Comment, analysis, and other offerings from Friday’s FT,
The world economy is in the midst of the second slowdown of this recovery from the financial crisis of 2008 and 2009, writes the US Treasury secretary. The question is not whether we have the economic or financial capacity to act to strengthen growth, but whether we have the political ability to do the right things. The shocks behind the slowdown – oil prices, Japan’s disaster, the crisis in Europe – are severe enough to have been dangerous even if they had happened during a global boom. They are more dangerous now because they hit a world still healing from financial crisis.
Stephen King: I can’t hear the markets but I can smell fear
I accepted Martin Wolf’s invitation to “listen to what bond markets are telling us,” King, chief economist at HSBC, says. Unfortunately, I was unable to detect the call to “borrow and spend, please” so audible to Mr Wolf. I took a deep breath and immediately realised what was going on. I might not have been able to hear anything. But I could certainly smell something. I could smell fear.
Gillian Tett: Beware whacking commodities speculators
Once upon a time, economists who crunched the geeky details of commodity prices inhabited a relatively sedate world. No longer, the FT columnist writes. Over the next month, the Commodity Futures Trading Commission is due to impose new curbs on the commodities markets, as part of a wider bout of financial reform. And as the deadline approaches, the sense of intellectual discord and anger is rising.
Samuel Brittan: Where an Augustinian fiscal policy falls short
St Augustine is known for saying: “Make me continent and chaste, but not yet.” Nearly all the world’s finance ministers stress that they want to balance their budgets, but over a period of years, the FT columnist says. The difference is between those like the UK’s George Osborne and US Republicans who want to go fairly fast and those like the International Monetary Fund’s Christine Lagarde and the UK shadow chancellor Ed Balls who want in today’s depressed conditions to take longer.
Editorial Comment: Slowdown leaves the ECB unmoved
It was a spirited president of the European Central Bank who gave his last but one press conference on Thursday. Jean-Claude Trichet hit some valedictory notes defending the ECB’s record on inflation and its handling of the crisis. Nevertheless, Mr Trichet and his colleagues compounded a mistake by leaving in place rates they wrongly raised in April and July.
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Analysis: Libya’s sovereign wealth fund — a spent force
Under Gaddafi’s rule, the Libyan Investment Authority sought to project an image of a savvy, modern sovereign wealth fund run by the best and brightest of a country intent on reform, report the FT’s Lina Saigol and Cynthia O’Murchu. In multiple interviews, former directors, bankers and Libyan officials who worked closely with the fund allege numerous cases of mismanagement. They say the LIA quickly became home to an opaque and often convoluted network of investments run by a tight-knit circle.
Inside Business: Milan bank case to test Draghi’s effectiveness
As he prepares to take up his new job in November, Mario Draghi, the European Central Bank governor-elect, could be forgiven for nervously counting down the days before he can escape Rome’s ancient and modern ruin, the FT’s Paul Betts reports. And although he can proudly point to the fact that no Italian bank has so far succumbed to the crisis or even failed so much as a stress test under his watch, there could still be problems ahead. Take for example the case of Banca Popolare di Milano.
Lex on UK retailers
Buy one, get one free? The UK retail sector has been creative in attracting customers since the crisis. But driving footfall in stores or clicks online is not the same as luring investors, as the near 20 per cent decline in the FTSE 100 general retailer index since June indicates, Lex says.
FT Brussels Blog: Barnier tactfully delays bank bail-in plans
The timing was hardly ideal. Just as funding seized up for some of Europe’s banks, Brussels was gearing up this fortnight to tell senior bondholders to shoulder the burden of rescuing stricken financial institutions, the FT’s Alex Barker reports. Whatever the merits of the “bail-in” proposals — and analysts say there are many — it is not exactly a palliative for panicky investors. Little wonder the plan has been shelved, at least for a month or two.