Comment, analysis, and other offerings from Friday’s FT,
Politicians in Greece and Italy have failed. Now it’s the technocrats’ turn. Having been pummeled by the bond markets and disgraced by their own intrigues, the Greek political class has turned to Lucas Papademos while the Italians have turned to Mario Monti. Both are skilled and reputable economists, but a sceptic can be forgiven for asking: why should ordinary citizens trust them?, writes Ignatieff, a former Canadian politician now teaching at the University of Toronto. Technocrats are supposed to have the mysterious authority of being above politics. But there is no “above politics”. The crisis is political all the way through.
Guido Westerwelle: Germany is not for turning on how to save the euro
Sound budgeting is not a German idée fixe based on our historical experience of hyperinflation, the German foreign minister writes. It is in the interest of Europe as a whole. Voluntary commitments and debt brakes are necessary, but insufficient. If we want to turn things around irreversibly, we will not be able to avoid amending the treaties.
Martin Jacomb: Now is the time to go back to square one
The implications of a single currency were understood by the leaders who formed the EU. The mistake was the euro’s premature introduction, writes Jacomb, chairman of Share plc and former chancellor of the University of Buckingham. The attempt to force political union before economic convergence and before populations were ready for it, has turned the euro from being an incentive to convergence, as was intended, into a powerful centrifugal force. The remedy may seem unpalatable but it is time to revert to national currencies.
Samuel Brittan: Five simple steps to curing Britain’s new depression
The shock rise in UK unemployment in October cannot be dismissed by the usual warnings about not going by one month’s figures, the FT columnist says. The size of the jump may be exceptionally large, but it marks an accentuation of a trend that has been evident since April. Previously surprise had been expressed at how modest an effect the sluggishness of the economy had had on unemployment. That surprise is rapidly disappearing.
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Analysis: Reconstructing Libya
Libya may have thrown off the shackles of Muammer Gaddafi’s 42-year rule – but the dictator has left a devastating legacy, the FT’s Borzou Daragahi reports. The country remains in many respects an economic backwater, with long-neglected infrastructure damaged further by this year’s vicious civil war, not least in important cities such as Tripoli and Benghazi. Production levels in the crucial oil sector have dwindled to 40 per cent.
Lex on UBS
When Sergio Ermotti, the new UBS chief executive, delivered his much-trailed strategy update on Thursday, investors might have guessed that it would be an anticlimax, says Lex. A dramatic strategy shift is asking too much of a Swiss bank. But Mr Ermotti at least confirmed what investors expected: that UBS will be completely centred on its wealth management business and its investment bank will be scaled back.
Gillian Tett: Greek bond losses put role of CDS in doubt
These days, it is becoming less clear whether sovereign CDS contracts really offer effective “insurance” against default, the FT’s Tett writes. And that in turn raises a more unnerving question: if the exposures of the large European banks were measured in gross, not net, terms, just how much more vulnerable might they be to sovereign shocks? Or, to put it another way, could the problems now hanging over eurozone banks and bond markets be about to get worse, due to the state of the sovereign CDS sector?
The World: Armageddon talk in Brussels
Yesterday evening I went to a dinner in Brussels, featuring a group of senior politicians and diplomats, the FT’s Gideon Rachman says. These dinners can be dull. But not this one. The sense of crisis in Europe made for an extraordinary conversation. The official speeches were not that exciting – featuring the usual, “we’re living in tough times, but I’m confident we’ll see this through type of rhetoric”. But it was the talk around the tables that was so striking