To give Germany the assurance it will need to agree to permanent burden-sharing, France needs to press on with reforms, and to do so boldly and visibly. It needs to reduce the size of the state, lower labour costs and so improve competitiveness and boost medium term growth prospects. Put bluntly, France needs to make its economy more German, and it needs to do so as quickly as possible. Read more >>

So far, so good. The commitment is most definitely there and the ambition has now been well-defined. Yet Japan is not yet out of deflationary trouble and, even in the event of the monetary equivalent of the Great Escape, it might still all end in disappointment. Read more >>

The reality is that, despite many commitments by national leaders, the capacity of nation-states to coordinate their responses has dwindled. Problems may have gone global but the politics of solving them are as local as ever. It is hard for governments to devote resources to problems beyond their national borders and to work with other nations to address these challenges – while painful problems at home remain unsolved. Read more >>

Tokyo should do what it can to rebuild trust with Beijing – not by giving ground on disputed East China Sea islands but by agreeing to put the issue on the shelf. Better to focus on restoring a relationship that can strengthen both economies – and, by extension, the domestic credibility of both governments. Read more >>

To the public, the implicit message was: “If you want any of this, I’m going to need a Democratic Congress next time.” When Republicans won control of Congress in 1994, Bill Clinton responded with a long list of small-bore initiatives: gun safety locks, school uniforms, cell phones for citizen patrols, and so forth. Mr Clinton wanted to show that he was still relevant and that he could still accomplish something even with a divided government. Mr Obama, by contrast, has little appetite for legislative hors d’oeuvres. His programme is designed to show not what he can do with a Republican Congress, but what he can’t do with one.  Read more >>

The speech this week by Britain’s Chancellor of the Exchequer on the “Reform of Banking” delivered a clear and forceful message: there is still energy and determination to reform the banking system, to make it healthier and safer. However, I am still left with a sense of unease about the direction that reform of the banking system is currently taking, both in the UK and also internationally. Read more >>

At a session on the crisis of confidence in business the moderator told us that after the initial presentations there would be plenty of time “for your interrogatives”. As the presenters talked movingly of the crucial need for businesses to communicate clearly and fully with their stakeholders, I had the leisure to ponder why the word “question” has become somehow too blunt and vulgar to use in polite company. Read more >>

The new Energy Bill that the government has introduced into parliament appears to pass the main tests that will ensure that the UK’s electricity system keeps the lights on while also reducing its impact on our climate. The basic principles are sound and there is a clear and encouraging sense of direction.

However, it still sends worrying signs that the internal bickering within the government over the future direction of energy policy may continue, undermining the confidence of potential investors in the power sector.  Read more >>

For the first time in a very long time, average Egyptians feel empowered and able to influence the destiny of a country that they now own. To outsiders, this comes across as loud and messy. And it is. But it is also an indication of Egypt’s new checks and balances and, more broadly, its bumpy journey towards a vibrant democracy. Read more >>

In any event, it is hard to see that Hollande’s reforms amount to a Copernican revolution, as Finance Minister Pierre Moscovici characterised it. French policy remains built on an assumption that the sun will continue to circle France, and that investors will continue to look benignly on the state’s 56 per cent share of the economy. Read more >>

Washington will defend its old friend. President Obama has made crystal clear that Israel’s operations in Gaza have his full support. Hillary Clinton, the US secretary of state, is expected to travel to the region today. Yet, the US is not the power looking to become more active in the Middle East in years to come. That country is China, a still-emerging power that has no cultural and ideological ties with Israel to protect as it looks to ensure the steady long-term flow of crude oil. Read more >>

If a central bank gives the impression that it stands ready to be the “only game in town”, it will end up being played. The other policy makers will have no incentive to take on their own responsibilities. This will ultimately drag the central bank into monetising the debt and lose its reputation. Read more >>

The minutes of the US Federal Reserve released on Wednesday are an essential read for those interested in a real time snapshot of the complexity of modern day central banking. They are also a cautionary note for all who believe that, acting on their own, today’s hyper-active central banks can engineer good economic outcomes. Read more >>

