Comment and analysis from Wednesday’s FT,
Martin Wolf: Wen is right to worry about China’s growth
“In the case of China, there is a lack of balance, co-ordination and sustainability in economic development.” Who dares to make such a downbeat assessment of the world’s most dynamic economy at a gathering of influential foreigners in the heart of China itself?, asks the FT’s Wolf. The answer is Premier Wen Jiabao at last week’s “summer Davos” in Tianjin. He is right. When almost everybody believes China is invulnerable, what might go wrong? As Andy Grove of Intel said: “Only the paranoid survive.” Mr Wen is wise to be similarly cautious.
MoneySupply: The last days of Summers
Larry Summers’ days as steward of the Obama administration’s economic policy are numbered, writes the FT’s James Politi. The White House on Tuesday night confirmed Mr Summers’ end-of-year departure as director of the National Economic Council to take up a teaching post at Harvard University. The move will no doubt rekindle concerns that the Obama administration’s economic team is burned out, and reflects mounting pressure for the White House to refresh its approach to economic policy.
Lex: US bank failures
Awaiting reports of bank closures has become something of a Friday evening ritual in some corners of the US financial market. Last week was worse than average, notes Lex. The Federal Deposit Insurance Corporation shut six institutions, bringing the year’s total to 125. Though still less than last year’s 140, the current rate 2010’s tally will come to 176. The quicker pace of failures may seem to fit badly with signs of recovery in banking sector. But size matters.
Sebastian Mallaby: Clone, rather than revile, robo-traders
Financial markets are like time machines, writes Mallaby, a senior fellow at the Council on Foreign Relations and the author of “More Money Than God”. The buyer of an equity turns today’s lump sum into tomorrow’s stream of dividends; the seller turns future income into cash to be spent now. Yet even as financial markets ease time’s tyranny, critics rail that they are rigidly short-termist. The latest target of this misconceived abuse is high-frequency trading.
GapperBlog: Lady Bracknell and British bank CEOs
Lady Bracknell would have something to say about the current proclivity of the British high street banks for losing chief executives, writes the FT’s John Gapper. First it was John Varley at Barclays, then it was Eric Daniels at Lloyds and next it may be Michael Geoghegan of HSBC, who has threatened to quit if he is not appointed chairman. Are you sitting comfortably, Stephen Hester of Royal Bank of Scotland?
News feature: JPMorgan’s US acquisitions pack punch
As one-two punches go, the one delivered by JPMorgan Chase to its rivals during the financial crisis will be hard to beat, writes the FT’s US business editor Francesco Guerrera. At the peak of the turmoil, Jamie Dimon, the bank’s chief executive, snapped up two coveted competitors within six months – Wall Street firm Bear Stearns and Washington Mutual, a regional lender. Now, just as the arduous and costly integration of WaMu and Bear is ending, Mr Dimon’s top team is increasing its focus, and expenditures, on winning more business overseas and hunting for international acquisitions.
Inside Asia: Asian companies need a brand new start
For a graphic snapshot of the realities of globalisation, it’s hard to beat Australian farming magazines with their colourful advertisements for tractors made by companies such as India’s Mahindra & Mahindra, writes the FT’s Asia regional correspondent Kevin Brown. Yet the company is largely unknown in the rest of the world, making it a good illustration of a regional conundrum: for all its vast size, rapid growth and vibrant companies, the Asia Pacific region is almost bereft of big global brands.
John Kay: A fiscal watchdog should not need a crystal ball
The FT’s Kay has some advice for Robert Chote, the recently appointed director of the UK’s Institute for Fiscal Studies. Harking back to his own experience as IFS director 25 years ago. Kay notes: “Focus not on what might be inside a crystal ball, but on answering the question: ‘What is the level of taxation that is needed to support current and future expenditure plans on a sustainable basis?’”
BeyondBrics: Facing off on microfinance
Is microfinance still microfinance if it involves outside shareholders and capital markets?, asks the FT’s Shannon Bond. That question was the subject of a lively debate at the Clinton Global Initiative on Tuesday as Grameen Bank founder and Nobel laureate Muhammad Yunus squared off against Vikram Akula, the founder and chair of SKS Microfinance, the recently listed microfinance lender.
o: Robert Chote, Director, The Institute for Fiscal Studies
Dear Robert,
Congratulations on your appointment as chairman of Britain’s new Office for Budget Responsibility. When I directed the Institute for Fiscal Studies 25 years ago, it was difficult to persuade journalists and parliamentarians that the think-tank’s figures were as good as official data. Now the government can reassure journalists and parliamentarians of the quality of its data only by securing the imprimatur of the IFS. The difference is partly the result of your success in establishing a reputation for independence and partly the failure of government to monitor that reputation for official data.