As an economic commentator, I have learned to loathe and resent the Financial Times.  It is, of course, the only proper newspaper left, consistently well-written, full of letters from the Great and Good, and read internationally like no other UK rag.

But as someone hoping to contribute original work into the ongoing economic debate, each copy that falls on my doormat runs the risk of:

  • adding some really uncomfortable information that skewers some theory
  • overloading me with new comment on some vital area and
  • WORSE OF ALL – jumping the gun on some really important and original argument I was about to make

Today’s FT seems to threaten to do all three.

One aspect of the daily debate – spending cuts, their economic effect – I have covered in a longer post on Freethink. Check it out for vintage, Redwood lunacy.

Obama is clearly a protectionist.  What else could explain his slapping duties on tyre imports?

Gillian Tett presents more evidence of how the slump has led to less globalisation – this time, in terms of how policymakers approach problems.

This fragmentation impulse is not limited to emerging markets. The western world is littered with signs of subtle policy divergence as almost every public step that G7 leaders make towards policy co-ordination is matched by a stealthy shift in other direction.

Martin Wolf argues that there is nothing unsustainable about China’s growth.

Is this growth surge sustainable? In a word, yes. Inevitably, the torrid growth of bank credit and money is spilling over into asset prices, particularly equities. But there is little danger of excessive inflation in an economy with an appreciating currency, fully embedded in a world economy still threatened more by deflation than by inflation, at least in the near term. Moreover, the government is solvent. As premier Wen Jiabao noted in Dalian, “we . . . kept budget deficit and government debt at around 3 per cent and 20 per cent of the GDP respectively”. Should bad loans increase, China is well able to recapitalise its financial system.

The Tory housing plans – telling councils to put off making controversial plans – are under fire from Housebuilders.  Tory NIMBY’s prevent houses being built, exacerbating next housing boom.

ECB nets E900m from crisis lending. But the BOE will make far more from QE, unless there is outrageous inflation, in which case the Government will make much more, and the losses will be monetized and written off.  Win win? one I’ll examine at some point.

On the subject of Inflation, Clive Crook says it is never too early to fear it.  Thanks to Clive, I have just found myself forced to buy The Road Ahead for the Fed.   Cheers Clive.

The Tories hope to balance their books using one of their favourite previous techniques: selling off bank shares.  “Tell Sid“.  While you’re at it, tell George that there is probably a conflict between (a) the banks being safe, and responsible vehicles for capitalist investment and (b) their being highly profitable exciting investments that make the government a lot of money.   I wonder which way Osborne will go?

UPDATE: Chris Dillow has commented on the Tell Sid story.   He makes the interesting point that just by selling the banks, the Govt doesn’t improve its fiscal position: it simply exchanges a run of future cash flows for a present sum.  I suspect that in fact what would happen is that the Govt would make money because it would be getting paid for a bank paid like a private entity, ignoring social costs and maximizing profits,  while losing the cashflows from one that takes into account all the external-effects of its behaviour – i.e. takes some uncommercial decisions for the ‘greater good’.  But he is bang-on that introducing the mighty shareholder into the equation won’t make them any better run – shareholders have had f___all effect throughout this.  How would they?


2 thoughts on “The endlessly relevant FT

  1. Giles (did I call you simon first time round? Dunno why)

    I’ve reprised/brought up the post I think you’re referring to over at Though Cowards Flinch as a sort of attempt to answer the Q you raise above, tho in fact I’d drafted it before I saw this. Not sure it’s entirely successful – looks a bit clunky today, though it looked ok last night.

    I’ve downloaded your ‘A Balancing Act’ and will read with interest, though prob only at weekend. Then I’ll come back (probably) to your central Q on debt repayment or not.


  2. I plan to have a good look at your arithmetic/equations later when I have got over the lump of reading already accumulating. Hope you like A Balancing Act.

    By the way, I know why the Simon thing: I used Simon Johnson as shorthand for the Banks Capturing Politics idea. Incidentally, I heard John Kay speaking on that subject this morning – very convincing indeed. Yours, the willing-to-see-things-differently Wilkes

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