Comment, analysis and other offerings from Tuesday’s FT,
Nick Butler: Nuclear power halted in its tracks
For the energy sector as a whole, events in Japan complicate an already divergent story, writes Butler, chairman of the King’s Policy Institute at King’s College London. Unless the current problems at Fukushima spiral out of control and undermine all confidence in nuclear power as a source of electricity generation, building plans in China and India are likely to remain in place. The bigger medium and long-term impact will come in Europe and America. For the nuclear industry, the next few days are crucial.
Michael Pettis: China must bridge the growth gap
Beijing must allow households to increase their share of the vast wealth generated in recent decades so that consumption, and not more investment, can be the next great driver of growth, writes Pettis, finance professor at Peking University and a senior associate at the Carnegie Endowment. But here’s the catch. Rebalancing requires that China reduce investment growth. The more bad investment China piles up, the more it must transfer wealth from households to keep those investments viable.
Gideon Rachman: Merkel’s nightmare — voters’ revenge
These days no European summit is complete without a new deal to solve the eurozone debt crisis, the FT columnist says. It is always interesting to see how long it takes for the markets to lose faith in the latest solution. The trouble is, to fend off the threat of political radicalisation in Germany, Ms Merkel is demanding austerity policies in countries such as Greece that pose a long-term risk to their political stability. European leaders do not know whether to be more frightened of the bond markets or of their own voters.
Lex on Bank of Japan money printing
Traditionally, there are three ways for countries to finance recovery from a natural disaster: cut other spending, raise revenues, or print money. Japan, because it has to, is taking the third way, writes Lex. But the tsunami may have made obvious what markets had long assumed. Japan will get out of this mess by monetising the deficit.
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Analysis: Banking — ahead in the clouds
When Barclays revealed last week that Bob Diamond was the UK’s highest-paid bank boss on a salary and bonus of £6.75m ($10.88m) for 2010, the only real surprise was that the figure was lower than predicted, FT reporters write. More than two years after the depths of the financial crisis, banks are grappling with profound regulatory changes to capital, market restrictions, and lines of business. But the model of paying extraordinarily high sums remains largely intact.
Inside finance: Blinkered approach to stress tests
If this year’s European banking exercise is a genuine stress test – not just an attempt to make amends for last year’s humiliation – why on earth are the European authorities focusing almost exclusively on eurozone sovereign risk, as officials admit in private?, asks the FT’s Patrick Jenkins. What kind of stress test ignores the macro-economic risk around commodity prices, particularly oil.
Japan Live Blog: Day Five
The FT continues to use Gideon Rachman’s blog to cover Japan’s earthquake, tapping our correspondents around the world. This morning — analysis of the worst-case scenario for the stricken Fukushima nuclear plant, explanation of radiation levels, and pictures from the tsunami area.
FT beyondbrics: Blackouts in Japan pose danger to chip supplies
In the immediate aftermath of the disastrous earthquake and tsunami which hit Japan last Friday, assumptions on the impact for the global manufacturing value chain were mostly guesswork. But that is changing now, the FT’s Kathrin Hillie reports. Spot prices of certain semiconductors have started soaring on fears of shortages caused by supply disruptions of certain components from Japan.