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RP’s Diary

Now for the next leg of the “financial crisis”?

Central bankers know they may be laying the ground for it, but can see no alternative

That is the money trap in operation – again. They are in a quandary. The fix is this. Unless they  return to “normal” levels of interest rates quite soon, the current model of capitalism, which depends on market-determined long-term rates, cannot function. If they do, however, raise interest rates any time soon, with debt leverage…
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Failure to grasp the implications of global finance

That's why the future of the world economy is balanced in a knife edge.

    It could go either way – towards “sauve qui peut” nationalism, withdrawal from international cooperation, a turning away from globalisation; or towards a remaking of the international system and regulatory apparatus in an effort to harness the benefits of globalisation for citizens.   It could depend on chance events.  The downing of a…
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The importance of getting money right

The lifechances of seven billion people are shaped by global money

The experience people have of the world, their life chances, what they learn, how they live, where they live, indeed their entire social and personal lives are shaped by monetary relationships, the monetary economy and thus to the world monetary system to an extent completely unprecedented in history. This means getting money wrong will have…
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Nation states fight to keep control over money

Policies remain resolutely national - which is why they are failing

    The major international efforts after the crisis focussed on action by each state to increase fiscal and monetary stimulus. In bank regulation, also, the emphasis has been on national measures, as in Dodd-Frank and similar measures in Japan and the EU. New powers over the banking and credit markets known as macro-prudential instruments…
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Globalisation – a poisoned chalice

Globalisation will triumph but bring many new problems with it

  Against such a backdrop, financial globalisation appears to be a weak force. Yet it exists. It exists in many senses. Nations may raise capital controls – though surprisingly few actually have done. But there are ways round them. People’s desire to connect to the major centres of finance where the opportunities and investment chances…
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Is Europe falling apart?

The geo-political fallout from the financial crisis continues

The triumph of the UKIP (United Kingdom Independence Party) and the National Front in France in the recent European elections is part of the continuing geo-political fallout from the global financial crisis – and above all from governments’ failure to manage it. The next could be  Scotland’s departure from the UK and the UK’s departure…
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The moral responsibility of central bankers

Don't be afraid to speak out

    In The Money Trap, I argue that that the international monetary anti-system (to borrow Jacques de Larosiere’s phrase)  makes it very difficult for central bankers to deliver financial and monetary stability in the long run.   I often wonder how many central bankers privately agree with this analysis but don’t dare to say…
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Beware crony capitalism

New pressures on central banks and the Fed

  As central banks come closer to the commercial sector, exercising powers such as the granting and withdrawal of licenses, and become more involved in decisions determining the livelihood of individuals, there must be a growing risk of “crony capitalism” at best and outright corruption at worst.   Corruption can take many forms – many…
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Rueff remembered

A great French monetary thinker recalled by a modern German central banker

  Thinking about monetary and economic nationalism reminds one of the French economist Jacques Rueff (1898-1978). He strongly opposed economic fragmentation, nationalism and protectionism. He saw a good monetary system as a unifying force.   Shall we blame him for the euro? He did say, back in 1949,  that money would lead European integration: “L’Europe…
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Which way for gold?

Gold remains the litmus test of central banks' cedibility

On Friday I was at a gold conference at Bloomberg’s glitzy London office at Finsbury Square when news came through of the fine imposed by Uk regulators on a senior trader at Barclays for manipulating the price of gold and on Barclays for lack of internal controls: “What, Barclays again?”, said one participant, referring to…
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