Comment, analysis and other offerings from Monday’s FT,
The A-list: George Soros – True Europeans now need a ‘plan B’
The European Union was brought into existence by what Karl Popper called “piecemeal social engineering”. A group of farsighted statesmen, inspired by the vision of a United States of Europe, recognised that this ideal could be approached only gradually, by setting limited objectives, mobilising the political will needed to achieve them, and concluding treaties that required states to surrender only as much sovereignty as they could bear politically, writes George Soros, chairman of Soros Fund Management. That is how the postwar Coal and Steel Community was transformed into the EU – one step at a time, understanding that each step was incomplete and would require further steps in due course.
Wolfgang Münchau: Don’t blame Moody’s for a messy euro crisis
You can always gauge the temperature of the eurozone crisis by the blame game, writes the FT commentator. Last week, the cacophony briefly subsided when everybody who mattered accused the rating agencies of engaging in an anti-European conspiracy. This was the day after Moody’s downgraded Portugal to junk. The fury of the reaction tells me that the process is in real trouble, once again. The most interesting aspect of Moody’s rating was not the downgrade itself, but the reasoning. Moody’s expects that Portugal, like Greece, will need another loan. Moody’s also expects that the politics will be just as messy. Will not the Germans again seek private-sector participation as a condition? Of course they will. Moody’s concluded, rightly in my view, that the messy European Union politics constitutes a reason for concern. Having observed this crisis from the start, I agree. This is as much a crisis of policy co-ordination as it is a debt crisis.
Clive Crook: Obama’s failed debt ceiling gamble
Amid disturbing signs that the US recovery has stalled, President Barack Obama took a huge gamble in his approach to the debt-ceiling talks last week, writes FT commentator Clive Crook. Believing he had an understanding with John Boehner, leader of the Republicans in the House of Representatives, he declared he wanted a $4,000bn “grand bargain” on the budget. Barely a day later, Mr Boehner said the deal was off. By Sunday evening, with talks about to resume at the White House, the president’s gambit appeared to have failed.
Alastair Campbell: A chance to escape Murdoch’s embrace
It is not easy to do what Ed Miliband, Labour leader, did last week, making himself an enemy of some of the media’s most powerful forces. He was right that Labour got too close to News International, writes Alastair Campbell, former journalist and director of Downing Street communications under Tony Blair. But he was also right that, given the media bias against us, he knew why we tried to level the playing field.
Editorial comment: Of economic drivers and navigators
Economic policymakers, like drivers, face two quite different types of challenges: choosing the correct route, and keeping the car on the road whether or not it is the right one, says the FT. In the rough second quarter, economies – and those who manage them – struggled to stay the course against the headwinds. When these subside it may be time for a new look at the road map. Across the rich world, economic activity has been flagging. Wobbles are even appearing in emerging markets. Despite continued strong growth, more and more people feel that not all is right.
Lex on China’s shadow banks
It was not the shadow banks that brought the US economy to its knees, says Lex. The deleveraging of all manner of non-bank investment conduits, vehicles and structures certainly magnified the impact of falling house prices, and globalised the crisis. But the core of the problem was the same as in every other banking crisis: sloppy underwriting at mainstream lenders. For the US, read China.
Editorial comment: Swaps bickering
Networks of derivatives contracts are the most potent vector of contagion between financial institution, and badly regulated derivatives remain a deep source of systemic financial risk, says the FT. Reports that the world’s regulators are falling out over how to control markets in derivatives are very bad news. A derivative is not a weapon of mass destruction, as investor Warren Buffett quipped, but more like dynamite: extraordinarily powerful and useful, but you do not want to have it lying around without control over who uses it and how.
Mark Malloch-Brown: Spend and lend wisely to restart the Arab spring
There is a dimension to the Arab uprisings which has been little noticed although it is arguably a crucial variable, writes Mark Malloch-Brown, chairman for Europe, Middle East and Africa at FTI Consulting, and former UN deputy secretary-general. Economics may change the final outcomes across the region. In Libya, there is a real issue of who runs out of money first. In Tunisia and Egypt, the reforms both countries need most – aggressive disposals of state enterprises, economic liberalisation and the inflow of foreign investment – have all been discredited. Yet elsewhere the economic noose may bring better news. The UN Security Council could not bring itself to condemn, let alone sanction, Syria. But the regime is running out of money, and will need loans if it is to survive.
