A Weekly Digest of The World's Financial Press

Forbes

On regulatory moves to monitor Americans through

their bank accounts

WASHINGTON wants your bank to spy on you. Four federal financial regulatory agencies have proposed "know your customer" rules that would force every bank to "determine its customers' sources of funds; determine the normal and expected transactions of its customers; monitor account activity for transactions that are incon-sistent with normal transactions; and report any transactions of its customers that are determined to be suspicious". Ostensibly this programme would help fight crime. In reality, it is a Soviet-style intrusion into your privacy. Who says the era of big government is over?

[As one Republican representative is] correctly pointing out, the government should have access to this kind of information only under a search warrant.

Steve

The Economist

In the search for stability, deflation is as much of a worry as rising prices

THE world economy is precariously lop-sided. Even as America's economy continues to surge, much of the rest of the globe is drifting towards deflation. It is scary that America's boom, fuelled by an unsustainable stock market, is now the main prop for global demand. For how much longer? Global deflationary pressures are already choking American profits, making its share prices look ever more overvalued. This could yet topple the stock market. No wonder American policy makers are urging Japan and Europe to reflate.

Most economists believe that a repeat of the 1930s is unlikely. Yet central banks failed to foresee either the 1930s depression or the great inflation of the 1970s. A big concern may now be that central bankers, having scotched inflation, will prove too slow to come to grips with the prospect of deflation.

Financial Times

Why banks are so profitable amid widespread criticism and increased competition

THE FACT is that customers get the banks they deserve. Competition in financial services did not begin with the arrival of those newcomers - the traditional high street clearing banks have been steadily losing market share, notably to building societies, since the 1980s. Yet the British consumer remains more likely to swap spouse than bank.

While that inertia prevails, the UK's traditional banks will get away with interest rates that are merely good enough, rather than having to match the best in the market. With such undemanding customers, Andrew Buxton's successors [as chairman of Barclays] and their opposite numbers at the other leading banks could have years of fat profits ahead of them.

20/21 February - George Graham

Business Week

Why Cor Boonstra, president of Philips, should break the electronics giant up

BREAKING up Philips would be wrenching. It's a national institution in the Netherlands. But as Philips confronts the Internet age, staying whole may be its greatest handicap. And with European stock markets close to records, the moment is ripe. Boonstra should divide Philips into its main businesses: semiconductors, consumer electronics, and lighting. Allowing each to trade separately, analysts reckon, would boost market capitalisation, now $25bn, by 30 to 60 per cent.

Scarred as he is, Boonstra can no longer avoid radical action. Cost-cutting and tinkering with production might have been right for the TV age. For the sprint-or-die Internet markets, here's betting that a few pint-sized Philips companies would run a whole lot faster than their big daddy in Amsterdam.

Stephen Baker

Wall St Journal

Why politicians do not have the right to spend America's $70bn surplus

MOST pernicious about Washington directing the use of any budget surplus is the premise that somehow all this money belongs by right to the government. Such was the mind-set in Treasury Secretary Robert Rubin's 4 February testimony to Congress. "We must save the great preponderance of projected budget surpluses," Mr Rubin said, "not consume them for tax cuts and spending programs." To talk of tax cuts as a way of "consuming" federal funds is absurd.

Republicans are now proposing a 10 per cent tax cut. It seems the least Washington can do toward letting Americans grow richer on the strength of resources best described not as a "surplus", but as the rightful private property of the individual Americans who worked to earn them.

19/20 February

BARRON'S

Wall Street's leader board is showing signs of distress

AS A postscript, we might add - in case it has escaped your notice - breadth on the Big Board has been atrocious as well.

Even on Friday, when most of the averages managed a rise of some sort, more stocks were down than up.

The same melancholy snapshot of a market obviously in distress is furnished by the tally of new highs and new lows.

On Thursday, for example, when the Dow Jones Industrial Average rose more than 100 points and both the S&P and Nasdaq posted solid advances, there were 29 new highs compared with 146 new lows.

On Friday, new lows were three times as numerous as new highs.

Forget the smiling faces, this old bull has wobbly pins.

Fortune

How the US Federal Reserve is becoming the world's central banker

WHAT IS less understood, especially in America, is how much the renewed dominance of the dollar is changing the role of the Fed. In commenting on Argentina's dollarisation debate, US Treasury officials said Argentina could do as it liked, but it would not affect the way the Fed handled its business.

In fact, Alan Greenspan is already tortured by the incompatible demands between an American asset bubble that is swelling dangerously and a global thirst for dollar liquidity in an increasingly deflationary environment.

It is hard to believe that those three interest rates cuts would have been made last fall if the Fed chairman, despite his denials, had not had one eye on the world at large. Power has a way of imposing responsibility.

Jim Rohwer

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence