An essential read from Martin Wolf this Thursday on the manner in which corporate surpluses are contributing to the savings glut problem and causing all sorts of distributive chaos in the process.
So, whereas it used to be the sovereigns over-hoarding international claims and under-consuming/under-investing in their own infrastructure for the benefit of getting a leg up in the global hierarchal order, it’s now corporates over-hoarding retained earnings for the sake of protecting their dominant positions instead (retaining earning piles being different to explicit cash piles, which can be generated with debt not just profit). Read more
The FT’s Martin Wolf led a stellar panel on the global economy and the outlook for commodities featuring China expert Michael Pettis, BP’s group chief economist, Spencer Dale (formerly chief economist at the Bank of England), and Goldman’s chairman of global natural resources Brett Olsher.
As one might expect there was a difference of opinion on the panel about China’s future growth path. Goldman’s Olsher said he was confident that China would be able to maintain 6.5 per cent to 7 per cent growth in the near term, whereas Pettis suggested that even 3-4 per cent should be considered a successful adjustment. Read more
As Martin Wolf has eloquently argued this week, yes, there is a clear-cut and urgent need for state e-money issuance.
But the case for expanding the central bank balance-sheet to the population — something which can easily be done via the issuance of sovereign e-money — does not in our opinion necessarily demand the elimination of private money issuance along with it. More than likely both forms of money can co-exist quite healthily. Read more
With his latest column on the nature of money and credit in the modern monetary system, the FT’s Martin Wolf delves deeper into the murky depths of the “what is money” debate.
Anyone who has speculated about the significance and effects of quantitative easing in the last five years should probably have a read. Read more
Will the eurozone survive? If so, in what guise? If not, how will it be broken up and what might the consequences be?
These, among others, are some of the key questions currently occupying the minds of the financial great and good. Read more
Andy Haldane’s latest speech is a coherent, logically argued history of modern banking that ends with four intriguing policy ideas. The Bank of England’s Executive Director, Financial Stability, is always worth reading but his Wincott Annual Memorial Lecture, delivered on Monday evening, is the best introduction to his views on banks.
The FT’s Martin Wolf includes a cogent summary of Haldane’s proposals as part of his formal response to the speech, highlights of which are available on his blog. Read more
Ben Bernanke sent a strong signal that the US Federal Reserve is not planning to loosen monetary policy despite weaker economic data, reports the FT, saying that the recovery “appears to be proceeding at a moderate pace”. Mr Bernanke’s comments will dash market hopes that the Fed might launch a third round of quantitative easing – nicknamed QE3 – in response to weak numbers on growth and the labour market recently. Meanwhile, Martin Wolf is less phlegmatic. In his Wednesday column, the FT’s chief economics commentator argues that with demand still in the doldrums, further stimulus could be warranted. Barack Obama appears sympathetic to such a view: the FT reports that the US President would consider extending December’s stimulative measures if the recovery continued to stall.
For the commute home, where your kids are tagging embarrassing pictures of you on Facebook,
- The Economist halts production for a month to let its readers catch up. (Or so says America’s finest news source.) Read more
Who’s more opinionated? Tough call, when its Morgan Stanley’s Stephen Wolf up against the FT’s Martin “Two Brains” Wolf on the small matter of US-China relations and the outlook for China’s currency policy. Bloomberg filmed the pair, who spoke — at length — at an event in New York on May 25. The president of the National Committee on US-China Relations, Stephen Orlins, moderated the 90-minute discussion. See FT Alphaville for a link to the video. Read more
This one slipped us by over Easter: Martin Wolf has a new online home on FT.com – Martin Wolf’s Exchange.
Martin promises to post, on a fortnightly basis, on a subject that’s he currently thinking about and to invite wider discussion. Read more
The FT columnist has weighed into the debate over whether big banks should be broken up. Extract:
“The governor of the Bank of England is one of the few public officials to have grasped that the primary purpose of regulation is to protect the public, both as taxpayers and users of financial services, and not to promote the interests of the financial services industry. When the next crisis hits, and it will, that frustrated public is likely to turn, not just on politicians who have been negligently lavish with public funds, or on bankers, but on the market system. What is at stake now may not just be the future of finance, but the future of capitalism.”
There have been economic spats before (Rogoff versus Stiglitz comes to mind), but a new one is definitely brewing in the shape of the tit-for-tat currently raging between Harvard’s Niall Ferguson and Princetonian Nobel Laureate Paul Krugman, over the issue of fiscal deficits and rising bond yields.
The central premise: are they deadly, tolerable, or even positive? Read more
It’s a while since we’ve heard from The Epicurean Dealmaker. Maybe he’s retired, hurt.
But this should fix that – a snap blog at FT.com to debate the vexed issue of bankers’ bonuses. Read more
The Fed has of course taken on much of Bear Stearn’s credit risk, and last week expanded its emergency lending to primary dealers. So what will Wolf and the economic pundits make of the financial regulation revamp, to be announced later today – which proposes enhanced supervision of investment banks on a temporary, rather than permanent basis?