Monthly Archives: December 2009

From the FT:

Three steps towards a safer financial system – Philip Purcell Read more

From the FT:

We must safeguard the Fed’s independence Mort Zuckerman, FT
European farce descends into Greek tragedy Wolfgang Münchau, FT Read more

From the FT:

Why it’s not the end for the City of London – Philip Augar Read more

From the FT:

One easy way to start a trade war – Editorial comment Read more

Here are some of the responses to Martin’s column on China’s exchange rate policy:

Jim O’Neill, chief economist at Goldman Sachs: Read more

Ingram Pinn illustration

A country’s exchange rate cannot be a concern for it alone, since it must also affect its trading partners. But this is particularly true for big economies. So, whether China likes it or not, its heavily managed exchange rate regime is a legitimate concern of its trading partners. Its exports are now larger than those of any other country. The liberty of insignificance has vanished. Read more

From the FT:
Tariffs can persuade Beijing to free the renminbi - Robert Aliber
The bonus points in Darling’s plans - Editorial comment
Japan’s fear of spending – Andrew Smithers

From elsewhere:
The importance of capital requirements – The Baseline Scenario
Alan Grayson asks Bernanke for answers in latest retrade of AIG deal – Naked Capitalism
Stiglitz: Too big to live – Economist’s View

By Wim Boonstra

Although the euro, which is approaching its 11th birthday, is close to its all-time high on the markets, the currency is not without its problems.

Early last year the euro temporarily lost ground against the US dollar because of a flight to safety, despite big problems in the US financial industry. Within the eurozone, interest rate differentials on public bonds of the various national sovereign issuers suddenly increased strongly. Although spreads have eased since early this year, the recent increase in Greek bond yields illustrates that the underlying problem is far from over. Read more

From the FT:
Bankers had cashed in before the music stopped FT
Business must champion low-carbon growth FT

From elsewhere:
Testing, testing: US healthcare
The New Yorker
Measuring the fiscal cost of not fixing the financial system The Baseline Scenario
The economics and politics of illegal immigration in the US Economist’s View
The difficult arithmetic of Chinese consumption Michael Pettis

From the FT:
Tokyo should not lose its nerve on the yen – Editorial
Trouble for the mighty repo – Gillian Tett
Commitee leans yes to Bernanke, no to a broad Fed - Krishna Guha via the Money Supply blog

From elsewhere:
Was Henry George right after all? - Economic Principals
Opaque bankers – Felix Salmon
A roadmap for more Fed easing – Free Exchange

Margaret Thatcher became prime minister of the UK on May 4 1979 and remained in office for more than 11 years. Her government reshaped the politics of the UK and, after the election of Ronald Reagan as president of the US in 1980, these two reshaped the world. But, in the aftermath of the biggest financial crisis since the 1930s, one that centred upon the US and UK, where the world’s two leading financial centres are located, what is left of the Thatcher revolution?

Mrs (now Lady) Thatcher entered office determined to reverse a national decline marked by high inflation, slow growth and trade union militancy. Her government emphasised monetary control, deregulation, particularly of the financial sector, flexible labour markets, and privatisation. The post-1997 Labour government did not overthrow these policies but built upon them. Labour increased public spending but not hugely: in 2007-08, expenditure was below where it had been under Mrs Thatcher until 1988-89. Labour also abandoned active fiscal policy, adopted inflation targeting, introduced central bank independence and welcomed the vigour of the financial sector. Read more

From the FT:
How to take moral hazard out of banking - Niall Ferguson and Laurence Kotlikoff
Greece’s economic burden – Analysis
New rules on liquidity could do more harm than good – José Maria Brandão de Brito

From elsewhere:
Questions for Bernanke – Simon Johnson via The New York Times
Anemic recovery - Econbrowser
Fed Watch: Bubbles and policy - Economist’s View

By Theo Vermaelen and Christian Wolff

In the recent financial crisis, taxpayers in many countries had to pick up the bills that resulted from governments bailing out banks. The idea that the government will save you if you make mistakes encourages excessive risk-taking. Bailouts have created popular resentment against bankers’ compensation, which makes it difficult to pay competitive salaries after a bank is rescued. So bailouts, which also add to the government deficits and crowd out other government spending plans, have many undesirable characteristics. Read more

From the FT:
Competitive devaluations threaten a trade war – Michael Pettis
Tactical taxation – Editorial comment
The real cost to business of government guarantees – John Kay

From elsewhere:
Double dip warning – NY Times, Paul Krugman
Feudal Lords Of Finance – Simon Johnson
The morals of bailouts - Felix Salmon
Going Beyond the Rules - iMFdirect

Ingram Pinn illustration

The Copenhagen summit on climate change is going to fall short. Does this matter? Yes and no: yes, because the case for action is so strong; no, because the likely agreement would be inadequate. Tackling climate change will be hard. It is crucial that we achieve the goal effectively and efficiently. The likely further delays should be used to achieve just that. Read more

From the FT:
Retread required: State of global trade governance – Analysis
Deflating the bubble – Charles Goodhart
Central banks vs. governments – Chris Giles on Money Supply blog

From elsewhere:
Systemic risk and Fannie Mae - Wall Street Journal
Hoarding international reserves: Lessons from the crisis – Joshua Aizenman
Things to come – Paul Krugman