IT’S not quite a Lehman moment, but financial markets are more anxious today than at any time since the global recovery took hold almost a year ago. The MSCI index of global stocks has fallen by over 15% since mid-April. Treasury yields have tumbled as investors have fled to the relative safety of American government bonds. The three-month inter-bank borrowing rate is at a ten-month high. Gone is the exuberance that greeted the return to growth (see article). Investors are on edge.
What lies behind these jitters? New nervousness about geopolitical risk, with tensions rising in the Korean peninsula, has not helped. But that comes on top of two wider worries.
One is about the underlying health of the world economy. Fears are growing that the global recovery will falter as Europe’s debt crisis spreads, China’s property bubble bursts and America’s stimulus-fuelled rebound peters out. The other concerns government policy. From America’s overhaul of financial regulation to Germany’s restrictions on short-selling, politicians are changing the rules in unpredictable ways (see article). And the scale of sovereign debts has left governments with less room to counter any new downturn; indeed, many of them are being forced into austerity.
The danger is that these fears reinforce each other in a pernicious reversal of the dynamics of 2008-09. Then, co-ordinated government action on a grand scale stopped the global financial crisis from turning into a depression. Now, thanks to incompetence and impotence, governments may become the problem that will drag the world economy down.
Don’t panic
That is far from inevitable. Fears about the fragility of the global recovery are exaggerated. Led by big emerging economies, the world’s output is probably growing at an annual rate of more than 5%, far swifter than most seers expected.
This pace will, and should, slow, not least because the big emerging economies need to tackle rising inflation and possible asset bubbles. (...) America’s growth may also slow as firms stop rebuilding their stocks and the government’s stimulus tapers off. But the world’s biggest economy does not seem on the verge of a second recession. (...) Growth prospects look grimmest in Europe. Yet even there the likely immediate outcome of the euro zone’s crisis is the enfeeblement of an already weak recovery, rather than a sudden slump. The region’s profligate economies will struggle for longer as austerity kicks in. But waning confidence will be mitigated by the boost that exports receive from the euro’s plunge.
Look only at those probable short-term prospects and it is hard to see why financial markets are suddenly in such a lather. The reason is that the risks of a far worse outcome have risen, and those risks lie mainly with governments.
(...) The world is nervous for good reason. Although the fundamentals are reasonably good, the judgment of politicians is often unreasonably bad. Right now that is what poses the biggest risk to the world economy.
Sempre dall'Economist vi segnalo tre articoli sulla riforma finanziaria (sia negli Stati Uniti sia le negoziazioni preliminari alla definizione di Basilea 3):
- la commissione bicamerale americana responsabile di pervenire ad un accordo sulla riforma finanziaria inizierà tra pochi giorni la sua attività con l'obiettivo di consentire la firma presidenziale entro il 4 luglio;
- come costruire un sistema bancario internazionale che resista ai futuri shock di liquidità...
- ...senza mettere in ginocchio la redditività delle banche?
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