Economics Views

May 26, 2011

The world is a tragedy to those who feel,
but a comedy to those who don’t.

Horace Walpole—it’s only because Central Bankers and Politicians don’t appreciate the suffering they cause that they turn up to work each day!

Fata viam invenient; the fates always find a way to implement destiny.
Greek Tragedy can’t be avoided. Oedipus, for instance, couldn’t escape the doom prophesised for him by the Oracle at Delphi. His parents did their best to frustrate its predictions, but failed comprehensively. The son killed the father and married the mother. That wasn’t the end of the tragedy, though. It continued for another generation—misfortune plaguing Oedipus’ children.

Modern Greece was doomed as soon as it signed up to the euro!
It’s much the same in the world of economics and finance these days. The Oracle had prophesied that Europe’s single currency, like all previous experiments of its kind, would fail. It prophesised also that, in the aftermath of a loss of confidence, generations of Europeans would suffer serious economics consequences. The first part of the prediction is now almost complete, and the second developing strongly. It’s clear that attempts by the Commission and ECB to avoid their destiny were pointless. They made things worse, not better.

A tergo lupi, a fronte praecipitium: no way out!
Currently, Greece finds itself handicapped by an impossibly uncompetitive exchange rate and an even more impossibly uncompetitive interest rate. Its economy is bound to collapse; its debt to be rescheduled. It’s just the extent of each that remains uncertain.

Nobody will invest in the country.
Understandably, investors are nervous. They’ll not commit money until they know more about the risks they’re running. In the meantime, GDP will fall sharply. Perhaps at double digit rates! Unemployment will soar. Revolution is possible.

Others will fare almost as badly.
Greece may be the first to suffer meltdown, but it’ll not be the last. Ireland and Portugal (Jocasta and Antigone to Greece’s Laius?) are headed in the same direction. Investment in these countries will also be hit. It’ll be no good Commissioners and Central Bankers, their credibility destroyed, saying that the outlook is secure. These boys have cried “wolf” too often in the past.

Even Germany, later this year, will have problems.
Everywhere in the EuroZone, Germany and the Netherlands only excepted, risk premiums will be raised. Growth will consequently decline. And, even in Germany, once Japan begins to recover its industrial capacity, in the fourth quarter perhaps, activity will falter. Set in the context of a global cyclical slowdown, the prospects in Europe are very poor.

The IMF provides jobs for the boys, nothing more.
This is no time for another graduate of the Ancient Régime to be sent to luxuriate in irrelevance at the IMF. The Fund is a waste of time and money; its track record consistently poor. The therapy it proposes in any crisis—that for Greece for instance—doesn’t work. It’d be better all round if the monster were closed down. Failing that, let somebody from Asia or Africa have a go.

Time to dispense with it.
Why is UK Chancellor, George Osborne, supporting Christine Lagarde’s candidature? Does he think the lady, a lawyer by training, a synchronised-swimmer by inclination, will bring something new and valuable to the job? Unlikely.

The Chancellor should focus on the UK economy!
There are bigger issues to deal with. Most importantly, the British economy. It’s not going well. The Chancellor and the Prime Minister and their Liberal Democrat chums talk of the urgent need to deal with the overgrown public sector, but they seem reluctant to do anything. Twelve months after they took office, it’s still growing relative to the private one!

It’s sickening!
Not good for the securities markets. They’re dull now and likely to stay so for several months.

Economics News

May 20, 2011

It’s hard to believe a man’s telling the truth, when you know that, in his place, you’d lie.

H. L. Mencken

Juries are asked to decide whether an accused is wholly innocent or wholly guilty.
There are only two people who know exactly what happened in the Manhattan hotel room last week. The rest of us don’t; and probably never will. Legal proceedings might make things clearer, but probably won’t. The man (formerly IMF Managing Director) is not likely to change his story, nor the woman (formerly Hotel Chambermaid) hers. A jury will have to judge one against the other. Whichever way the verdict goes, a sizeable proportion of the population will cry, “foul!”

In reality, of course, he’s neither. DSK, for instance.
It shouldn’t have come to this. It was wrong to appoint Strauss-Kahn to a senior position. Those responsible for scrutinising his candidacy were remiss. The creature’s track record, one of serial misconduct, shouldn’t have been suppressed, but publicised. Delinquents oughtn’t to be indulged, but disciplined; pyromaniacs given as playthings, not matches, but water. The risks stemming from negligence are substantial!

