Comment, analysis, and other offerings from Thursday’s FT,
John Gapper: Don’t make Amazon a monopoly
Whoever thought up Amazon’s latest idea for squeezing other retailers – offering money off to people who scanned prices in US stores with its smartphone app and then bought the goods on Amazon – deserves an award for bad timing, the FT columnist writes. Amazon’s $5 offer is a textbook example of why the Supreme Court changed US antitrust laws four years ago to discourage free-riding by discounters. It has caused outrage among retailers and politicians at a time when Amazon needs all the political support it can get.
Richard Milne: Sarkozy plan to prop up sovereigns is worrying
European leaders appear to be repeating one of the original sins that led to the eurozone crisis in the first place: forcing banks and insurers to load up on government debt, the FT’s Milne says. French President Nicolas Sarkozy’s call for banks to use ECB liquidity to buy bonds is perhaps the most explicit sign yet that “financial repression” – the term coined by Carmen Reinhart for using captive domestic investors to keep interest rates low – is one of the main ways that western governments will try to get rid of their huge debt burdens.
Susan Schwab: It is right for Russia to join the WTO
Ministers are expected on Friday to put Russia on track to become a member of the World Trade Organisation in 2012. Have the delays not largely been due to Russia’s own actions, ask WTO members? The Russians too have doubts: will the benefits of membership offset the discomfort of WTO-imposed disciplines and accountability? Amid all the uncertainty on the Russian stage, does WTO membership still make sense? My answer is: yes, yes and yes, writes Schwab, US trade representative from 2006 to 2009.
The World: So, about that IMF €200bn…
It is not for the first time that late-night eurozone summit announcements are looking ragged in the daylight, the FT’s Alan Beattie reports. The €200bn the EU was supposed to contribute to the IMF (€150bn eurozone, €50bn non-eurozone) turns out not to include certain contributors (for example the UK, until the initiative turns into a global funding round, and Estonia). The global funding round won’t happen until the eurozone gets its act in gear, and the odd numbers that are dribbling out of capitals so far — maybe €10bn from Moscow, maybe €8bn-€10bn from Brasilia — are underwhelming.
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Analysis: Climate change — the great regrouping
Wealthy countries persuaded developing nations to join them in a legally binding pact to tackle climate change at the Durban conference – but not any time soon, the FT’s Pilita Clark reports. In return, they agreed to a second round of Kyoto emissions cuts but left the details vague. So the deal struck in the humid city on South Africa’s east coast staved off the political disaster of a collapse in the talks. That would have been even worse than the shambles of Copenhagen two years ago because it would in effect have killed the Kyoto treaty.
Lex on the US dollar
The pattern of late is familiar to the point of contempt: stocks go down, the US dollar goes up. Asset manager Factor Advisors notes that the 90-day correlation between the dollar and large-cap US stocks is negative 0.85 – the most extreme in a decade. Conversely, the correlation between the S&P 500 and the euro was positive 0.84. This is anything but surprising, given financial markets’ fixation on the ups and downs of the eurozone’s efforts to save its currency. However, underlying this short-term effect is a fundamental but under-appreciated factor – the impact of currency moves on reported corporate profits, Lex says.