Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Britain and America seek different paths 
The US and UK have similarities that go beyond speaking the same language: both had huge expansions in household credit; both had to rescue their financial sectors; both have watched their central banks push interest rates close to zero and adopt “quantitative easing”; and both have experienced massive post-crisis increases in fiscal deficits. Yet a big policy divergence is on the way. The coalition government of the UK will on Wednesday announce details of their cuts in government spending. Nothing comparable is expected in the US, writes the FT columnist.
Alfredo Sáenz: All banks should face the same tests on risk
The architects of coming global financial reforms must soon decide how best to identify, measure and curb systemic risk in the banking system. Their initial reflex was to propose the break-up of banks that were seen as “too big to fail”. The shortcomings of this approach quickly became apparent, so the focus is now on a surcharge in the form of higher capital requirements, levied on those institutions deemed to be systemically significant. But this focus is too narrow, writes Alfredo Sáenz, chief executive of Santander.
John Kay: An economy of people who don’t sweat
Manufacturing fetishism is back, writes the FT columnist. It is easy to understand why. People have made large amounts of money for themselves – and occasionally have claimed to be creating large amounts of wealth for society – by exchanging bits of paper. But since the financial crisis of 2007-08, the public views this process with increased scepticism. The claim that real wealth can only be achieved by making things falls on receptive ears. You can’t have an economy of hairdressers, the saying goes.
BeyondBrics: Qu Hongbin on China’s rate rise
China’s decision to raise interest rates for the first time since 2007 surprised us given that GDP growth has been slowing and producer price inflation has shown signs of peaking. It shows that policymakers have been encouraged by some better-than-expected economic data in the last two months. They are no longer worried about a sharp slowdown in growth, giving them scope to respond to public concerns about negative real deposit rates, writes Qu Hongbin, Co-head of Asian economic research and chief China economist, HSBC.
Analysis: Energy – Cooling ambitions
It was supposed to be the showcase for 40 years of French nuclear expertise in one of the world’s biggest energy markets. The site had been chosen, the partner secured and the politicians won over. But when Constellation Energy of the US pulled out of the project to build a French-designed new-generation reactor on a site in Maryland, the country’s industry was left in shock, writes the FT’s Peggy Hollinger.
Lex on Brazil
What choice does Brazil have? The country currently suffers from being the world’s ultimate “risk-on” trade, with a currency that rises whenever traders happen to be feeling more optimistic (or, as on Tuesday, it falls when China scares the world by raising interest rates). Traders’ optimism also shows up in bullishness about Brazilian debt. If the credit default swaps market is to be believed, Brazil is now a much safer credit than its old coloniser Portugal, or even than the mighty Goldman Sachs notes Lex.
Market Insight: The strength of the euro is no accident
Earlier this year, the euro was sold as a proxy for a variety of ailments in the eurozone. However, as we argued then and now, the euro will not only prevail, but triumph over the US dollar in the medium to long-term. Let’s first debunk the myth that economic growth is necessary to have a strong currency – just look at Japan, writes Axel Merk, president and chief investment officer of Merk Investments and the author of “Sustainable Wealth”
Lex on China
At last, China has moved beyond the pea-shooters, Lex notes. Three increases to banks’ reserve requirement ratios since the beginning of the year had little obvious effect on prices; the inflation rate in August was 3.5 per cent, the fastest pace in 22 months. Bigger guns have now been deployed. For the first time since December 2007, the People’s Bank has increased the benchmark one-year deposit and lending rates by 0.25 percentage points, to 2.5 and 5.56 per cent respectively.