The crime which’ll not come to Court is appointing him in the first place.
Strauss-Kahn himself should have been unwilling to take the top job: the role of adviser is one thing; that of principal another. If the man’d been honourable, he’d have recognised his frailties and contained his ambition. The French Establishment is also blameworthy. If its members hadn’t been so secretive, so willing to hide each others’ indiscretions (asinus aninum fricat), he’d have been black-balled.

Adolescents can’t be expected to do an adult’s job.
Let’s hope that those who select the next MD will do their job a little more conscientiously. They must look after the interests of the general public, not those of the alumni of the grands écoles. Full disclosure, warts and all, is essential. It might be advisable, additionally, to disqualify all French applicants for the next twenty years.

It’s the same in Britain: bankers, for instance.
Not that things have been going well in the UK either. The ease with which the rich and guilty seem to be able to get an injunction to suppress the publication of true, but embarrassing, news stories demonstrates a worrying lack of judgment amongst the country’s legal bigwigs. What, for instance, could have made anybody choose to protect the rights of Fred Goodwin over those of the Great British Public?

Judges no less.
Full disclosure ought to be forthcoming. Not only of the loathsome banker’s indiscretions, but also of the aberrant judge’s rationale. A spell in the real world might benefit both.

Economies are still slowing.
The world economy, meanwhile, continues remorselessly to lose momentum. The descent is not yet steep. But upwards of 58% of data items are “disappointing.” In Britain, the numbers are a little worse than in most of the rest of the developed world.

In Britain, more than most.
The Coalition has wasted the first year of its term. Instead of cutting expenditure immediately it came to power, it merely talked about doing so. Instead of getting the pain out of the way, it still lies ahead. Its ratings are not high now, but they’ll be much lower a couple of years hence.

Stock prices only temporarily strong.
The bad economics news has, ironically, boosted securities valuations. While activity is so dull, it’s argued, central bankers won’t raise interest rates. Partially true, but only partially. Softness will delay the change, but not indefinitely. Next year, economics debility and monetary tightness may combine to unsettle valuations!

Gold

May 16, 2011

Thinking to get at once all the gold the goose could give,
he killed the fowl and, opening it, found nothing!

Aesop, would today’s Central Bankers have acted more sensibly?

Politicians are amateurs; they’re expected to get things wrong.
Central Bankers being as susceptible to collateral miscalculation as Government Ministers, the law of “unintended consequences” operates as mischievously in finance as it does in politics. The operation of money policy demonstrates the point. Intended to dampen the ups and downs of real activity, it tends more often to intensify volatility in financial affairs—sometimes unbalancing the real economy the policy was supposed to balance! Central Bankers don’t mean to be perverse, but they often are.

Central Bankers are professionals; but they’re no better.
In 2009 and 2010, credit was exceedingly accommodative. The authorities wished to re-activate their economies. Accordingly, they encouraged individuals and companies to borrow and spend. It was a partially successful policy. GDP did quicken, but, in the old developed world, not by as much as had been hoped. At no stage did activity there develop sufficient momentum to become self-sustaining.

Easy money fuels bull markets.
Asset valuations, on the other hand, soared. People found themselves swamped with liquidity and, reluctant to spend, invested it in assets instead. But the volume of such assets being unresponsive, it was prices that had to change.

The only way was up in 2009 and 2010.
They certainly did.  All round the world, rates of return rose: commodities and equities leading the charge, bonds and real estate bringing up the rear. The high beta categories, equities in developing countries, for instance, generated more than 40% per annum; while the low betas, real estate in troubled economies, most obviously, held their own. Gold, as usual, found itself somewhere in the middle.

Tighter conditions more recently . . .
The picture began to change half way through 2010 and has continued to do so ever since. Money policy became progressively tighter. In China and India, Australia and Brazil, the motivation was the control of inflation. In Europe, the Bundesbank in the van, the objective was orthodoxy for its own sake. But the bottom line in either event was a reduced capacity to buy assets; and lower valuations, therefore.

. . . have dented valuations.
The process has further to go. The Bank of England has just said that it plans to clamber on the bandwagon in the next few months. And it’s fairly clear that the Fed will resist the temptation to embark on a new phase of quantitative easing.