In a sense, this government has turned the country toward the left. It is thus reasonable to expect that the next government of Xi Jinping and Li Keqiang would go back to the reform track. The political report of the 18th congress did not mention the payroll reform, a mandate carried out by the current premier Wen Jiabao in the hope to correct China’s enlarging income inequality. Clearly, the next leadership does not want to continue the left-leaning policies of the current administration. Read more >>

Mistakes happen, even in great news organisations like the BBC. If they are bad enough, heads will probably have to roll. But what matters much more than the bloodletting is that lessons should be learnt from what went wrong, so that the error is not repeated. In the case of the most recent Newsnight affair, there are three main conclusions to be drawn.  Read more >>

Pakistan and Afghanistan look on the spectacular landslide re-election of Barack Obama for a second term as US president with some trepidation. Pakistan has just come out of a nine-month breakdown of all talks with the US, the worst state the two countries relationship has been in for 60 years. Pakistan thinks the US under Mr Obama has no strategy, while the US thinks Pakistan lies as it continues to harbour extremists. Mr Obama has frequently called Pakistan his biggest headache but he has been unable to come up with a satisfying painkiller. Read more >>

What bit the dust on Tuesday was the world of denial in which Republicans have immured themselves ever since the rise of the Tea Party in 2009. This is a universe in which the financial crash was caused by over-regulation; one in which, despite years of brutal drought and violent weather patterns, climate change is a liberal hoax; a country that can correct a vast structural deficit without ever raising additional revenue, while expanding the military budget beyond anything sought by the Pentagon; a belief system in which Mr Obama was the source of all economic ills rather than the steward of the most intractable crisis since the Depression. The mantra was that a business executive would, simply by virtue of that fact, effect a magical rejuvenation of the staggering American economy. Read more >>

Those who have participated in the backroom negotiations know that it is the US above all other countries that has resisted a clear and accountable financing mechanism. This is par for the course. The US these days resists almost all calls for sharing the financial burdens of sustainable development. As a striking example, the US official development assistance budget, though large in absolute terms, is the lowest share of GDP of any advanced economy, just 0.18 per cent of national income. Read more >>

I don’t know if these results are unprecedented, but they are certainly remarkable given that Mr Obama has now been president for almost four years. One would think that as the years have gone by memories of Mr Bush would have faded, and as Mr Obama’s policies were implemented that he would in essence “own” the economy. Read more >>

Through both its actions and what it refrained from doing, the Federal Reserve confirmed on Thursday that it is operating in policy purgatory: incapable of delivering the good economic outcomes it desires, yet unable to exit from an experimental policy stance that risks a widening array of collateral damage and unintended consequences. Read more >>

Mario Draghi’s bond buying plan has restored some control over interest rates in those parts of the eurozone which, it seemed, were in danger of becoming detached from the European Central Bank mothership. While many in the private sector harbour doubts, the ECB president has to be fully signed up to the euro’s survival. It can therefore justify purchasing assets that others might regard as untouchable. And with yesterday’s qualified ratification of the EU bailout programmes by the German constiutional court, the ECB can look back on an effective week. Read more >>

Regaining the confidence of the markets, once it has been lost, is extremely demanding. Regaining the confidence of the people is nearly impossible. Read more >>

The question at the core of America’s upcoming election isn’t merely whose story most voting Americans believe to be true – Mitt Romney’s claim he can pull it out of its stall because he’s a businessman who has turned around failing companies, or Barack Obama’s claim the economy is slowly mending from the worst downturn since the Great Depression because his approach is working.

If that were all there was to it, Friday’s report from the Bureau of Labor Statistics showing that the economy added only 96,000 jobs in August, relative to July’s respectable 160,000, would appear to bolster Mr Romney’s claim.

The deeper question is what should be done starting in January to boost a recovery that by anyone’s measure is still anaemic — and on this neither candidate has offered specifics. Read more >>

This year, the critical question in Europe has changed from whether policymakers could find the required policy instincts – they have – to whether they are moving fast enough to get ahead of the deleveraging by the private sector. By announcing a new conditional bond purchase program on Thursday, the European Central Bank took a major step to close what, at one time, seemed a near-insurmountable deficit in this race. It now needs the support of other policymaking bodies to fully eliminate the gap. Read more >>

Having recently declared that I am not likely to vote this year here in the Financial Times, I should have added that that is just how I feel now. I am certainly open to persuasion and my feet are not set in concrete. Read more >>

