Daily Archives: August 26, 2014

The US and much of the world have been rudely awakened to the fact that the group formerly known as Islamic State in Iraq and the Levant is both a dangerous terrorist organisation, and considerably more than that. The deadly reality of its capabilities and ambitions is captured in the latest title by which Isis styles itself: the Islamic State. It is a de facto government with evolving borders that seeks to impose its vision of society on the millions of people over whom it rules. And, as it has dramatically shown since the capture of the Iraqi city of Mosul in June, it seeks to expand its borders and the numbers subject to its control.

The biggest question now facing western states is what to do about Syria. Iraq’s neighbour is where Isis established itself and from where it directs its operations. The fact is that the world cannot defeat Isis in Iraq, or limit its potential elsewhere, if it continues to enjoy sanctuary in Syria. Yet this is a country whose president, Bashar al-Assad, stands accused by the west of war crimes as part of an onslaught against his own citizens that has fuelled a conflict costing almost 200,000 lives. 

The biggest threat to investors may come from the foreign exchange market rather than the stretched prices of equity and bond markets. Judging by recent policy and technical signals, the forex market may be about to exit an unusual phase of low volatility.

After a prolonged period of monetary policy alignment, advanced economies are embarking on increasingly contrasting paths. This “multi-track” world of central banks reflects notable divergence in underlying economic performance. 

As soon as the latest gross domestic product figures emerged, showing that the French economy was becalmed in the second quarter of the year, it was clear that the new political season would be very tough for Socialist President François Hollande and the still new government of Manuel Valls. But the president’s decision to dissolve and reassemble his cabinet under the same prime minister was still a surprise. Valls Mark One lasted 147 days. When one starts to count the age of governments in days there is an unmistakable scent of the Fourth Republic in the air.