OS BANCOS SÃO DINOSSAUROS QUE PODEM SER DISPENSADOS

A afirmação foi proferida por Bill Gates há mais de 20 anos.

Há alguma função realizada pelos banqueiros que não possa ser realizada automaticamente pelos meios tecnológicos hoje conhecidos, além daquelas que eles realizam para interesses unicamente próprios? Descubram uma. 

Não há.

"Penso o mesmo há muitos anos. O que impede a completa obsoletização dos bancos não é a ausência de meios tecnológicos que os tornem redundantes mas os interesses astronómicos daqueles que detêm o poder de governar o mundo de forma inimputável. Até ao dia em que o abuso desse poder ilimitado derrube as estruturas por excesso de carga", anotei aqui em Outubro de 2014.

Martin Wolf no Financial Times de ontem, cf. Good news - fintech could disrupt finance .  A Banca é, actualmente, ineficiente, dispendiosa e cheia de conflitos, afirma o subtítulo.

Se considera exagerada a afirmação que titula este apontamento leia o artigo de Martin Wolf até ao fim. 

O DÉFICE NÃO É UM PROBLEMA

Martin Wolf, citado por Paul Krugman aqui, defendia ontem no Financial Times que  a política fiscal norte-americana não está em crise - America´s fiscal policy is not in crisis -, o desafio mais urgente é a promoção da recuperação da economia. Sem dúvida, reconhece MW, a evolução da dívida poderá vir a colocar sérios problemas a longo prazo, mas a única forma de os evitar não é a redução da despesa a curto prazo mas a criação de condições de crescimento económico que obrigue a inflexão da curva do endividamento antes que este assuma proporções indomáveis. Em resumo: Martin Wolf alinha pela política da administração de Obama, ainda que pondere nela alguns trajectos que deverão ser equacionados, por exemplo, o crescimento dos custos de um sistema, ineficiente, de saúde. Do ponto de vista da oposição republicana no Congresso, que já engoliu metade do sapo do aumento do tecto da dívida, Martin Wolf será um socialista infiltrado no diário de maior expansão mundial, um símbolo inequívoco do capitalismo.

Uma das consequências imediatamente visíveis desta política é persistente desvalorização do dólar relativamente à moeda única europeia que, obviamente, favorece as exportações norte-americanas e dificulta as economias europeias, sobretudo aquelas que, por se encontrarem num patamar tecnológico médio menos competitivo, enfrentam desarmadas a guerra das moedas. A desvalorização da moeda não é uma  uma boa via para ganhar competitividade de forma sustentada, mas a valorização é certamente um handicap que algumas economias, e nomeadamente a portuguesa, com um tecido produtivo não geralmente sofisticado,  dificilmente poderão compensar com outros argumentos.

Assim sendo, é esperável que a União Europeia do norte reconheça a curto prazo que a política prioritária da austeridade tem de dar lugar a uma política mais flexível que, sem descurar a prosecução do aumento da eficiência do Estado, permita criar condições à revitalização das economias mais fragilizadas. A obsessiva polarização do discurso político no saneamento das finanças públicas, de que a reentrada nos mercados é um exemplo flagrante, tem desvalorizado o caminho económico que permitirá pagar a dívida. Alguns argumentam que não há crescimento económico sem saneamento das finanças públicas e que a economia não é o governo que a promove mas os empresários. O que sendo verdade, não é totalmente verdade. Se fosse, as exportações portugueses não representariam, apesar dos progressos observados, ainda uma parte menor do PIB do país.  

VÉSPERAS EUROPEIAS

A generalidade dos analistas e colunistas geralmente mais citados mostra cepticismo quanto aos resultados da cimeira europeia que tem início amanhã e se prolonga no dia seguinte. Martin Wolf e Wolfgang Münchau, do FT, entre outros, têm-se desdobrado em múltiplas análises e propostas para a solução da crise, algumas das quais vêm sendo agarradas por alguns líderes europeus sem, contudo, terem conseguido o consenso suficiente para serem adoptadas.

Na edição de hoje do FT, MW afirma logo a abrir o seu artigo - Look Beyond summits for euro salvation -, "Mais uma vez, a UE reune-se para resolver a crise da zona euro. Mais uma vez, é provável que a UE fique longe de uma solução convincente". Por seu lado, o Economist considera o documento de Van Rompuy, divulgado ontem, a que me referi aqui, "uma proposta delicada, e conclui que é muito provável que a cimeira europeia desta semana seja decepcionante, concorrendo para mais uma ronda de pânico nos mercados."
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Estes quadros, publicados no artigo de MF que comecei por referir, são bastante elucidativos que não é, antes pelo contrário, o maior endividamento global da UE que coloca o seu sistema financeiro em posição mais fragilizada que o dos EUA. O que é significativamente diferente é a união política norte-americana que garante a união monetária, que não existe na UE, que Angela Merkel diz querer prosseguir, só não diz quando. 