And will probably devastate economies.
So concerted a shift to monetary austerity would be desirable if it were to be occurring in the midst of an economics boom, but very undesirable if at the start of a cyclical downturn. Sadly, it’s the latter. Central Banks seem determined to raise interest rates and to restrict credit, even in the face of softening activity. It’s happened before: the Fed did it in 1929 and the BOJ in 1989.

What are the Bankers playing at?
Why are they risking recession, possibly depression? Because they see themselves caught between Scylla and Charybdis. It may be bad if they tighten, they acknowledge, but even worse if they don’t. At the moment, they perceive a significant amount of misbehaviour in the finance sector. They fear it’ll get worse if they take no action. It’s already caused chaos in the EuroZone. It has the potential, they think, to disrupt much of the rest of the world.
They’re protecting us from a possibly non-existent danger!

Whether they’re right or not isn’t the issue.
They’re going to continue to tighten, and the liquidity that would otherwise have supported valuations is going to continue to be withdrawn. The implication for prices is obvious. Higher betas will be most vulnerable; lower ones least.

Valuations will fall.
If the economy tumbles, it’s industrial commodities that’ll be hit hardest.
Many equities will also be susceptible. Real estate likewise. Government bonds, especially those of favoured countries, will be the asset of choice.

Gold, by more than the best, but less than the worst.
And gold? It’ll fare better than base metals, but worse than bonds. Over the long term, it’ll keep its value, but it’ll not do so during a credit-induced recession. One thousand dollars has a nice ring to it.

Economics Views

May 14, 2011

The world economy is slowing, but patchily;
by the time we’re all in recession, inflation’ll be low.

Hope springs eternal, says Alexander Pope, but it’s the result of misanalysis; man never is, but always, to be, blest.

Europe’s polarising: the good are very good; the bad, horrid.
Last week’s economics numbers were mixed: those from France and Germany, good (partly a reflection of Japan’s temporarily diminished capacity); those from most of the rest of the world, bad. On balance, the latter were deemed to be more significant than the former. Accordingly, investors were minded to switch from “real” assets to “financial” ones. Valuations responded accordingly: shares falling modestly, properties more steeply, and commodities very steeply.

The rest of the world is losing momentum.
Investors fretted that Central Bankers had misanalysed the economy’s trends and, still agonising about inflation, would lift interest rates too far. They’d impose a credit squeeze on economies already in the moderating phase of their cycles. By the time they recognised the danger, it’d be too late to correct it. There’d be another recession, therefore; possibly another severe one.

Including, recently, a bit of a surprise, Australia.
Australia illustrated the way things might pan out. The country had enjoyed brisk growth for the last several years (buoyed hugely by the minerals boom). Unemployment had fallen a good deal, credit had surged and, despite a strong currency, inflation had quickened.

Is employment down-under about to tumble?
The Reserve Bank had responded in an orthodox, and commensurate, way. It had raised interest rates moderately, but progressively. During 2010 and the opening months of 2011, its measures seemed to be having no effect. And then, suddenly, catching most forecasters on the wrong foot, employment in April was reported to have fallen quite sharply.

Might the same thing happen in LatAm?
Was that white noise, or the start of a new and softening trend? Nobody knew, but everybody was worried. What made matters worse was that Latin America too had begun to look a little fragile.

If so, it’s unlikely the Fed’d be able to save us this time.
If global activity were to begin to fall away later this year, and if the retrenchment seemed to be intensifying during 2012, how would the major Central Banks respond? What, in particular, would the Fed do? Would it, as it had in 2001 and 2007, slash the cost of credit?

We’d have to grin and bear it.
Probably not. Its interest rates in early 2012 would be likely still to be negligible. It’d not have the capacity, therefore, to lower them. That being the case, there’d be no respite for hard-pressed economies. The recession would simply get worse.

But retail prices would stabilise.
Inflation, on the other hand, would evaporate; commodity prices declining and pay settlements moderating. Retail inflation might be down by a percentage point in the first twelve months of recession, by a further point and a half in the following twelve. That, though, would probably serve only to raise real interest rates! The risk would be (shades of the US in the thirties, Japan in the eighties), that recession would turn into depression!!!

Bonds’d be preferred to equities. Especially those deemed to be safe.
What does the investor do in such circumstances? He acts cautiously. He opts for safety rather than return; for lower betas rather than higher ones; for bonds rather than equities; for established economies (and currencies) rather than developing (and speculative) ones.