The choices of the size of government and how we pay for it are fundamental ones. They are also the ones we should be analysing and debating. Mr Romney has proposed a plan of fiscal consolidation and tax reform. Accomplishing it will require reducing the growth of federal spending and broadening the tax base. These changes will not be easy. Mr Obama proposes a larger government with explicitly higher taxes on high-income taxpayers but, by the arithmetic of higher spending levels, eventually higher taxes on all Americans. Read more >>

The expression of a dissenting opinion, especially when the opinion coincides with the view of a large part of the population of the respective country, generates the impression that discussions within the Governing Council are politicised, and that all members reflect national views. This may encourage pressures by national constituencies on the different ECB Council members to act on the basis of national interests, rather than the broader European ones. Read more >>

What should one make of the indicators coming out of Beijing that have regularly fallen short of market expectations; the most recent being an August PMI — further revised downwards this morning — showing manufacturing intentions hitting a nine-month low? Read more >>

There is great interest in the annual symposium of central bankers that starts tomorrow, and rightly so. Whether it is in Europe or the US, central bankers continue to carry most of the policymaking burden, and do so deep in experimental territory. There is no better place to discuss central banking than Jackson Hole, in Wyoming. Read more >>

Like Mr Romney, I have labored in the private equity vineyards and am familiar with many of the loopholes available to practitioners of that art. But Mr Romney unearthed crevices that I never knew existed and worked the tax code to greater advantage than I’ve ever heard of a private equity executive doing. Read more >>

These events will almost certainly make abortion a major issue in the presidential campaign. Clearly, this will be to the disadvantage of Republicans, who would prefer to continue their practice of appealing to anti-abortion extremists without endangering the votes of women and other members of the party likely to bolt if forced to accept the extremist position. Read more >>

European leaders should choose. If they really think they would be better off with Greece out they should offer it an exit package.  Read more >>

On the surface, it seems strange: Spain is offered large loans at below-market interest rates, coupled with significant additional support by a regional central bank willing to buy the country’s government debt on the secondary market. Yet the government is reluctant to officially request this help. Read more >>

This much you have to give Mitt Romney: by choosing Paul Ryan as his running mate he has made it impossible to avoid turning the presidential election into a genuine and long overdue debate on the nature, extent and responsibilities of American government. By doing that, whatever the outcome, he will have rendered a service to the American people, who deserve to be drawn into in an all-out contest of principles rather than the usual beauty-pageant cum pratfall-watch that consume most fall campaigns. Read more >>

Short of a targeted assassination or some other form of quick decapitation strike by the rebels, we have a worst-case scenario: A regime that can’t win but won’t quit—and an outside world willing to do little more than watch. Read more >>

The Fed’s attempt to overcome its policy dilemma has little chance of succeeding given the degree of political dysfunction in Washington. It is only a matter of weeks until, once again, Fed officials will feel compelled to act, and despite full knowledge that their measures will have limited effectiveness in delivering desired outcomes. Read more >>

A third of American presidents became president directly or indirectly through the vice presidency. It is a decision to which great thought should be given. Unfortunately, this is often not the case. Read more >>

Chinese companies seeking opportunities abroad are now primarily motivated by the search for resources with showcase examples in Africa and Latin America and a notable victim of politics being Cnooc’s pursuit of Unocal in the United States. That failure contrasts with the Cnooc’s attempted $15bn acquisition of Nexen’s oil and gas assets, which if approved by the Canadian Government could represent a landmark shift in how Canada views the US and China. Read more >>

This assumption is currently far from being satisfied. The euro area financial market, in all segments and maturities – including the very short term money markets – does not function properly, as banks deposit their excess liquidity with the central bank instead of lending to other banks. Cross-border banking flows have dried up. Households and firms across the union borrow at rates which depend more on the respective sovereign risk — just look at Spain, today, for example — than on their intrinsic creditworthiness. Interest rate decisions made by the central bank are not able to affect monetary conditions in the desired way in a large part of the euro area. Read more >>

Look for the Fed in the next few weeks to go further in revising down its job, growth and inflation forecasts for 2012. Given the institution’s dual mandate of price stability and maximum employment, this will inevitably raise expectations of additional policy activism.