Obviamente, já toda a gente percebeu que não é Angela Merkel que decididamente impede o avanço para uma maior coesão europeia mas os eleitores alemães. Mas, por outro lado, não é adquirido que esse avanço para uma maior integração política seja aplaudido pelos eleitores dos restantes membros da UE de forma maioritária. O referendo para a Constituição Europeia chumbou em França e na Holanda, o Tratado de Lisboa contornou as dificuldades de um consenso unânime mas encravou o processo de integração e, ainda assim, a Irlanda reclamou excepções.

Esse processo está agora a ser prementemente empurrado pelas piores razões: pela crise que se alastra e ameça desmoronar a UE. Sendo uma crise económica e financeira as sucessivas tentativas para a ultrapassar têm sido, até agora, unicamente da mesma natureza. Daí os repetidos fracassos.

A solução ou também é política ou não há solução. E muito menos com um superministro das finanças às ordens de Berlim.

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Act.
Angela Merkel irá a la cumbre europea de Bruselas preparada para pelear por el aumento de los controles fiscales y, según ha insistido este miércoles, contra la colectivización de las deudas de los socios de la Unión. En una declaración gubernamental ante el pleno de la Cámara baja parlamentaria (Bundestag), la canciller federal criticó las recientes propuestas de los líderes de la UE para salir de la crisis asegurando que adolecen de “un claro desequilibrio entre responsabilidad y control”. Merkel ha dicho compartir “la noción de que la unión monetaria necesita cuatro elementos para ser estable: la colaboración integrada de los institutos financieros relevantes; una política fiscal integrada; un marco para armonizar las políticas económicas y de competitividad; la legitimación democrática de esa colaboración reforzada de los Estados de la eurozona”. (El País)

DO AVESSO

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Yet all is not lost. In particular, the US and German governments retain substantial fiscal room for manoeuvre – and should use it. But, alas, governments that can spend more will not and those who want to spend more now cannot. 

...

Mr Obama wishes to be president of a country that does not exist. In his fantasy US, politicians bury differences in bipartisan harmony. In fact, he faces an opposition that would prefer their country to fail than their president to succeed. Ms Merkel, similarly, seeks a non-existent middle way between the German desire for its partners to abide by its disciplines and their inability to do any such thing.

Martin Wolf  - aqui

O DEBATE NECESSÁRIO

O Financial Times inicia hoje um debate acerca da mais controversa questão do momento: aquela que opõe radicalmente aqueles que defendem uma continuação dos estímulos às economias de modo a evitar uma recaída da crise, que, se ocorrer, será mais profunda e prolongada, e os que entendem que a melhor forma de tamponar a crise é reduzir a tempo a astronómica liquidez que foi injectada.

Diz respeito, também a nós, este debate? Certamente que sim. Mas não tanto às nossas especificidades estruturais.
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The Great Austerity Debate

Thy the battle is joined over tightening

By Martin Wolf

To tighten or not to tighten – that is the question. It is one to which policymakers have started changing their answers. Are they right to do so? That is the issue addressed in the Financial Times this week, echoing the fierce debates of the 1930s. If arguments for tightening are correct, failure to do so would bring fiscal and financial shocks in some of the world’s most important countries. If arguments for tightening are false, decisions to do so threaten recovery and might trigger further financial shocks.

Where are the policymakers? The declaration after the Toronto summit of the Group of 20 leading nations, stated: “There is a risk that synchronised fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth. Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilise or reduce government debt-to-gross domestic product ratios by 2016.”

This language is notably more cautious than that of the Pittsburgh summit of September 2009. That stated boldly: “We pledge today to sustain our strong policy response until a durable recovery is secured. We will act to ensure that when growth returns, jobs do too. We will avoid any premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a co-operative and co-ordinated way, maintaining our commitment to fiscal responsibility.”

So what has changed?

The first answer is that the world economy is recovering more strongly than expected. In April 2009, at the time of the London G20 summit, the consensus of forecasts for global economic growth this year was 1.9 per cent. By last September it had reached 2.6 per cent. By June 2010, it was 3.5 per cent. In the US, the consensus forecasts for 2010 were 1.8 per cent in April 2009, 2.4 per cent last September and 3.3 per cent in June 2010. Even for the eurozone, the consensus of forecasts has moved a little, from 0.3 per cent in April 2009, to 1 per cent last September and 1.1 per cent in June 2010.

The second answer lies with the fiscal crises in Greece and other peripheral members of the eurozone, reinforced by the election of the coalition government in the UK. The flight from risk was dramatic: in May, the yield on Greek 10-year bonds peaked at more than 12 per cent. This led to a rescue package by the International Monetary Fund and other eurozone governments, and the creation of a new €750bn joint IMF and eurozone stabilisation facility.

