The Great Debate

The uncharted waters of government ownership

June 10, 2009

lou-lataif– Louis E. Lataif, a former president of Ford Motors of Europe, is dean of the Boston University School of Management. The views expressed are his own. —

Diamond hangs on to Barclays crown jewel

June 8, 2009

Margaret DoyleYou have to hand it to Barclays. The reported sale of BGI, its fund management arm, to BlackRock  for $13 billion is probably the best way that the bank could bolster its capital ratio.

Bernanke’s deficit warning helps Obama

June 4, 2009

obama– James Pethokoukis is a Reuters columnist. The views expressed are his own –

This time, CIC raises Morgan Stanley stake

June 3, 2009

Wei Gu– Wei Gu is a Reuters columnist. The opinions expressed are her own –

No U.S. bounce from China’s safety net

June 3, 2009

Christopher Swann– Christopher Swann is a Reuters columnist. The views expressed are his own –

from The Great Debate UK:

A reality check from Standard & Poor’s

May 21, 2009

REUTERS-- Neil Collins is a Reuters columnist. The views expressed are his own --

Standard & Poor's could have chosen a better day to kick the British economy, by placing the UK onto "negative outlook", the usual precursor to a downgrade of S&P's rating of an issuer's debt.

Conceptual problems in commodity regulation

May 5, 2009

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

Killer robots and a revolution in warfare

By Bernd Debusmann
April 22, 2009

Bernd Debusmann - Great Debate– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own –

from The Great Debate UK:

Bank of England faces dilemma on QE extension

April 9, 2009

johnkemp-- John Kemp is a Reuters columnist. The views expressed are his own --

LONDON, April 9 (Reuters) - The Bank of England's terse press statement announcing it will maintain overnight rates at 0.5 percent and continue the existing 75 billion pound quantitative easing (QE) programme gives no clue about whether the Bank intends to extend the programme when the first tranche of asset purchases are completed in June.
But officials will have to make a decision soon: unless they signal a commitment to extend QE, gilt yields will rise even further in anticipation that the major buyer in the market will withdraw.
The QE programme is dogged by ambiguity about its objectives (which a cynical observer might conclude is deliberate).
Officially, the aim is to prevent inflation falling below target by accelerating money supply growth, not manipulate the yield curve for government and corporate debt.
In this, the Bank's avowed strategy is more conventional than the Fed's ambitious efforts to determine the cost of credit for borrowers throughout the economy. It is a straightforward quantitative easing patterned on the Bank of Japan, rather than a credit easing patterned on the Fed.
If true, the measure of success is how much the money supply has been boosted at the end of the three month period; the Bank should be indifferent about whether ending QE causes yields and borrowing costs to rise.
So long as money supply has risen consistent with the inflation target, and the Bank can discern some green shoots of stabilisation if not recovery, officials can declare victory, end the programme, and keep the other 75 billion pounds of asset purchases authorised by the chancellor in reserve. Yields can be left to find their natural level.
But many suspect the Bank's real objective is yield control -- in which case it will have to announce another round of buy backs of gilts and corporate bonds in good time, well before the current programme is completed, to shape market expectations.
The results of the existing round have been unimpressive.
After falling initially, gilt yields are almost back up to the level they were at before the Bank's foray into unconventional monetary policy.
The snag is that if the Bank stops buying, other investors will struggle to absorb all the new government paper on offer without a major increase in yield -- pushing up borrowing costs for everyone, precisely what the Bank has sought to avoid.
The Bank's dilemma is whether to push on (heightening fears about inflation) or call a halt (risking a spike in yields all the same).
Either way, the Bank needs to give the market, as well as the Treasury and the Debt Management Office, plenty of warning about its intentions.
(Editing by Richard Hubbard)

from The Great Debate UK:

Women entrepreneurs to dispel micro myth

March 2, 2009

090301_glenda_pic- Glenda Stone is chief executive and founder of Aurora, a recruitment advertising and market intelligence company, and co-chairs the UK Women's Enterprise Taskforce established by Prime Minister Gordon Brown. The opinions expressed are her own. -