Financial Times News - Martin Wolf Column

Tax the windfall banking bonuses

Thu, 19 Nov 2009 22:40:25 GMT

Windfall taxes are a ghastly idea. They are a sop to prejudice, a burden on risk-taking and a form of arbitrary confiscation. No sensible person should support them. So why do I now find the idea of a windfall tax on banks so appealing? Well, this time, it really does look different.

Grim truths Obama should have told Hu

Tue, 17 Nov 2009 20:10:52 GMT

Barack Obama, president of the US, met Hu Jintao, president of the People's Republic of China, for a private meeting on Tuesday. The agenda was long, covering the world economy, climate change and non-proliferation of nuclear weapons. The last two are the most important, over the long run. But the first is the most urgent. If we do not achieve a healthy global economic recovery, hope of a co-operative relationship is likely to prove vain. Yet such a recovery is far from ensured. Worse, some of what is now happening - particularly China's decision to depreciate the renminbi along with the dollar - makes healthy recovery less likely.

Outside Edge: Big Nanny's plan for us all

Fri, 13 Nov 2009 22:50:33 GMT

Labour really "cares". It wishes to protect the vulnerable - particularly children and the elderly - from any abuse. It has duly set up a new body - known as the Independent Safeguarding Authority, under Sir Roger Singleton, to carry out checks on the criminal records of all those coming into contact with vulnerable people. Some criticise the government for being officious and interfering. Arguably, it has not gone far enough.

Victory in the cold war was a start as well as an ending

Tue, 10 Nov 2009 21:05:17 GMT

"A crisis is a strange way to celebrate an anniversary." This is the wry judgment of Erik Berglöf, chief economist of the European Bank for Reconstruction and Development.* Yet a crisis is what we see in countries that began the march from communism two decades ago. So, has capitalism failed, as communism did? In a word, "no". Some transition countries are in crisis; transition is not. The same judgment applies elsewhere: capitalist countries are in crisis; capitalism itself is not. But reform is necessary. The great virtue of liberal democracies and market economies is their ability to reform and adapt. They have shown these qualities before. They must do so once again.

New dynamics

Fri, 06 Nov 2009 16:50:40 GMT

The financial world is changing. We cannot yet know how the interaction of two great forces - the financial crisis of 2007-08 and the economic rise of emerging countries - will reshape the world of finance. But we can make some informed guesses.

Changing places

Fri, 06 Nov 2009 16:50:40 GMT

Five years ago, the world's 12 most valuable banks by market capitalisation were, in order: Citibank; Bank of America ; HSBC; JP Morgan Chase; Wells Fargo; Royal Bank of Scotland; UBS ; Barclays ; Wachovia; BNP Paribas; Bank of Tokyo Mitsubishi UFJ; and US Bancorp .

Time for a debate on immigration

Thu, 05 Nov 2009 20:30:24 GMT

Alan Johnson, home secretary, has recently admitted that the government has been "maladroit" in its handling of immigration. This is British understatement. It has been dishonest: it has pursued a radical policy, with profound consequences, on weak grounds, without serious debate. That is why the British National party is on BBC television.

Private behaviour will shape our path to fiscal stability

Tue, 03 Nov 2009 22:00:23 GMT

If we are to understand where we are, we must understand where we have been. This is particularly true if we are to escape from the huge fiscal deficits being run by many governments. These deficits are not the result of government stupidity; they are mainly a consequence of - and response to - private behaviour. We must not ignore this connection.

How mistaken ideas helped to bring the economy down

Tue, 27 Oct 2009 21:30:34 GMT

How did the world economy fall into such a deep hole? It is recovering, but painfully, and after a deep recession, despite unprecedented monetary and fiscal easing. Moreover, how likely is it that a balanced world economy will emerge from this force-feeding? The very fact that such drastic action has been necessary is terrifying. The fact that there is little room for a policy encore is yet more terrifying. Most terrifying of all is that this is not the first time in recent decades the world economy has had to be guided through a post-bubble collapse.

Why curbing finance is hard to do

Thu, 22 Oct 2009 20:35:25 GMT

About a month ago, I visited the aero engine factory of Rolls-Royce, in Derby. I was hugely impressed. Making jet engines able to work at extreme temperatures is an extraordinary achievement. Why does the financial industry not work this way? How might we bring the performance of finance close to that of other sophisticated businesses?

How to manage the gigantic financial cuckoo in our nest

Tue, 20 Oct 2009 20:55:20 GMT

A year ago, at the height of the financial panic, the world yearned for a profitable and confident financial sector. It now has what it wants, but hates it. As joblessness soars and the hopes of hundreds of millions of people are blighted, the financial sector's survivors are thriving. Even bonuses are back. Policymakers have made a Faustian bargain. Success feels like failure.

The rumours of the dollar's death are much exaggerated

Tue, 13 Oct 2009 22:20:23 GMT

It is the season of dollar panic. These panic-mongers are varied: gold bugs, fiscal hawks and many others agree that the dollar, the dominant currency since the first world war, is on its death bed. Hyperinflationary collapse is in store. Does this make sense? No. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.

