By Ruona Agbroko
Today’s selection of interesting articles from around the web:
By Ruona Agbroko
Today’s selection of interesting articles from around the web:
Under normal circumstances, an American president running for re-election would do his utmost to avoid a row with the Israeli prime minister. But I wonder whether President Obama really will be damaged by his semi-public clash with Benjamin Netanyahu?
The conventional argument is that the Jewish vote is very important in two vital swing states, Florida and Ohio. The major American-Jewish organisations are passionate in their support for Israel and their concerns about Iran. So being perceived to be tough on Israel and weak on Iran is dangerous for Obama. Read more
Welcome to our rolling coverage of the eurozone crisis. German judges have ruled in favour of the eurozone’s rescue plans – albeit with conditions, Dutch voters are going to the polls and Brussels publishes plans for eurozone-wide banking supervision. By Tom Burgis, John Aglionby and Ruona Agbroko on the London newsdesk with contributions by FT correspondents around the world. All times are BST.
16.51 That’s a wrap for our live coverage of a big day in the eurozone. The message of the past week seems to be: all hail the ECB. See ft.com for more news and analysis through the evening. We leave you with a last summary of the market mood from Ralph Atkins, the FT’s capital markets editor.
Markets have reacted positively to today’s news but it had largely been priced-in – the party took place last week. Spanish 10 year bond yields which have fallen by some 200 basis points since late July dropped a further six points. Spanish two year bonds were down 10 basis points. Shares rose initially, but the FTSE Eurofirst 300 index is closing more or less unchanged at 1108.0.
16.26 In Frankfurt, FT bureau chief and eurozone economics guru Michael Steen has been assessing the impact for the ECB of moving into the murky world of banking regulation.
By taking on oversight of eurozone bank supervision, the ECB can at best hope to prevent situations arising in which a bank needs to be bailed out and its depositors repaid. But, as people inside the ECB have themselves acknowledged, supervision is very far removed from the intellectual world of setting interest rates.
“When you deal with banks, you deal with politics. Automatically,” one senior ECB official said. “It’s very dangerous.”
By Ruona Agbroko
Here are some of the articles that have grabbed our attention from today’s FT and elsewhere:
By Gideon Rachman
The European Central Bank has fired its magic bullet. By promising “unlimited” purchases of sovereign bonds, Mario Draghi, the ECB’s president, may have kept his pledge to do “whatever it takes” to save the euro. But in rescuing the currency, Mr Draghi’s magic bullet has badly wounded something even more important – democracy in Europe. Read more
Here is our pick of reading material from the weekend and today:
Did President Barack Obama’s Democratic convention speech convince the American electorate that he is worth another four years in the White House? Or has Mitt Romney begun to swing the race towards the Republicans? With the opinion polls at level pegging, Gideon Rachman is joined by John McDermott and Richard McGregor to discuss how the parties stand post convention.
This is what got us chatting today:
Welcome to our rolling coverage of the eurozone crisis. Mario Draghi has unveiled the ECB’s bond-buying scheme. By Tom Burgis, Ben Fenton, John Aglionby and Ruona Agbroko on the newsdesk in London and Anjli Raval in New York with contributions by FT correspondents around the world. All times are BST.
21.40 As we close up today’s blog, here is a last US markets round-up from Arash Massoudi in New York:
What a day for equities on Wall Street. US stocks jumped to their highest closing level since January 2008 as investors piled into risk assets.
The benchmark S&P 500 rose 2.04 per cent to finish at 1,432.12. All ten broad sector groups on the index moved more than 1 per cent higher. Financials were among the day’s top performers with bulge bracket banks enjoying hefty gains. Bank of America rose 5 per cent to $8.35, Citigroup climbed 4.5 per cent to $31.12 and JPMorgan Chase gained 4.3 per cent to $38.69. Broadly, the S&P 500 is up 13.9 per cent since the start of the year.
The Nasdaq closed at its highest level since December 2000.
If Twitter is any guide then Barack Obama may have extracted from Charlotte what Mitt Romney singularly failed to get last week from Tampa – momentum, or what George H. W. Bush once called “the big Mo”. Partly because of what the New York Times described as Michelle Obama’s “high definition” fashion power, the first night of the Democratic convention garnered 3m tweets against 4m for the entire three days in Tampa.
It went off the charts for Bill Clinton’s epic – some would say Fidel Castro-esque – 48-minute primetime address on Wednesday. If Tampa was “good enough” for Mr Romney, but nothing more, Charlotte looks likely to qualify as a boost for Mr Obama’s re-election chances.
But momentum, like many things in life, is not what it used to be. Even if Mr Obama does emerge from Charlotte with “small Mo”, the chances are that it will evaporate pretty quickly. His first hurdle comes on Friday morning with the publication of the jobs numbers for August. Read more
For market traders, economists, and data geeks alike, Friday is one of the highlights of the month – non-farm payrolls day.
For the uninitiated this is the release of data on US jobs growth over the previous month – more properly called the Employment Situation report - published by the Bureau of Labor Statistics, usually on the first Friday of the month following the data (i.e Friday’s new data will be for August).
It is undoubtedly the most eagerly awaited monthly data by world markets and has attained a totemic status, perhaps beyond its real importance. Morning trading volumes are slim in European markets on the day of release as they await the afternoon release time (8.30am Eastern Time in the US).
The World Bank has a new chief economist: Kaushik Basu, currently chief economic adviser to the Indian finance ministry and otherwise a professor at Cornell. He follows China’s Justin Lin, another high-profile appointment from the Brics.
