Pink picks

Posted by Izabella Kaminskaon Jun 15 08:04.

Comment, analysis and other offerings from Wednesday’s FT,

Martin Wolf: How China could yet fail like Japan
Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades. Today, people are yet more in awe of the achievements of China. Is it conceivable that this colossus could learn that spectacular success is a precursor of surprising failure, asks the FT’s Martin Wolf? The answer is: yes. The Chinese government is skilled. But it cannot walk on water. The water it is going to have to walk on over the next decade is going to be choppy. Watch out for the waves.

Bassma Kodmani: The road to ruin for the Assad regime
After a week of suppression and mass punishment, the Syrian army has regained control of the town of Jisr al-Shughour, writes Kodamani, executive director of the Arab Reform Initiative. It has been a brutal campaign in the classic mode of tyrants. But not withstanding this success, the world should be in no doubt that the oligarchy of Assad sons, cousins and buddies is seeing the rationale that has governed for years turn against them.

John Kay: Why banks’ ringfences risk being Chinese walls
The UK’s Independent Banking Commission has proposed that conglomerate banks in the UK should ringfence retail banking operations, writes the FT’s John Kay. The aim is to reduce the subsidy to large investment banks and the related risk exposures to taxpayers that arise from the belief that such banks are “too big to fail”. The effect of these proposals is that the taxpayer would still be expected to protect depositors, and perhaps other bank creditors, from the consequences of banks’ bad lending but would be spared the losses from the banks’ inept gambling. This would be reassuring for those who bailed out RBS and UBS, though little consolation for those who bailed out HBOS and Anglo-Irish Bank. The issue is how to make the ringfence effective.

Yukon Huang: The myth of China’s unbalanced growth
China’s announcement today that inflation in May hit a three-year high of 5.5 per cent and industrial expansion exceeded expectations will buttress those who see an inevitable economic crash coming. But even those who remain confident that a soft landing is possible seem to agree that China’s economic growth is unbalanced, with these imbalances widely blamed for trade surpluses with the west, says Huang, a senior associate at the Carnegie Endowment and a former country director for the World Bank in China. This view, however, is much exaggerated.

Lex on European commercial property
Sometimes a bad reputation is easy to shake, says Lex. Much of the blame for the financial crisis fell on the property sector. The share prices of the large listed funds fell by more than half from their prior peaks. But investors’ fears appear to have vanished. So far this year, property is Europe’s best performing sector. The FTSE Eurofirst 300 real estate index has risen 10 per cent in 2011, about 12 per cent ahead of the broader market.

Jacob Weisberg: America’s new politics of Republican sanity
Just a few weeks ago, Barack Obama’s re-election bid was beginning to look like an easy downhill jog. The daring raid that the President ordered delivered Osama bin Laden to the bottom of the Indian Ocean. Economic prospects looked brighter. Perhaps most helpfully, the Republican Party seemed to be indulging some kind of collective death-wish, putting Donald Trump first in the polls and Representative Paul Ryan’s budget cutting at the top of its legislative agenda, writes Weisberg, chairman of the Slate Group.

Editorial comment: Paying Greek debt
“Something will turn up.” Charles Dickens, the Victorian novelist, made the expression famous 160 years ago when he put it in the mouth of Wilkins Micawber, the perennial optimist of David Copperfield. At times it has seemed as if Micawberism has defined the response of European policymakers to the Greek debt emergency. But not much has turned up since May 2010, when the European Union and International Monetary Fund hastily arranged a three-year, €110bn loan for Greece.

John Plender: No time for Germany to go soft on banking reform
The European Banking Authority has made a promising start by incurring the wrath of BaFin, the German banking watchdog, which is worried that this year’s bank stress tests will be too tough on forms of hybrid capital used by German banks, writes the FT’s John Plender. Given the flabbiness of the earlier stress tests conducted by the EBA’s predecessor, the Committee of European Banking Supervisors, this looks like good news for financial stability in Europe.

This entry was posted by Izabella Kaminska on Wednesday, June 15th, 2011 at 8:04 and is filed under Uncategorised.

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