Britain's phoney debate on slashing spending

Thu, 08 Oct 2009 23:35:27 GMT

"Our country is facing the largest budget deficit in our modern history." Thus did George Osborne, shadow chancellor of the exchequer in the Conservative party, start his speech at the party conference this week. He was right. The questions are what to do, how and when.

Finding a route to recovery and reform gets tough now

Tue, 06 Oct 2009 22:15:23 GMT

A year ago, the world economy fell into a deep recession. Now, happily, we see financial stabilisation and economic recovery. But we must not declare victory. The world could still make two mistakes: first, we might withdraw stimulus too soon; second, we might lose the opportunity for reform. We must avoid both dangers. That is the lesson I learnt at the annual meetings of the International Monetary Fund and World Bank in Istanbul. So where are we and where do we need to go? Think of this in terms of five 'r's: rescue; recovery; rebalancing; regulation; and reform.

Why narrow banking alone is not the answer to finance solution

Tue, 29 Sep 2009 21:15:24 GMT

The FT has a new series on the future of investment. But what, I wonder, is the future of finance itself? Who is confident that the financial system now emerging from the crisis is safer, or better at servicing the public's needs, than the one that went into it? The answer has to be: few people. The question is how to remedy this dire situation.

Why Cable's mansions tax is right

Thu, 24 Sep 2009 20:40:18 GMT

Has Vince Cable, much-praised Treasury spokesman of the Liberal Democrats and vindicated Jeremiah of the UK's property bubble, produced a "batty idea"? Even the FT thinks so. But the batty Lib Dem idea is not Mr Cable's "mansion tax", but replacing council tax with a local income tax. Taxation of property should be heavier, not lighter. But it should also be less regressive. That is why the mansion tax is the germ of an excellent idea.

The west no longer holds all the cards

Wed, 23 Sep 2009 17:40:22 GMT

Crises overturn established orders. The financial and economic crises of 2007-09 are no exception. The rise of the G20 to prominence is a watershed in history: for the first time since the industrial revolution, economic power is no longer concentrated in western hands.

Why China must do more to rebalance its economy

Tue, 22 Sep 2009 22:25:18 GMT

China has had a good crisis. That became obvious at the "summer Davos" of the World Economic Forum, in Dalian, less than two weeks ago. Chinese confidence was palpable. But so was anxiety. The giant has survived the shock. But its recovery is driven by a surge in credit and fixed investment. In the longer term, China needs to rebalance its economy, by increasing consumption. It is time for the Chinese to enjoy themselves more. How unpleasant can that be?

Do not learn the wrong lessons from Lehman's fall

Tue, 15 Sep 2009 19:25:17 GMT

"If the price of oil stabilises, I believe we can weather the financial crisis at limited cost in terms of real activity." Thus did Olivier Blanchard, newly appointed head of the International Monetary Fund's research department, describe the prospects ahead on September 2 2008. He was swiftly proved wrong.

Wheel of fortune turns as China outdoes west

Sun, 13 Sep 2009 15:35:15 GMT

China has emerged as the most significant winner from the global financial and economic crisis. At the end of 2008, many questioned whether China would achieve its growth target of 8 per cent in 2009. Who now dares to do so?

Turner is asking the right questions on finance

Thu, 10 Sep 2009 21:05:17 GMT

I like and admire Lord Turner, chairman of the UK's Financial Services Authority. He is more than an acute analyst. He is also brave. He showed that in his struggle with Gordon Brown, then chancellor of the exchequer, over plans for pension reform published in 2005. He is showing that again today in the lively debate he has initiated on the future of financial regulation.

Why it is still too early to start withdrawing stimulus

Tue, 08 Sep 2009 20:05:24 GMT

"Our unprecedented, decisive and concerted policy action has helped to arrest the decline and boost global demand." Thus did the finance ministers and central bank governors of the Group of 20 leading high-income and emerging economies pat themselves on the back over the weekend. They were right. The response to the crisis was both essential and successful. But it is still too early to declare victory.

Adapting to Britain's mediocre prospects

Thu, 16 Jul 2009 19:20:17 GMT

If the government of the UK wishes to find a suitable motto, it should adopt the advice of a great Scot. "Great Britain should," wrote Adam Smith in The Wealth of Nations, "...endeavour to accommodate her future views and designs to the real mediocrity of her circumstances." Smith offers wise counsel. The country's circumstances are more mediocre than imagined two years ago. The question is how to respond.

After the storm comes a hard climb

Tue, 14 Jul 2009 19:25:13 GMT

Is the world economy on its way out of the crisis? Has the world been learning the right lessons? The answer to both questions is: up to a point. We have done some of the right things and learnt some of the right lessons. But we have neither done enough nor learnt enough. Recovery will be slow and painful, with substantial danger of relapses.

How India must change if it is to be an advanced economy

Tue, 07 Jul 2009 17:50:12 GMT

What will the world economy - indeed, the world - look like after the financial crisis is over? Will this prove to be a mere blip or something more fundamental? Much of the answer will be provided by the performance of the two Asian giants, China and India. Rightly or wrongly, it is widely accepted that China will continue to grow very rapidly. But what is the likely future for India?