Comment, analysis and other offerings from Friday’s FT,
Jean-Claude Trichet, president of the European Central Bank, will now face criticism for raising rates too early. But the doves are wrong: a raise in rates could not have waited any longer, and more must now follow, writes Mayer, chief economist at Deutsche Bank. By reacting to the real risk of inflation, the ECB is sending a clear message: they will stick to their mandate and refuse to let the governments off the hook by softening the euro.
Gavyn Davies’ blog: ECB takes the right decision, with major risks
The ECB decision to raise its policy rate by 0.25 per cent to 1.25 per cent is a seminal moment for the global economy, the FT columnist argues. Not only is this the first of the leading central banks to raise rates, it is the first time for decades that Europe has initiated a rate rising cycle ahead of its counterparts at the Fed. I believe that it is wrong to view this as an isolated occurrence: economic fundamentals are far more supportive of rate rises in the eurozone than they are in the US, and that will remain the case for some time to come.
Martin Wolf: Nasty choices in a time of raising of rates
What Mervyn King, governor of the Bank of England, called the Nice (“non-inflationary, consistently expansionary”) decade has vanished, the FT columnist writes. In its place, we see what I would now call the Nasty (“nightmare of austere and stagflationary years”). Nasty times create nasty choices: should the monetary policy committee respond to the inflationary overshoot by tightening, despite economic fragility and fiscal austerity? Or should it continue to assume that the overshoot will end?
Bradley Fried: Mandela’s lessons in truth for City high-fliers
A comparison between attempts to exorcise the ghosts of apartheid-era South Africa and the worst excesses of the financial crisis may sound odd if not extreme, says Fried, managing partner of Grovepoint Capital. But there is no question that in the wake of the banking crisis the UK has undergone its own serious trauma, the aftershocks of which we are still feeling today. I fear that in the absence of a serious, objective process that addresses these last few awful years, we may be destined for a repeat of the banking crisis.
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Analysis: China and the US — access denied
Huawei’s 14-year love affair with America is on the rocks, the FT’s Kathrin Hille, Stephanie Kirchgaessner and Paul Taylor report. While the lessons from Silicon Valley have helped the Chinese company storm markets in Africa, the Middle East, Latin America and Europe – and elevated it to the global number two slot – it has hit a brick wall in the US. Huawei’s frustrated attempts to make serious inroads in the US add up to more than just a corporate saga. They reveal deepening mutual distrust between China and America.
Lex on Portugalling debt sustainability
Trouble repaying your debt? Here, borrow some more: how about €80bn? That sums up the eurozone’s response to member states running into trouble, Lex says. But eurozone policymakers should ask themselves: can Greece, Ireland and Portugal do everything expected of them and pay back every cent of their borrowings on schedule?
Management: 20 questions with Michael Spencer
How would your PA describe you? Motivated, open, direct, responsive and that I have a good sense of humour. I trust my colleagues and have high expectations. She would also say I am a typical Gemini, says Spencer, founder of the interdealer broker Icap.