With the Bank playing a smaller role than formerly in financing development, its views on economics also carry less weight. The flagship World Development Report used to host some fierce ideological disputes, one of which a decade ago caused another Cornell economist to quit as head of the report (and produce a remarkably illuminating paper describing the unnecessarily polarised debate within the discipline).
But the Bank still has the capacity to start debates, and one particular idea of Basu’s seems a likely candidate. He created a stir by publishing a proposal on the highly charged (particularly in India) question of corruption, suggesting that giving bribes be legalised and only bribe-takers prosecuted. There are sound incentive-based reasons for this – it encourages those asked for bribes to report them to the police – but one can imagine why it might be controversial to let bribers go free. Read more
There is no name for people whose job it is dissect the choreography of US conventions. It involves the kinds of skill Kremlinologists used to deploy.
Take the Democratic show in Charlotte this week. Any hardcore politico watching before prime time (between 10pm and 11pm eastern standard time), would see an unabashed celebration of liberal values.
Speaker after speaker defended gay marriage and abortion among other themes guaranteed to get an ovation. They even boasted about Barack Obama’s signature healthcare bill – a reform rarely highlighted in campaign events. Every time Mitt Romney’s name was cited, it seemed to be followed by “Swiss bank account”. According to Ted Strickland, the former governor of Ohio: “If Mitt was Santa Claus he’d fire the reindeer and outsource the elves.” Read more
by Ruona Agbroko
Mining has always been a dangerous business. But the tragedy that unfolded last month in Marikana, South Africa, threw a new and harsh light on the lives of those who spend their days toiling in the dark. On August 16, 34 workers were killed and 78 were wounded when police opened fire during clashes over pay at a platinum mine in Marikana, South Africa. The violence evoked painful memories of state brutality during the apartheid era, and prompted a debate around how much progress the country has made in tackling inequality. As South Africa produces about 80 per cent of the world’s platinum supply, the unrest continues to spook global commodities markets, pushing up platinum prices and dragging gold futures up too. Three weeks after the killings, crisis resolution talks have restarted, but will they succeed? And what will be the long term legacy of Marikana? Read more
The stories that grabbed our attention today:
One day somebody might write a dissertation on the role of Ferraris in the downfall of the Chinese Communist Party.
The scandal surrounding Bo Xilai featured lurid rumours about the high-living of his son, Bo Guagua – who was said to have driven around Beijing in a red Ferrari. Bo Guagua denied the story. But the notion that he spent his time roaring around in fast cars has stuck; and it played its part in the discrediting of his father.
Now another senior figure in the party has experienced a serious setback after a story has surfaced about a Ferrari-driving son. Like Bo Xilai, Ling Jihua was a high-flying official, who was expecting to be promoted in the coming all-important party reshuffle. But now he has missed out on his expected promotion; apparently, after his son was involved in a car crash, which was rumoured to feature a Ferrari. This story has a tragic element since, (rumour again), somebody died in the accident. Read more
For many FT readers, the guerrilla conflict that Colombia has suffered over the past 50 years, and the possibility that it may now end, probably seems like a sordid tropical war taking place in a corner of the world of little interest, and less importance. It is otherwise. In this corner of the Americas there is, in fact, a great and complex geopolitical game at work, in the same way that there was a great game at work in central Asia in the 19th century.
Only 12 years ago, Colombia was considered an “almost failed” state. That is why the United States – under an initiative begun under President Bill Clinton, and continued under President George W Bush and President Barack Obama – launched “Plan Colombia”: a program of military and development aid that constitutes one of the US’s biggest, and one of its most controversial, foreign policy initiatives. To date, the US has committed some $8bn under this plan, which is designed to combat insurgent guerrilla forces in Colombia and curb drug trafficking. Read more
In the interests of fairness, having looked at how the Republican platform addresses trade and globalisation (fizzy rhetoric but not many hostages to fortune), here’s how the Democratic platform measures up.
In summary: it doesn’t say much, and it doesn’t say much new. The overall tone is boilerplate mercantilist with a soupcon of social concern:
We have taken steps to open new markets to American products, while ensuring that other countries play by the same rules. President Obama signed into law new trade agreements with South Korea, Colombia, and Panama … but not before he strengthened these agreements on behalf of American workers and businesses. We remain committed to finding more markets for American-made goods—including using the Trans-Pacific Partnership between the United States and eight countries in the Asia-Pacific, one of the most dynamic regions in the world—while ensuring that workers’ rights and environmental standards are upheld, and fighting against unfair trade practices.
Every four years, Americans ask themselves: “Are you better off than you were before the presidential conventions?” To judge by the falling television ratings, the answer is not good.
This week in Charlotte, Barack Obama and his surrogates will be trying to fend off the Republican line that voters are worse off economically than when he took office. For most Americans, the answer is unfortunately “no” (median incomes have dropped almost five per cent since the recovery began in mid-2009).
The fault may lie more in the stars than with Mr Obama, who can plausibly argue that without his 2009 stimulus people would be far worse off. But his team will continue to respond with an unequivocal “yes” because in the game of politics if you admit any vulnerabilities then nobody – least of all the media – will let you change the subject. The formula is prebaked. Most voters feel worse off than they were four years ago. Yet Democrats are responding with a version of Groucho Marx’s: “Who do you believe? Me or your own lying eyes?” Little wonder the electorate is tuning out. Read more
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Welcome to the World blog. Gideon Rachman and colleagues offer commentary on international affairs.