Stephen’s career spanning five decades has made him one of the most respected and unique voices in the City of London. Disclaimer regularly publishes a selection of his elegant and thoughtful essays on the global economy, which he has been writing regularly since he founded Fifth Horseman Publications in the late 1980s. As well as an economist, Stephen serves as Treasurer of the Forum for European Philosophy and was elected to the Royal Institute of Philosophy.
Articles by Stephen
The world at large is still waiting to see what differences to US foreign policy Mr Trump’s move into the White House will make. In a climate that has suddenly turned inimical to their objectives, EU policymakers have, at least momentarily, been thrown off balance.
Since the 2008 crisis, the financial markets have been reluctant to acknowledge that an economic depression has been under way. Popular anxiety at perceived global injustices is bubbling over. The problem in forecasting Trump's actions is that he has yet to demonstrate he has an understanding of the challenges.
For the Western political classes, nothing seems to have been going right recently. The economies over which they preside appear to have lost the buoyancy that had ensured growth. Brexit confirm that the world was changing in ways they had not previously envisaged
Central banks will be pursuing monetary policies that are not strictly appropriate to whatever economic conditions are current. Therefore traditional banks face a challenge. The 1980s saw the final culmination of a more than five-hundred-year development, the end of an era, not the inception of a new and sustainable financial order.
Potential presidential candidates have been on the stump since last summer. But the serious business of collecting delegates to the party conventions will only begin next week.
Though the referendum campaign is likely to be waged on narrow economic issues, a rational judgment on the advisability of Brexit would take full account of the benefits and risks of the UK’s staying in the EU, and not merely the balance relating to leaving.
What the past twelve months have revealed is how uncomfortable most investors feel when faced with geopolitical risks. To be sure, it had been difficult to ignore these risks ever since President George W Bush launched his ‘war on terror’ in 2001 but, it seems, international tensions have increased markedly since the early days of 2014 when turmoil erupted in Ukraine.
There are distinguished economists of a neo-Keynesian bent who argue in favour of greater fiscal flexibility but theirs is not the standard view. There are two distinct forms that flexibility could take. Governments could simply spend more and tax less in the hope of priming a rise in economic demand.
After seven years of trying and failing to restore the economy to a state as they themselves might recognise as normal, some central bankers might have been expected by now to be questioning whether the problems of the global economy are, indeed, primarily monetary.
Central bankers were granted their political independence but they have abused the privilege, conducting experiments in a so far futile attempt to validate pet theories rather than consider broader economic welfare.
There are factors that might explain the slowdown in world trade in the post-crisis era that are not at all cyclical in nature. It is not unreasonable to suppose that globalisation had already reached a mature phase before the financial markets erupted in turmoil.
When disorder breaks out in China, things turn very nasty indeed. It is best, therefore, to avoid disorder at almost any cost. Currency Devaluation. Shadow Banking. Bad Loans
At a time when Greece’s chances of staying in the euro zone and possibly the EU have been a focus of concern in financial markets, the bookmakers’ odds on Brexit have been shortening
the ‘austerity’ that Osborne is accused of enforcing during the Coalition years saw general government current spending rise, in real terms, by 3.8% between 2010 and 2014
Despite the pound’s present buoyancy, a growing perception of political risk surrounding the UK could yet carry it lower. The question is one of timing.
Signs are that US ruling circles are aware of the danger to their position and will attempt counter-measures to ensure that it is not weakened further. They have already withstood one challenge, from the Soviet Union during the Cold War. They may well feel they can see off this latest threat too.
Some would blame the loss of power and prestige on President Barack Obama’s uncertain handling of foreign policy. That does not seem entirely fair. It is not difficult to think of other US leaders who, if they had been occupying the White House in Mr Obama’s stead, might have guided the ship of state into even more dangerous waters.
If a week is a long time in politics, it is a geological age in the life of the modern financial markets and digital communications.
From the banking halls of Vienna, to the austerity stricken streets of Athens, there is an eerie of air déjà vu over the development of relations between Russia and the West and fault lines that appeared covered may be starting to remerge. Events are rarely inevitable and history doesn’t always repeat itself, but there are lessons from the past that may serve us well today.
Failure to resolve differences between Greece and its creditors by the end of February could quickly bring matters to a head. But, even if Mr Tsipras were resolved to reach agreement with EU partners in the end, he would want to show he had wrested worthwhile concessions from them. This suggests that, at the very least, the next five weeks will see Greece and its creditors playing a game of chicken as the euro teeters on the precipice.