Equities’d be subdued for eighteen months.
It’s unlikely that the dull period would last for long. It’d one thing for economies to resist the blandishments of monetary stimulus; it’d quite another for asset valuations to do so. Towards the end of 2012, the latter might be rising again.

The Great Currency Debate

May 10, 2011

CNBC Televison

9th May 2011

Economics Views

May 7, 2011

Marriage is the misalliance of two people:
one never remembering birthdays;
one never forgetting them.

An Ogden Nash misquotation. And the LibDem-Tory Coalition? Very similar!

Political alliances usually fail; some faster than others.
A year ago, after an indecisive general election, the Tory-LibDem Coalition was born. From the start, it was unstable: a marriage born of psephological cynicism, not philosophical convergence. It owed more to the vanity of the parties’ leaders than to the reservations of their memberships. It was not thought by many to be likely to survive for long!

The LibDems overplayed their hand.
Last week, it looked as if it was on the point of expiring. Initially shallow cracks in its structure had widened subsequently into deep crevasses; minor criticisms of Tweddledum by Tweddledee had flared into major condemnations. It was, though, the local authority elections that turned the smouldering embers of resentment into incandescent flights of fury.

They’re now universally despised.
The polls were a disaster for the LibDems, but only a minor setback for the Tories. Voters seemed to feel that the promises of the former had been broken, but those of the latter kept. Partially true, it was a message that was bound to intensify ill-feeling between the partners.

AV wouldn’t have saved them.
And the A.V. referendum only made things worse. LibDem strategists had thought that a voting system that took account of the electorate’s second preferences would secure for the party a permanent role in government. It probably wouldn’t have done. But, in the event, we’ll not know. The system won’t change.

Nor even would full PR.
The LibDems have no lifeline in the short-term, and probably none either in the long-term. Four years hence, after the next general election, it’s possible they’ll barely exist. There’ll be no role for them to fulfil. Protest votes will go to other parties. The LibDems will be seen realistically: as an historical oddity, one that lasted seventy years longer than it should have.

The economy is the top priority.
The Tories, meanwhile, will have to turn their attention to the economy. In the last year, while they were faffing around with trivia, fundamentals deteriorated horribly. It’s time to get a grip; to tackle public spending, public sector pensions in particular. The therapy’ll not be painless; it’ll provoke heightened industrial action. But the consequences’d be worse still if the shortcomings were left unattended.

Public sector workers to be culled, bankers to be thrashed.
It’s time also to call commercial bankers to heel. The level of taxpayer support for them has been unconscionable. Like senior civil servants, they’re under-worked and over-paid. It’s a myth that the banks have to be strong in order that the economy recover; it’s a myth also that they contribute anything worthwhile to the status of the City of London. In reality, they’re a low-value-added and low-tech money transmission mechanism. They are to financial services what the LibDems are to politics: an irrelevance. Best to sell them off or close them down.

Another recession is on the way.
It isn’t only the UK economy that’s struggling. Just about everywhere else in the world, growth is faltering. The business cycle is in its moderating phase. It’ll continue to be so until spring 2013 at the earliest. And, in the meantime, with many central banks lifting (!) interest rates, the slowdown could be severe.

Sell in May.
Asset prices will also be under pressure. They’ve drifted sideways for the last six months. They’ll probably soften in the months that lie ahead.

Interview on CNBC

May 3, 2011

The world’s central banks are all considering whether it is time to end the ultra-loose monetary policies that have helped the global economy recover from the financial crisis but one strategist believes the tighter monetary policy can only lead to recession, and a severe recession at that.

“Throughout the current cycle, the world economy has progressed disappointingly. In its ‘weak’ phase, it underperform­ed. And in its ‘strong’ one, it’s done so as well. The outlook is not good. Activity is due to peak again this autumn. Thereafter, another recession may occur,” Roger Nightingale,  told CNBC on Tuesday.

“It’s possible it’ll be a severe one because large numbers of central banks will have raised interest rates into the slowdown,” he said.

“Many in the ‘emerging world’ began doing so in 2010. Some in the commodity-producing world followed suit a little later. And the ECB is currently itching to add its two-pence to the restrictive cocktail,” said Nightingale.

