Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Nemesis chases Murdoch’s hubris
The game is up for Rupert Murdoch, says the FT’s Philip Stephens. The head of News Corp has held sway over Britain’s media industry for a generation. Prime ministers have feared and feted him. He has outwitted regulators and outgunned rivals. Now, suddenly, it is all unravelling. The media mogul has lost his touch. These things happen. News International, Mr Murdoch’s London-based company, is under criminal investigation for alleged telephone hacking and illegal payments to police officers. Scotland Yard has 50 officers on the case. Executives have been accused, under the protection of parliamentary privilege of perverting the course of justice. The allegations about the activities at the tabloid News of the World have stirred a wave of public revulsion. With advertisers threatening a boycott and the prime minister endorsing calls for a public inquiry, the company has announced the closure of the best-selling 168-year-old Sunday title. It will probably re-emerge as the Sunday Sun.
Samuel Brittan: It is time for Britain’s economy to buck up
The relative decline of the British economy in the century up to the late 1970s has been reversed. Since then, the UK has caught up with and even overtaken its principal trading partners. The previous two sentences are neither a typing mistake nor a daydream, writes FT commentator Samuel Brittan. They are the sober conclusions of the country’s leading quantitative historian, Prof Nicholas Crafts.* UK per capita output, which had fallen in 1979 to 86-90 per cent of German and French levels, was by 2007 1-6 per cent above theirs. There was still a gap compared with the US, but less than before.
Kemal Dervis: Sea, ships and solar can get Greece growing
For months the debate on Greece’s prospects, on the spending cuts and revenue measures to further reduce the budget deficit, and on the various approaches to the rollover of bonded debt has continued, writes Dervis, vice-president for global economics at the Brookings Institution. The French banks have put forward a complex proposal, involving a partial rollover with guarantee of principal and a link of the interest rate to future Greek gross domestic product growth. The European Union and the European Central Banks have constrained such proposals to forms that avoid declarations of “default” by the three major rating agencies, so that the financial engineering under discussion cannot do much to reduce the burden of debt. The kind of swap under consideration could gain time to allow more fundamental solutions to be worked out.
Lex on the ECB
We have done our job; now you do yours, says Lex. Jean-Claude Trichet did not use those words in his Thursday press conference, but that was the European Central Bank president’s message to eurozone governments. Mr Trichet will probably avoid having to address a collective government failure to deal with troubled peripheral sovereigns, but only because he leaves the ECB at the end of October.
The A-list: Laura Tyson – Only stimulus can tackle America’s jobless, wage-less recovery
The US economy has just marked two years of recovery from its worst recession since the Great Depression. But few Americans are celebrating; indeed, most believe that the economy is still in recession. No wonder, says Tyson, professor at the Haas School of Business at the University of California at Berkeley. Although gross domestic product has recovered to its pre-recession peak, employment has not.
Editorial comment: Italian austerity
Amid the economic turmoil of the past three years, the Italian government has done a remarkably good job of keeping its finances under control, says the FT. Despite a painful recession, it kept the country’s budget deficit to just 4.6 per cent of gross domestic product in 2010. It should fall to 3.9 per cent this year. The problem is that, despite this fiscal restraint, Italy is still sailing close to the wind. The country’s heavy debt burden – about 120 per cent of GDP – leaves it at the mercy of skittish bond markets. On Thursday, yields on 10-year government paper hit their highest since 2008. In this environment, the government must do everything in its power to preserve its hard-won fiscal credibility.
Gillian Tett: US state pension funds could learn from the north
America’s public sector has not produced many pleasant financial surprises this year. This week, however, one emerged: John Liu, New York City Comptroller, announced that in the year to June 30, the City’s pension fund produced returns of more than 20 per cent, raising total assets to $119bn, writes the FT’s Tett. Admittedly, that level is only slightly higher than in June 2008, or just before the financial crunch. But it does, at least, mean that the losses of 2008 and 2009 have been erased. Better still, Mr Liu is not the only comptroller with good news to share: this year a host of other public pension funds, like their corporate counterparts, have also produced large gains, as rising stock and bond prices have boosted asset values.
Analysis: Banks under strain again
Just as engineers at the turn of the century blamed the “wrong sort of walking”, so financial regulators eight years later blamed the wrong sort of banking for a global crisis whose effects are still felt, particularly in the eurozone, write the FT’s Patrick Jenkins and Brooke Masters.
Interactive graphic: The phone hacking scandal
This interactive timeline shows the key events in the News of the World phone hacking scandal.