But Opec faces a new set of challenges — some generational, as senior officials retires, and others more practical, such as meeting rising oil demand in a world more dependent than ever on Opec supplies.
Lex on new bank capital rules
“Give me chastity and continence, but not yet.” Bank regulators seem to understand the sentiment of the youthful St Augustine, Lex observes. The post-crisis Basel III capital standards delay banks’ day of mortification. That’s good news for bank shares in the short term — but a high-risk gambit further down the line. Eight years is a long time in finance.
Business Life: Beware the superstar chief executive
The fascination of the Mark Hurd drama is that it contains all kinds of mysteries. A month after he was pushed out of Hewlett-Packard, we still don’t really know why, writes Philip Delves Broughton. What we do know, however, is that in hiring Mr Hurd, Oracle’s Larry Ellison has hired a very particular form of CEO – a superstar cost-cutter. But truly great chief executives need to cut costs and expand their businesses.
Martin Wolf: What are the priorities for global reform?
There are twin aspects of the global challenge: macroeconomics and so the global imbalances; and microeconomics and so the regulation of finance, the FT’s Wolf writes. How can solutions to the two be combined? The world economy cannot be rebalanced without global monetary support to prevent additional crises. But the financial system too is a huge cuckoo in the global economic nest.
Money Supply: Is Basel III just like tightening monetary policy?
Angela Knight, head of the British Bankers’ Association, argues that tighter capital and liquidity standards will hit households hard through dearer credit and it is all the fault of pesky regulators. Not quite, argues the FT’s Chris Giles. It would appear that Basel III is akin to tighter monetary policy, but only marginally tighter — and the other benefits are very large indeed.