Global economy

Gideon Rachman

The news that Greece is returning to the markets as an issuer of sovereign-debt is symbolic of the resurgence of interest in Europe among international – and particularly US – investors. As ever there is a circular logic in play here.

Because most investors no longer fear a collapse of the euro, Greece can come back to the markets. And the sight of Greece returning to the markets will confirm the prejudices of those who argue that the crisis in the eurozone is over.

But just as international investors were, in retrospect, too panic-stricken about Europe in 2012 – I suspect they are probably too relaxed now.

Greece’s return to the markets is one striking sign of this. Another is the fact that 5-year Spanish bonds now have a lower yield than their US equivalent – despite the fact that Spain is barely growing, that its budget-deficit continues to bust EU rules, while unemployment is more than 25 per cent. Read more

Could the UK go it alone in the cut-throat world of global trade?

Iain Mansfield, the 30-year-old British diplomat awarded a €100,000 prize by the eurosceptic Institute of Economic Affairs for his plan for a British exit from the EU, certainly thinks so. At the centre of his plan is the case for the UK to go it alone in negotiating trade agreements with big players like China and the US. Read more

Imagine you are the boss of a multinational company with a long-planned meeting with an authoritarian leader of a vital trading partner. Then just before the scheduled get-together, he decides to invade one of his neighbours. What do you do?

That, roughly, was the position of Joe Kaeser, chief executive of Germany’s Siemens, as he decided to go through with a meeting with Vladimir Putin this week at the Russian president’s nineteenth century country residence on the outskirts of Moscow. Read more

Here is an addendum to our post on Friday on what might come next for trade sanctions on Russia. I spent part of the weekend playing with the data on MIT’s brilliant Observatory of Economic Complexity. It is a fabulous place for visualisations of trade data. The underlying data are a few years out of date. But the overall trend still holds true and so these interactive charts on Russia seem worth sharing given the current debate. Read more

By Gideon Rachman
In 1996 a friend of mine called Jim Rohwer published a book called Asia Rising. A few months later, Asia crashed. The financial crisis of 1997 made my colleague’s book look foolish. I thought of Jim Rohwer (who died prematurely in 2001) last week as a I listened to another Jim – Jim O’Neill, formerly of Goldman Sachs – defending his bullish views on emerging markets in a radio interview.

David Pilling

AFP

I had the privilege this week of listening to a lecture by Hans Rosling, professor of global health at Sweden’s Karolinska Institute. Many will have seen his engaging performances on Youtube or in Ted talks . He’s the one with the endearing Swedish accent – he says “yust” for “just” – and the animated charts that show nations as variously sized, coloured bubbles moving dramatically over time. He also uses a pointer with a little hand attached to the end.

His message is basically an optimistic one: that poor countries are rapidly converging on richer ones as their birth rates fall to sustainable levels and as their victory over preventable disease and premature death allows them to advance economically. Most of the world is now between what he calls “light bulb” and “washing machine” – in other words advancing up the lower rungs of the “middle classs”. Read more

By Gideon Rachman
Faced with a dangerous political threat, governments the world over tend to place their faith in the same magic medicine – economic growth. When world leaders try to address the roots of terrorism, for example, they instinctively assume that prosperity and jobs must be the long-term answer. And when a regional conflict threatens to get out of control – in east Asia or the Middle East – the standard political response is to call for greater economic integration. From Europe to China, governments place their faith in economic growth as the key to political and social stability.

(c) WEF

Every year, there is debate at Davos about what is hot – and what is decidedly not. This year, the emerging markets are definitely in the second camp.

Never mind the fact that the streets of Davos are full of cheery posters proclaiming the joys of Malaysia, India or Brazil – or that Nigerian food was being served to Davos delegates at lunch (complete with snail stew.) Also ignore the determinedly upbeat messages emanating from a host of officials from the BRICs nations.

Behind the chirpy smiles, a new mood of anxiety is stalking the emerging markets delegations, amplified by the recent dramas around Argentina. And that marks a stark contrast to recent years, when the emerging markets were regarded as the new saviours of global growth – and their leaders strutted around the Davos corridors with pride. Read more

Emily Cadman

UK Chancellor George Osborne and former US Treasury Secretary Lawrence Summers have just locked horns at Davos on the UK’s economic recovery. Whilst Summers didn’t directly use the words “you blew it” as some reported, FT reporters on the ground say that was the clear sentiment.

 Read more

According to the Kübler-Ross model, there are five stages of grief: Denial, anger, bargaining, depression and acceptance. Jamie Dimon still seems a long way from acceptance.

The JPMorgan Chase chairman and chief executive waded into controversy again at the World Economic Forum in Davos on Thursday by saying that the $20bn legal costs the US bank has paid for alleged wrongdoing before the financial crisis were “unfair”. Read more