The UK election is dominated by the ramifications of no political party gaining a parliamentary majority and the cross-party co-operation that might follow. A different form of future co-operation was raised by Sir John Gieve, former deputy governor of the Bank of England, today – that between the Bank of England and the Treasury.
I am deeply indebted to my colleague James Mackintosh, the FT’s investment editor, who heard Sir John this morning. It certainly makes interesting reading and goes a lot further than Sir John went in his final speech as deputy governor last year. Read more
… Remarkably, the way that the eurozone authorities have managed the Greek crisis has pulled off the difficult trick of incurring the stigma cost of the IMF’s presence while squandering much of the benefit. The unhappy combination has arisen from the eurozone’s mulish insistence in taking charge despite an iterative, not to say convoluted, decision-making process… Read more
Back from a trip to the US, Jean-Claude Trichet, European Central Bank president, hurries on Wednesday to Berlin, where he will brief German parliamentarians on Greece. Here is what he might want to say – but probably will not.
Sehr geehrte Damen und Herren Abgeordnete,
Forgive me if I switch to English. My German is much improved, but not yet to an extent where I can speak it on such an occasion – even though scenes of Wagner’s Götterdämmerung come to my mind when I think how we Europeans have handled the Greek crisis in recent weeks.
Let’s be frank. We have repeatedly got it wrong. As my governing council colleague Yves Mersch, Luxembourg’s central bank governor, told Belgian newspaper L’Echo in an interview on Tuesday: Greece has become ”a lesson in what not to do.” We have failed to react quickly and with sufficient conviction, and allowed financial market pressures to get out of hand. Greece has become a much bigger problem as a result – for the whole eurozone.
The sequence of failures was set out in a candid speech earlier this month by another of my colleagues, Lorenzo Bini Smaghi, an ECB executive board member. He highlighted the dangers of underestimating the self-reinforcing nature of financial markets. “Vague statements that some event, such as a default, will not occur, are not sufficient to calm the markets. Concrete actions are needed,” he concluded then.
At the ECB, we know the importance of acting fast – as I like to remind audiences. If the ECB had not Read more
I am at the Institute for Fiscal Studies launch of their election analysis. It is a pretty dismal affair; not because the work is bad, but because all three main parties’ plans are woeful compared with the necessary repair job for the public finances and the tax system.
The differences between the parties on the public finances is small, IFS says and, as the FT demonstrated yesterday, all parties’ “public spending plans are particularly vague”. The big row over the speed of fiscal tightening makes “a relatively modest difference to the long term outlook for government borrowing and debt”. Read more
Reining in property speculation is not enough to combat inflation. An advisor to the Chinese central bank has said there is a fundamental problem with the PBoC mandate.
Zhou Qiren said there was “conflict” between the bank’s forex intervention and its job to manage liquidity and control inflation, reports Bloomberg. Speaking of the record levels of lending in 2009, he said: “Unless there are very forceful measures, that large amount of money will flow through the market. Even if you put lid on in one place, it will emerge somewhere else.” Read more