20 August 2019 FT — Articles to Read

20 August 2019


Question: According to MSN: Money, how much is a starter home in Washington DC?


US companies rethink business by ditching creed of shareholders first – Pg. 1

  • One of the US’s biggest business groups has dropped the “shareholder primacy” creed that has driven capitalism for decades, urging companies to weigh the environment and workers’ wellbeing alongside pursuing profits
  • The Business Roundtable placed shareholders as one of five stakeholders, alongside customers, workers, suppliers and communities in a new “state of purpose”
  • It is a significant departure from the belief that businesses serve the owners of their capital – a philosophy championed by Novel Prize-winning economist Milton Friedman and which has driven corporate America since the 1970s
  • The change amounts to a call to reform capitalism in a time in which rising populism and concern over climate change have led politicians and shareholder activists to demand that companies consider their impact on the world beyond their balance sheets


Land sales mark Catholic Church’s loss of clout – Pg. 2

  • The sale reflects the declining property needs of the once-mighty Church, whose influence has waned after decades of scandal over child abuse by priests, and a property market that is still seeing prices increase, albeit at a slower pace
  • Church bodies have long ranked among Ireland’s largest real estate owners
  • Property market figures say a further reason why Church bodies are selling property is to fund donations to a state redress scheme for former residents of religious-run institutions who suffered abuse
  • Catholic institutions entered a binding agreement in 2002 to pay 128m (euro) to the state for redress


Thailand economy slows to five-year low as exports fall – Pg. 4

  • ….slowing exports, a struggling farm sector and rising US-China trade tensions took their toll on south-east Asia’s second-largest economy
  • GDP rose 2.3% in April to June compared with the same period in 2018…
  • The Bank of Thailand unexpectedly cut the main lending rate by a quarter of a percentage point this month, owing to concerns over the sluggish outlook for the Thai economy and for global trade


Low interest rates are the scourge of the poor and vulnerable – Pg. 9

  • In a world of ultra-low rates, most households have no hope of wealth accumulation, no matter how much they save.
  • …American middle-class wages today are no higher than they were in 2001 when inflation is taken into account. Household income may e up in real terms, but that is largely because many households are now subsisting on multiple wage earnings as well as on gig employment.  Fully one-third of Americans are not working as much as they would like


Europe banks accused of ‘complacency’ on interest rate benchmark transition – Pg. 11

  • Eonia will be replaced by the ESTR benchmark in early October, after a series of market manipulation scandals eroded confidence in the way the existing benchmark is calculated
  • Eonia is used to price about 22bn (euro) of interest rate derivatives, 2tn (euro) of cash market transactions – such as current accounts and overdrafts – and about 4.4bn (euro) of debt securities
  • The new system is designed to be more robust as it is based on the price of interbank transactions submitted daily by 50 banks; Eonia is set using estimates from a narrower group of lenders


Yield curve pain for regional US banks – Pg. 13

  • So-called asset-sensitive banks, those with a business heavily weighted towards floating rate loans such as business loans, face a hit to their profits because of the slump in yields, which pulls down the interest they will receive
  • It also makes it much harder for asset-sensitive banks to make money, since they cannot offset falling income from floating rate loans by cutting the rates they pay depositors, since these are already at rock bottom. Larger banks can have other fee-based businesses such as wealth management or payments that make their profits less sensitive to the yield curve


Answer: $335,700