Having exhausted long ago the effectiveness of traditional monetary policy tools, the Fed has no choice but to consider another mix of unconventional measures – specifically, additional purchases of securities, a lower interest rate on excess reserves, an even more aggressive communication policy, and enhanced access to the discount window. Read more >>

It is perfectly legitimate for Mr Lula to express his affection and admiration for Mr Chavez. Affects – like love – are blind and deserve respect. But it is not legitimate for Mr Lula to intervene in another country’s elections. That’s not what democrats do. And Mr Lula knows it. Or he should know it. Read more >>

We are now a year and a half into what many persist in calling the Arab Spring even though there is no end in sight to the turbulence and it is hardly certain to have a happy ending.

Nowhere is this more the case than in Egypt, the most populous and by many measures the most important country in the Middle East. Read more >>

Dismal jobs numbers reflect a fundamental lack of economic growth. Three full years have now passed since the trough of the recession. But, the US grew at only 1.9 per cent and an estimated 1.5 per cent for the first and second quarters of this year, respectively. For the full year, the consensus estimate is only 2 per cent. Such figures, well below the economy’s long run growth potential, are just not good enough to offset population growth and improve labour markets.

The obvious question is: why such a weak recovery? The answer traces back to the catastrophic 2008 credit market collapse. Namely, that the financial damage which it inflicted on consumers, lenders and homeowners has not been fully remedied. And, therefore, each of these three, broad sectors is struggling. Read more >>

The problem, then, is not so much that policy hasn’t worked but, instead, that we expect too much from it. Stagnation is a lot better than Depression but there are still plenty of people out there who believe that, with a bit more effort and a few more macroeconomic policy wheezes, the good times will return – despite the evidence of persistent “optimism bias” in official forecasts based on no more than blind faith in the potency of policy. Read more >>

Friday’s disappointing employment report out of the US is unsettling even for those of us that have consistently worried, and warned about the country’s weak job picture. It comes at a time when many people are understandably giving up hope of any major policy initiative out of Washington. And it confirms that this closely-watched release should be interpreted beyond its traditional role as a lagging indicator; these days, it is also a leading indicator for economic and political issues, both domestic and global. Read more >>

Francois Hollande has had the kind of month most politicians enjoy once in a lifetime. After an unexpectedly large victory in the Presidential election, his troops followed up with a remarkable triumph in the legislatives, delivering him an absolute majority in the Chambre des Deputes, without the need to compromise with the Left Front or the Communists. The Socialists now control the Chambre, the Senate, and almost all the regions. It is “La Vie en Rose” across the politicaal landscape, for the first time under the Fifth Republic. That may well, however, be as good as it gets, and he should bask in his success while it lasts. Because dark clouds are gathering, and the honeymoon is likely to be very short-lived. Read more >>

To stop the doom spiral that threatens the eurozone, European leaders must now repair the serious flaws in the design of monetary union that have been revealed by the crisis. At the very least, at this week’s summit of European leaders, they should recognise them, name them, agree on directions for reform, and set a timetable for decisions. Read more >>

The President has seldom been a risk taker; he has operated within the boundaries of the possible, avoiding postures that yield no results. But he and his campaign have cleverly recognised that Mr Romney’s slow-footedness and lack of imagination presents an opportunity for them to shine in contrast. They have reversed the usual dynamic of reelection campaigns, highlighting the challenger’s stodginess while making Mr Obama’s into a nimble incumbent. Read more >>

Pity Ben Bernanke and his colleagues on the Federal Reserve’s main policymaking committee. Once again they felt compelled to do something to be seen as countering a renewed slowing of the domestic economy that is compounded by a deepening European crisis and less buoyant emerging economies. But in continuing to act on its own, all the Fed will do is buy some time that will again be wasted by the country’s politicians. Meanwhile, collateral damage will mount, making the next policy steps even more excruciating. Read more >>

What happens next? In these dire circumstances a confrontation between the courts and the government over whether Mr Gilani should resign or not, in which ultimately the courts call upon the army to intervene on their behalf could easily lead to the country’s fifth martial law. Mr Zardari may be trying to avoid that by calling upon his party to show calm and quickly nominating a new Prime Minister from the PPP, who will easily get sworn in by Parliament because the PPP and its political allies hold the majority. Read more >>