With personal debt so high and consumer confidence so weak, Nightingale believes higher rates now could lead to a recession, “possibly as bad as the last one”.

Denial Not a River in Africa

Dismissing the positive comments on the global economy from politicians and policymakers as wishful thinking, Nightingale believes they are simply trying to keep spirits up, knowing they have got it wrong and are unwilling to admit it.

“They know that credit shouldn’t have been allowed to grow so recklessly in the nineties. They know that delinquent banks shouldn’t have been bailed out when they implod­ed. And they know that cuts in public spending shouldn’t have been timed to coincide with the cyclical downturn,” said Nightingale.

“The developed countries that look least troubled now are those that in the past most closely followed these rules: Germany, Japan and the US,” he said.

“For a couple of years, equity markets have been strong. Easy money and strongly recovering corporate profits have been the driving forces. Neither will be so favorable in the future. The chances are, therefore, that indices will be drifting lower in the second half of 2011” said Nightingale.

 

Higher Rates Mean Severe Recession

May 3, 2011

CNBC Television

3 May 2011

“The outlook is not good. Activity is due to peak again this autumn. Thereafter, another recession may occur.”

Joseph knew that current trends wouldn’t last indefinitely

May 2, 2011

Joseph knew that current trends wouldn’t last indefinitely;
so he saved in the good years to survive in the bad ones.

If Brown or Darling had been in charge, the Egyptians would all have starved!

Cameron criticised Brown for doing little to tackle the economy’s problems.
Twelve months after the election, not much has changed in the British economy. There’s been a great deal of talk about remedying its shortcomings, but very little action; lots of announcements about public spending cuts, but barely any implementation of them. The “rebalancing” still lies ahead, therefore. So does the pain!

But his own track-record leaves a lot to be desired. A huge misjudgment!
The chronology could hardly be worse. Lower public spending and less expansive credit policies will coincide with the cyclical slowdown; each probably reinforcing the others. If so, the second half of this year is going to be bad; 2012 and 2013 worse.

The cuts, when they do eventually occur, . . .
Electorally, Cameron and Clegg have made things very difficult for themselves. The economics softness in the years ahead will be blamed on the fiscal austerity. The Coalition, unpopular for other reasons, will be charged with incompetence; the Opposition, phoenix-like, will arise anew!

. . . will make life politically difficult for the Coalition.
Much of the rest of the developed world is similarly troubled. Nearly everywhere, fiscal policies have been ill-conceived. Governments were reckless in their spending proposals in the “good” years, and they’ve been dilatory in amending them in the “bad” ones.

In Europe too, policy prescriptions have been ill-judged.
In many countries, things are getting worse rather than better. In parts of Europe, for instance, GDP is declining so quickly that taxation is falling faster than spending. Debt, as a result, is spiralling out of control. Will society implode? Will revolution ensue? Possibly.

Japan’s done better.
Japan has fared much better. It’s had to live with the problem (in a relatively mild form) for a couple of decades. And it’s coped rather well. Public spending hasn’t been cut particularly severely, nor rates of taxation raised particularly sharply. National Debt may have soared, but public finances have been largely untroubled. Inflation has stayed low, and unemployment tolerable.

America, best of all the oldies.
Arguably, it’s the US that’s done best. It entered the last recession in a very sorry state, but looks set to handle the next downturn in a much better condition. Its Government was fairly quick to cut public spending, but was quick also to cut taxation and boost credit. The result, initially, was deterioration; but, subsequently, amelioration!

It’s growth isn’t fast in absolute terms . . .
Recent figures for GDP, employment, exports and tax returns have been encouraging. Growth isn’t fast in absolute terms. But it’s good in comparison with the achievements of most of its competitors. Debt is still rising rapidly, but the hope is that it’ll moderate in the future—and do so more because of strength in taxes than weakness in expenditures.

. . . but is the best of a very indifferent bunch.
Unsurprisingly, security markets have held up fairly well in the last year or so. Monetary policies have been accommodative and corporate profits supportive. Are things about to change, though? Many developing countries have been raising interest rates for some time. Commodity producers likewise. Recently, the ECB has followed suit. Might the Fed, BOJ and BOE shortly do so as well?

Asset prices are vulnerable.
Possibly. In that event, stock price indices would be hard pressed. The conjunction of economics retrenchment (possibly recession) and reduced liquidity (possibly a dearth) might send valuations tumbling. Investors are ignoring the downside!

