The meta-story over the weekend was the conviction of the Russian punk band Pussy Riot on charges of hooliganism. They were sentenced to two years. This made the front page above the fold in both the Financial Times (FT), with a big picture and the headline “Outcry over Pussy Riot verdict,” and the Wall Street Journal (WSJ), with “Russian Band Found Guilty.” The FT also followed up on Monday with “Pussy Riot sentences open perilous split in Russian society” (p. 2). The conviction represents a blow against Russia’s reputation as a state ruled by law and is the latest step the government has taken against the opposition.

On Monday, the meta-story was China, hit for both politics and economics. Political issues led the front pages of the New York Times (NYT) and the WSJ, with “Chinese Defer Death Penalty in Lurid Killing” and “Sentencing in China Stokes Politics,” respectively. The FT also covered the subject in “Murder trial verdict looms for disgraced Bo’s wife” (p. 3). These stories show the verdict as an attempt to close down a potentially embarrassing case while minimizing damage to the country’s reputation and exposure during a leadership transition. External politics also received coverage in “Anti-Japan protests flare across China as crisis deepens over disputed islands” (FT,p. 1) and “The South China Sea’s Gathering Storm” (WSJ,p. A11); this is a brewing conflict I have mentioned repeatedly over the past couple of weeks.

In Summary

Should Countries Stay or Go?

The big story today is the most recent decline in Facebook shares, which was prominently reported in the Wall Street Journal (WSJ) with “Facebook Investors Cash Out” (p. A1), in the Financial Times (FT) with “Investors defriend Facebook shares” (p. 1), and in the New York Times (NYT) with “Facebook Shares Hit New Low Amid Fear” (p. B1). Sounds pretty bad, right, when a new tech heavyweight drops almost 50 percent from its initial price? Things must be bad?

The dog that isn’t barking—at most maybe whining a little—is that the U.S. markets are actually doing really well. Yesterday brought them back to relatively high levels, as reported all the way back on page C4 of the WSJ with “Stocks Approach Multiyear Highs.” With the markets doing as well as that, maybe it is time to worry. The fear referenced in the NYT Facebook headline certainly has not shown up in the VIX, referred to as the market’s “fear index,” which the WSJ comments on with “The Fear Gauge Goes Quiet – Too Quiet” (p. C1). We have had a quiet August, and when September rolls in and everyone takes a fresh look at the world politics and economy, perhaps they won’t be as sanguine as they are now.

An interesting mix of stories today. Financial malfeasance makes all of the front pages again. “Bank Deal Rankles Regulators” on page A1 of the Wall Street Journal (WSJ) is about how the Standard Chartered settlement with New York State could derail other investigations and has annoyed British regulators. The Financial Times (FT) has “StanChart rallies as settlement welcomed” on page 1 and a follow-up story on page 15, “StanChart pays hefty price for ‘small errors’,” which makes many of the points I did yesterday about the speed of settlement and the magnitude of the fine with respect to what Standard Chartered admitted. The thrust of the article is that the bank was forced to settle quickly, regardless of the merits of the case, because of the effect uncertainty would have on its business and because of a reluctance to go head-to-head with the regulators. I am not so sure, but we will see. My bet is that more problems will show up.

The front page of the New York Times (NYT) has “No Criminal Case is Likely in Loss at Corzine Firm,” about the collapse of MF Global. Two interesting things here: first is the emphasis that, once again, there is no punishment of individuals for business disasters, and second is the personalizing of the story, even to the headline. Again, I would say this is a growing trend; personal accountability will become a much bigger part of the financial industry, especially at the risk end, and rolling heads will become a mandatory part of settlements. Corzine, of course, is still on the hook from both a civil and regulatory perspective—a point the article makes explicitly.

Europe, the Euro, and the Possible Failure of Political Integration

Europe, the Euro, and Political Integration

One of my favorite movies is Star Wars, for a number of reasons. The scene I am reminded of right now is the one where the Imperial stormtroopers stop Luke and Obi-Wan, and Obi-Wan uses a Jedi mind trick to make the troopers let them go.

The meta-story today is again the Paul Ryan candidacy and the presidential race. The Financial Times (FT) leads with “Obama uses heartland visit to launch first attack on Romney running mate,” the Wall Street Journal (WSJ) opens with “Presidential Race Snaps Into Gear,” and the New York Times (NYT) has a front-page picture and “Medicare Rises As Voters’ Issue in GOP Gamble.”

Other Ryan stories include “Everything Wall St. Should Know About Ryan” on page B1 of the NYT, which states that he actually may not be very pro-financial industry; “Ryan’s Record Shows Flexibility on Policy” on page A4 of the WSJ, which notes that Ryan voted for the Troubled Asset Relief Program (TARP), the Bush-era Medicare prescription drug benefit extension, and an early version of the auto bailout; and “Obama tries to harvest votes in Iowa” on page 4 of the FT, which has the subtitle “The president blames Paul Ryan for holding up the farm bill.”

Balancing Europe and the Euro