The latest weapon brandished by central banks is supposed to boost economic growth and ward off deflation by punishing cash hoarders. In practice, this radical policy damages credit creation, fuels bubbles, threatens civic freedoms and spooks the living hell out of markets.
As the woes of emerging markets increase, 1930s-style protectionism and exchange controls are back on the agenda. A warning from the Bank for International Settlements of an “epoch-defining seismic rupture” in the financial system may be more than just hyperbole.
The media mogul mayor may yet try to be U.S. president. Hands down he’d be the richest contender ever. It would take extreme candidates Bernie Sanders and Ted Cruz as nominees for Michael Bloomberg to run. The bigger issue is that he’d have his deep ties to finance to explain.
The classic leftist response to capitalism’s unfairness - tax and spend - has failed. A better bet is to fight unfairness caused by corruption, vested interests and tax cheating, while investing in education. India and Italy show some of the right ideas.
Two big transactions dominated Davos. One would open up a democracy to capital markets after years of feckless governance and isolation. The other is designed to help a repressive regime retain power. In the world’s current parlous state, it’s to be hoped that both get done.
Having invested heavily, both mining and energy firms are struggling with oversupply and weak prices. New mining production from BHP and others will continue to weigh on commodities for years. But oil investment cuts set the stage for the next bull market in the black stuff.
The blustery real estate mogul isn’t due to attend the World Economic Forum with other business and political leaders, but the force behind his unlikely campaign for the White House will. Populism finds its roots in the inequality that Davos both represents and tries to solve.
The Polish and Greek governments may be flouting the rule of law. This doesn’t just undermine democracy: it is bad for investment. Brussels is in a quandary. It doesn’t want to pick quarrels. But if it turns a blind eye, bad behaviour could spread.
U.S. presidential wannabe Ted Cruz has attacked bank bailouts and special-interest policies, from Ex-Im Bank to ethanol subsidies. Now he concedes he used a Goldman Sachs loan to fund a 2012 Senate campaign and didn’t disclose it. It bruises his carefully crafted populist image.
The 19 member states have so far failed to put in place a full regime of bank oversight, argues former Citi exec William Rhodes. As U.S. and euro zone interest rate policies diverge, this is a big risk. To complete banking union, agreement on proper deposit insurance is a must.