Economics News

May 2, 2011

The world is set at risk more by accident than design;
Central bankers are trained to cause accidents.

Amateurs make only minor mistakes; experts major ones!

There’d been warnings that the data would disappoint.
Last week, most of the economics news published in the US and UK was disappointingly tame. Initial estimates of GDP in these countries in the opening quarter of 2011, for instance, came in well below consensus expectations. Forecasters had been presuming that the business cycle was still in an accelerating phase. They were wrong!

But they weren’t sufficient. The numbers were awful!
The deceleration that began in mid-2010 intensified significantly in early 2011. It’ll probably continue to do so for at least another eighteen months. It’s not yet certain that there’ll be a recession, but the probabilities of there being one are now quite high.

The Fed’s policies, arguably, aren’t working.
In his recent Press Conference, Fed Chairman, Ben Bernanke, was predictably subdued. He’d done his utmost to boost activity. Credit conditions in the States in the last couple of years had been extraordinarily accommodative—but not sufficiently so, the data implied, to counter the forces of retrenchment. All he could do now was hope that the slowdown would be mild.

The BOE’s, incontestably, are failing.
The Governor of the BOE, Mervyn King, hasn’t yet confronted the Press. But, when he does, he’ll probably get a rough ride. Britain’s economics numbers have been shockingly poor. The setback in activity in the fourth quarter of last year was icy, but the recovery in the first of this year only tepid. Over the period as a whole, GDP stagnated, labour productivity declined, the fiscal balance deteriorated and the currency softened.

The Governor ought to resign.
His policy prescriptions in the boom were questionable, and they’ve been no better in the bust. Similarly, his forecasts, bad in the one period, became worse in the next. Will he fall on his sword? Unlikely. The chances are that, like his chums in the commercial banks, he’ll continue to live extravagantly on taxpayer handouts.

Trichet ought to have done so years ago.
Are other parts of the world likely to find the economics times as challenging? Yes; many of the countries in peripheral Europe are hanging on by their teeth. They’ve landed themselves with an impossible conjunction of circumstances: an overvalued currency and intolerably high interest rates. Their economies won’t just fail to grow; they’ll collapse in a heap.

The EMS cannot continue in its current form.
Declines in GDP won’t dawdle at 1 or 2% per annum. They’ll race along at 5%, maybe as much as 10%, per annum. Tax collections will evaporate and Government debt explode. Investors will demand higher and higher yield premiums. The authorities will be in an impossible predicament. They’ll be forced, not just to restructure, but to repudiate. Germany won’t dare bail out even the smallest of the victims for fear of the precedent it would set for the largest of them.

Nor perhaps can the EU.
The euro will have to be recast; membership of the EMS being severely restricted. Only those countries prepared to surrender their fiscal as well as their monetary sovereignty will be eligible to join. Some who could meet the economics criteria will find the political ones too demanding. Some, a minority, will wish to retain an element of elective democracy. Five years hence, the EU will have changed fundamentally.

The Far East is better placed, but not risk-free.
In much of Asia, meanwhile, growth has slowed but is still fast. A loss of momentum in exports to the developed world has been one factor; higher domestic interest rates another. What nobody knows is how much further the moderation will go.

A significant slowdown is coming.
The authorities in Beijing and Delhi are optimistic. They hope that a couple of percentage points taken off the advance in GDP during the course of 2011 will be sufficient to cut twice as much from inflation. If so, their economies will be in fine form again by early 2012. Central Banks will be in a position to lower interest rates again; GDP in a position to reaccelerate.

Will it be controllable?
That’s possible but unlikely. Inflation, once established, tends not to very tractable; and real growth, once reduced, not very amenable to restimulation. The risks are mostly on the downside.

Possibly not.
The Fed is obviously worried that Central Banks elsewhere in the world will tighten credit by enough to neutralise its loosening. It fears that those who are currently raising interest rates are repeating the mistake it made in 1929 and the BOJ repeated in 1989. It’d prefer that countries put up with modestly higher inflation in the cyclical retrenchment, and not restrict liquidity until the next cyclical recovery in 2014.

Markets are less vulnerable than economies.
No chance. The taps are going to be turned off all round the world. Economies will falter to a greater or lesser extent. Securities markets too will subside, but probably only modestly. Next year, a degree of serenity may have returned.

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