Recent rollercoaster markets are a symptom of a more concerning malady. They reflect the shock accompanying recognition that widely accepted assumptions about everything from monetary policy to geopolitics, and even the state of global health, are dangerously flimsy.
The epicentre of last week’s fright was the 18-nation currency bloc, whose three big economies – Germany, France and Italy – are in their own ways stuck. There is a grand bargain sketched out by Mario Draghi that might shift the malaise. But it won’t materialise soon, if at all.
Car service Uber raises its prices to balance supply and demand when drivers are reluctant and customers are eager. That works, but the method has an anti-social edge. For the common good, it’s better to start with just prices and add allocation by patience, need or merit.
Matteo Renzi’s Plan A is to push through domestic reforms, hope the ECB manages to get inflation ticking up, and keep his fingers crossed that the economy stops shrinking. But if this fails, a mega wealth tax, debt restructuring and/or exit from the euro beckons.
The supply of the raw material of finance can be varied far more easily than any physical commodity or human skill. If central bankers really grasped that, monetary policy could have been far more radical – both pre- and post-crisis.
In an era when everything is shared or rented, including music, there’s a premium to be paid for actual experience – like, say, a festival. That partly explains the media mogul’s interest in Live Nation, which is stalking the promoter behind Lollapalooza and other big gigs.
Tesco, Barclays and BP offer useful lessons about what to do (and what not to do) when disaster strikes: take things seriously and apologise. It is also best to start off with a stock of goodwill.
Business bosses tend to admire free enterprise. But in a complex economy, too much freedom leads to ruinous competition and persistent under-investment. Corporates appreciate the value of controlled rivalry. That’s why episodes like the current UK supermarket price war are rare.
CEOs and corporate financiers revel in the power of the deal. One company, Vail Resorts, is taking the idea to extremes. By acquiring clusters of snowy U.S. retreats in different climates and selling “Epic” season passes, it is trying to smooth bumps caused by Mother Nature.
The Labour opposition has a somewhat anti-business agenda, while the Conservatives want to hold a referendum on Britain’s EU membership. Next May’s election contest isn’t quite a choice between the devil and the deep blue sea, but it’s not a good one.