The financial panics are over. Now we must deal with the longer-term aftermath.
I advanced this thesis at a private dinner last night and, to my surprise, Nouriel Roubini agreed with me. More precisely, he agreed that “tail risk” had been sharply reduced.
The big change of the last 12 months has, of course, been in the eurozone. This has something to do with policy improvements in vulnerable countries, particularly Italy and Spain. It has even more to do with the willingness of the European Central Bank, under the redoubtable Mario Draghi, to use its power to reduce break-up risk and offer potentially unlimited liquidity to banks and sovereigns under stress. Read more
The FT’s world news desk brings you their picks of the day… Read more
Alan Simpson (left) and Erskine Bowles Getty Images
If there is one thing at which Washington does not excel (an admittedly rich menu), it is self-deprecation. The city operates to a kind of Gresham’s Law in which self-importance drives out whatever humour is to be found. Which makes the latest intervention from Alan Simpson, the co-keeper of the nation’s fiscal conscience, along with Erskine Bowles, all the more enjoyable. At 81, the former Republican senator has made his fair share of gaffes – not least his remark in 2010 about the “lesser people” who rely on Social Security. He added: “We’ve reached a point now where it’s like a milk cow with 310m tits.” He never really apologised.
With just three weeks to go before the US arrives at a deeply sobering fiscal cliff, Mr Simpson has developed a better line in humour since then. Last week, Mr Simpson said that he hoped that Grover Norquist, the keeper of the Republican anti-tax conscience, would “slip into” the same bathtub in which he famously wants to drown government. Then on Wednesday, Mr Simpson descended into the idiom of the lesser people – or at least the younger ones – with the releases of a “Gangam-style” video exhorting viewers to take to the social networks and campaign against the fiscal cliff . Read more
Like the European Christmas, America’s Thanksgiving is edging towards being an entirely retail-driven festival. Black Friday, the day after the holiday, has been the busiest shopping day of the year for a while; we now also have Small Business Saturday and Cyber-Monday (for online buyers), and no doubt some marketing fiend somewhere is seeking to theme Sunday and Tuesday also.
Those capitalistic Puritans would have been proud, right? Max Weber says so. Liberated from the clutches of a static and stultifying Europe (and skipping all those EU summits), they worked hard, saw profits and wealth as evidence of God’s calling, and we ended up with the greatest economy on earth.
Well, not really. Not only were they pretty feeble producers themselves to begin with – Bill Bryson claims the Mayflower carried not a single cow or horse or plough (plow, whatever) or fishing line – but the Massachusetts colonists had some peculiar views about business. Read more
Intriguing piece in the Economist about “Chilecon Valley”, Chile’s attempt to snaffle some of the start-up tech talent driven out of the US by self-destructive American immigration laws. Some public seed capital and easy-to-get work visas and the sector is up and going.
So where does this leave the argument that a tough intellectual property rights regime, particularly with software and other tech patents, is necessary for innovation? Chile was forced to tighten up its patent and copyright law as a result of its 2004 bilateral trade deal with the US, but Washington remains unhappy about the implementation. Chile is one of the dirty dozen countries (actually 13 in 2012) on USTR’s ominously named annual Priority Watch List for poor IP protection, and Washington is trying to raise the IP bar yet higher for Chile and the other countries in the Trans-Pacific Partnership. Read more
Saul Loeb/AFP/Getty Images
Yesterday, I was all “the emerging markets have a point about running the IMF”. Read more
Greece is usually labelled the eurozone’s most reform-resistant economy, but perhaps that’s because Cyprus slips under most people’s radars, writes Tony Barber. Read more
By Gideon Rachman
Over the past three years, conventional wisdom divided the world’s major economies into two basic groups – the Brics and the sicks. The US and the EU were sick – struggling with high unemployment, low growth and frightening debts. By contrast the Brics (Brazil, Russia, India, China and, by some reckonings, South Africa) were much more dynamic. Investors, businessmen and western politicians made regular pilgrimages there, to gaze at the future. Read more
Demonstrators outside the Spanish parliament on Sept 25 clash with police during a protest against spending cuts. Photo: Getty
The political gulf opening up between Spain’s growing separatist movement in the richest province Catalonia and the government of Mariano Rajoy, backed by King Juan Carlos and the Spanish military, has spooked the markets and provoked much debate in the press about whether Spain can survive in its present form. The country’s increasingly precarious financial position has also tilted the country further towards disaster.
In the FT:
The eurozone crisis now threatens the survival of a nation-state, writes David Gardener. The decision of Catalonia’s nationalist government to call a snap election in November – which in practice will amount to a referendum on independence – has opened the way to Catalan secession, and may give a lift to Basque separatists. “As a Spain trapped in the eurozone crisis tries to battle its way through a wrenching recession, it must now contemplate the real possibility that its plurinational state, which replaced the suffocatingly centralist Franco dictatorship with highly devolved regional government, may break up.” Read more