Opinion

The Great Debate

from UK News:

Roger Bootle throws capitalism a life preserver

Problems sparked by the financial crisis have not gone away, but have been transferred to the public sector, economist Roger Bootle posits in his new book.In "The Trouble With Markets: Saving Capitalism from Itself" Bootle argues that in large measure, the underlying cause of the financial crisis was the result of an idea that markets work, and that governments do not."Despite the trillions of dollars lost, and despite the worries of millions of people, more than this -- much, much more -- is at stake," Bootle writes. "For this crisis has delivered the killer blow to an idea that has underpinned the structure of society, framed the political debate, and moulded international relations for decades."Bootle, director of Capital Economics and an economic advisor to business accountancy firm Deloitte, reflects on the pitfalls of the corporate system and puts forth his ideas on the future of capitalism.He discussed his book and his economic predictions with Reuters at his London office.

Getting ready for the dollar’s fall

Agnes Crane It just won’t go away, this needling worry about the U.S. dollar losing its coveted top-dog status.

No matter that there are plenty of reasonable arguments to support the dollar as the world reserve currency — namely there’s just no alternative — for perhaps decades to come.

Yet, in a world where once-rock-solid assumptions quickly turn to dust, investors should keep an eye on the dollar since changing perceptions are chipping away at its cherished status as currency to the world.

from The Great Debate UK:

Banks get mixed reviews from institutional shareholders

Brendan Woods- Brendan Wood is Chairman of Brendan Wood International, a global intelligence advisory firm. Recently, BWI published the World’s TopGun CEOs as ranked by 2500 institutional investors, which provides insight into the executives in whom shareholders feel the greatest confidence. The opinions expressed are his own. -

Brendan Wood International tracks the competitive position of investment bankers in global and regional markets. It also compiles the confidence rankings of hundreds of global shareholders in corporate investments, including those in the world’s leading banks. As of mid-2009, the Brendan Wood Investor Panel found a mixture of sharp criticism, but also some occasional strong praise for these “newly refurbished” financial behemoths.

First, the bad news: while all the banks have by now somewhat improved their situation from what it was earlier in the year – repaying $68 billion in government assistance, raising new equity, and carrying out a number of boardroom shuffles – their improving news and modest profit reports have not led to any total absolution from the Brendan Wood Panel for the worst falls from grace when the credit crisis exploded.

from The Great Debate UK:

Shareholder confidence vs. value investing

Brendan Woods- Brendan Wood is Chairman of Brendan Wood International, a global intelligence advisory firm. Recently, BWI published the World’s TopGun CEOs as ranked by 2500 institutional investors, which provides insight into the executives in whom shareholders feel the greatest confidence. The opinions expressed are his own. -

The Brendan Wood International's panel of 2500 institutional investors suffered through last year's markets believing value would somehow prevail. Those value investing "diehards" indeed died hard.

Conversely, those who correctly read the status of shareholder confidence and acted on it were spared. In short, shareholders that had lost confidence in the system abandoned their value criteria and sold good companies along with lesser ones.

from The Great Debate UK:

The stockmarkets: irrational nonchalance

Laurence Copeland- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -

Before the credit crunch, we had what I called a Prozac market. Investors on both sides of the Atlantic seemed to be in denial, as irrational as the people who end up in the bankruptcy court because for years they have kept on smiling while the bills piled up unopened.

Last Fall, reality caught up in the shape of the worst banking crisis in history, and we have now had to mortgage our earnings for decades to come in order to bail out the banks. Not surprisingly, by mid-March this year, the Dow had fallen by well over 50 percent from its peak level at the start of October 2007, and the FTSE by nearly as much. In the last three months, however, the FTSE has risen by 20 percent and the Dow by nearly 30 percent. What has happened to justify the recovery?

from The Great Debate UK:

Borrowing from the 1930s to solve the financial crisis

Alan Beattie, FT Economics Leader Writer.- Alan Beattie is world trade editor at the Financial Times, and author of the recent book “False Economy: A Surprising Economic History of the World”. He studied history at Oxford and economics at Cambridge, and worked as a Bank of England economist before joining the FT. The opinions expressed are his own. -

Those who forget history are condemned to listen to historians going on and on about it, a fate almost as bad as listening to economists doing the same. (And I write as a double agent with a foot in both camps attempting the delicate task of bringing the two together in my new book)

As we are perpetually being told, the current global financial crisis and recession is the kind of event that comes along only once or twice in a century. So now the immediacy of the panic has subsided, perhaps this is a good time to ask if we been applying the correct lessons from the past, and particularly from the 1930s, in dealing with this one.

Conceptual problems in commodity regulation

John Kemp Great Debate– John Kemp is a Reuters columnist. The views expressed are his own –

The financial crisis and wild gyrations in commodity prices have exposed deep conceptual flaws in the way academics and regulators think about commodity markets that will force a fundamental re-think.

In particular, they have demolished three key main planks on which the laissez-faire approach to regulation has rested:

from MediaFile:

Tax breaks (not bailouts) for newspapers

I ran a story on New Year's Eve about the opportunities and perils that could face struggling newspapers if they end up surviving because of government help. I opened the story with the tale of Connecticut state lawmakers and a state commissioner who are trying to find someone to buy two Journal Register-owned dailies and several weeklies that are going to be shut down in January if they can't be saved. From there, I explored the ramifications of government aid to newspapers.

The story got plenty of attention, though it looks like misinterpretation was rife. Many bloggers and news sources portrayed the Connecticut situation as a bailout, leading to plenty of ire directed at the lawmakers and the story. (Some conservative bloggers hinted that we deliberately omitted the lawmakers' affiliation. For the record -- they are Democrats. Also for the record: I had that in there, then deleted it, intending to put it somewhere else in the story. Then I plum forgot. No hidden agenda.)

So here's what I'm expecting next and here's what I still don't know or understand. I'm eager to hear from folks who care about the future of newspapers in the United States to add their thoughts in the comments section.

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