Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Don’t boot out tomorrow’s Nobels
With the award of the Nobel for economics to Thomas Sargent and Christopher Sims this week, the US once again took the lion’s share of the annual prizes, writes Gapper. Its citizens gained seven awards (including the not-strictly-Nobel economics prize) and its grip on the Nobels shows little sign of weakening. In the long run, it is bound to. The US is not trying hard enough to preserve one of its best claims to American exceptionalism.
Wolfgang Münchau: The fallacy of the ‘big bazooka’
The world wants the eurozone to act, to do something that impresses the financial markets, a ”big bazooka”, as David Cameron puts it, the FT columnist writes. Among the recommendations generally given are an increase in the size of the European financial stability facility; a debt-monetisation programme by the European Central Bank; standby arrangements by the International Monetary Fund; bank recapitalisation, and a once-and-for-all resolution to the Greek debt problem. No matter what you do, do it now, and do it big, eurozone leaders have been told. This is unhelpful advice, and if followed, it would make the crisis worse.
Charles Grant: Eurozone ‘outs’ must stick up for the single market
One of the European Union’s greatest achievements has been to scrap non-tariff barriers to trade in goods and services, writes Grant, director of the Centre for European Reform. But the “single market” remains incomplete and faces new threats. The European commissioner responsible for it is blocking further liberalisation of services – even though the Commission as a whole is economically liberal. The biggest danger is that the euro crisis will lead to a two-speed Europe that fractures the single market.
Analysis: US homeowners yet to feel boost from ‘Twist’
Almost a month after from the Federal Reserve’s launch of “Operation Twist”, the latest emergency monetary easing aimed at reviving the US economy, and hopes of a big boost for homeowners have yet to materialise, write the FT’s Michael Mackenzie, Nicole Bullock and Shahien Nasiripour. Borrowing costs have fallen. The key 30-year mortgage rate has dropped below 4 per cent for the first time on record, according to Freddie Mac, the state-backed US mortgage group. But that move has lagged behind a much bigger decline in yields on benchmark 10-year Treasury bonds in recent months.
David Pilling: Why Americans should learn to love the renminbi
Until recently, few workers in America, Europe or Japan spent much time worrying about why they earned 10, 20 or even 30 times what a Chinese worker did, the FT’s Pilling writes. What was it that allowed, say, someone stacking boxes in a US factory to earn multiples of the wage earned by a Vietnamese or Mexican worker? As hundreds of millions of workers in the emerging economies, especially within Asia, have entered the global workforce, they have begun the slow process of levelling the playing field. Developing countries are improving their standards of education, infrastructure and technology, even if their legal and political institutions still lag behind.
Editorial: Eradicate the fear in Europe’s banks
As investors again fear to tread amid the holes of unknown depth that riddle Europe’s banking system, policymakers have finally regained their resolve. Better late than never: the efforts now being made to probe and fill the capital needs of banks are welcome news.
Lex: Hewlett-Packard’s Plan A
Meg Whitman’s career at Hewlett-Packard will be a series of hard decisions, says Lex. The first will be whether to spin off the personal computer business, which generates a quarter of HP’s revenues and a sixth of operating profit. Ms Whitman’s predecessor, Léo Apotheker, liked the idea; Ms Whitman has promised a “hard look” before deciding. Without PCs, HP becomes much easier to digest.