Monthly Archives: March 2013

The European Central Bank – like the Bank of England – has decided against an immediate further loosening of monetary policy, but Mario Draghi, president, says some ECB policymakers favour cutting interest rates. Ralph Atkins, the FT’s capital markets editor, argues that with small businesses in the eurozone’s south facing a severe credit crunch and the stronger euro hitting eurozone exports, further action from the ECB may soon prove inevitable.

An investor appeared to make sensible decisions with her family’s savings – avoiding her home country of Greece, picking a safe haven and bonds rather than equities. But as FT Alphaville reporter Lisa Pollack explains, the Dutch bank that issued the bonds she chose was nationalised and all was lost – a consequence of new legislation on bank resolutions.

John Authers

Yet again, it is time to rain on the parade of the many people who are excited by the new high set on Tuesday by the Dow Jones Industrial Average. The rally in US stocks is impressive, however you measure it. But the Dow remains a fatally flawed index, and there is no reason why anyone should pay any attention to it. I said this as the Dow hit landmarks back in 2006 and 2007. Here goes again.

As an index of only 30 stocks, the Dow is not broadly diversified and is not representative of the US stock market as a whole (the S&P 500, by far the world’s most widely followed index, is more important for that purpose). Its stocks are not uniformly large enough to qualify as a “mega-cap” index (try the Russell Top 50 instead). Neither are they sufficiently dominated by industrials (despite the name) to qualify as an industrial index (the S&P 500 industrials sub-index might work better for that). Read more >>

James Mackintosh

Ireland’s recent history is a story of hopes dashed. Hope is now being stoked again, not least by those with the most interest in being positive: the Irish government and European lenders.

For Europe, Ireland is the poster child for austerity and must, just must, be recovering. Some positive jobs figures, showing the first growth in employment since 2008 (on which more later) have prompted what passes for elation in the depression-hit island.

European Commission President Jose Manuel Barroso led the cheering this week on a visit to Dublin, saying Ireland’s economy “is turning the corner”.

It shows that the programmes can work. It shows that there can be light at the end of the tunnel.

When there’s a determination we can achieve results. This is a message that’s valid for Ireland and other countries that are going through reforms.

Of course, he wants to believe this. Europe desperately needs a success story to set against the anti-austerity vote in Italy, yet more gloom in Greece and a worsening economic outlook for the eurozone.

But the bond markets agree, and have done for months. Irish 8-year yields (its benchmark) stand at 3.7 per cent, lower than Spain and Italy. The country has successfully returned to bond markets, and hopes to bring in a 10-year benchmark before the end of June. Even the inconclusive Italian elections prompted only a slight wobble.

So, have the markets become too optimistic? Below is a rather longer than usual read on Ireland and the wider eurozone issues. Read more >>