The extent of the tightening must also not be exaggerated. In its May Economic Outlook, the Organisation for Economic Co-operation and Development forecast a decline in cyclically adjusted fiscal deficits for the grouping as a whole from 6.4 per cent in 2010 to 5.8 per cent in 2011. Corresponding figures were 9 per cent and 7.9 per cent for the US, and 4.1 per cent and 3.6 per cent for the eurozone. But further tightening is now planned, particularly in the UK. Moreover, many think planned fiscal tightening does not go far enough.

What, then, are the arguments?

At the anti-deficit extreme are those who argue fiscal deficits have no impact on activity since they lead to offsetting behaviour by private people. Thus, if governments run deficits, private people save, since they understand that their taxes will ultimately rise. Another, very different, extreme position comes from those who believe a deep slump would purge past excesses, and so lead to healthier economies and societies. While people who think in these radical ways influence the broader politics, they have limited direct influence on policymakers. So what is the latter debate about?

The “cutters” argue that such huge fiscal deficits – never seen in peacetime in big developed countries, notably the US – threaten long-term fiscal credibility and depress private confidence and spending. While piling fiscal stimulus on top of the built-in stabilisers made sense in the panic of 2008 and early 2009, the time has come for swift consolidation. Otherwise, a spike in borrowing costs looms, with dire results. The permanent loss of output and revenue left behind by the crisis, along with ageing populations, make action inescapable and urgent.

Finally, should economies weaken after a fiscal tightening, monetary loosening would be highly effective. The latter can work by encouraging investment and weakening exchange rates, so also encouraging exports. Many cutters also argue that the best response would be to reduce spending. That is the lesson, they say, from past fiscal retrenchment.

The “postponers” agree there must be decisive slowing of the growth of long-term spending. But they emphasise the fragility of recovery and, in particular, the huge private sector financial surpluses. This private frugality has caused the fiscal deficits, they insist, not the other way round. The sequence of events makes that evident.

Moreover, add postponers, we have seen a strong flight to safety: for the panickers, there is no alternative to bonds of highly rated governments, particularly the US, issuer of the world’s safe-haven currency. Since the eurozone crisis, that role has become more entrenched. Moreover, the long-term interest rates of leading countries are falling, not rising: in the US, 10-year Treasury bond rates are 3 per cent. Where, then, is the threat to confidence?

Moreover, postponers would add, with interest rates close to zero, monetary policy is ineffective, except to the extent that it supports fiscal loosening. Fortunately, countries with their own central banks can finance fiscal deficits directly. This is untrue for members of the eurozone, which are, in effect, operating with a foreign currency. So long as excess capacity remains so large and normal bank lending so weak, such reliance on the central bank “printing press” creates no inflationary danger. On the contrary, the danger is rather that premature fiscal tightening would trigger a sharp economic slowdown, as in Japan in the 1990s, so pitching important economies into deflation.

The interaction of high indebtedness with deflation could, they argue, create a downward spiral. A Japanese-style “lost decade” threatens the developed world. That is particularly likely if everybody tightens together. If anything, further loosening is needed: in the first quarter of 2010, the GDP of every member of the Group of Seven leading countries was still below its pre-crisis peak.

Readers must make up their own minds on the merits of the arguments this week. My own strong sympathies are with the postponers. But on one thing everybody agrees: this debate matters. We cannot be sure who is right. But we can be sure that, if policymakers get it wrong, the results may well be dire. Physicians must prepare to respond swiftly to adverse reactions to their favoured course of treatment.

O QUE DIZ MARTIN WOLF

Why central banks shloud keep printing

Martin Wolf

Festina lente – hurry slowly – is advice we have inherited from the ancient Romans. Western policymakers should now take it to heart. Confronted with huge fiscal deficits, many have concluded that they should hurry fiscal tightening on as fast as possible, in the hope that it will prove expansionary. What are the chances that they will be right? Small, I believe. Moreover, rather better alternatives are on offer. But their drawback is that they are unorthodox: alas, many “sound” people prefer orthodox recessions to unorthodox recoveries.

Why might a sharp structural fiscal tightening promote recovery? As Harvard’s Alberto Alesina and Silvia Ardagna note in an influential paper, smaller prospective deficits may improve confidence among consumers and investors, thereby raising consumption and lowering risk-premia in interest rates.* Meanwhile, on the supply side, fiscal tightening may increase supply of labour, capital or entrepreneurship. The broad conclusions of their paper are that fiscal adjustments “based upon spending cuts and no tax increases are more likely to reduce deficits and debt over gross domestic product ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions.” This line of argument has strengthened the will of George Osborne, the UK’s new chancellor of the exchequer.

Is it persuasive? In a word: no. The authors group together data for members of the Organisation for Economic Co-operation and Development between 1970 and 2007. But the impact of fiscal tightening is going to depend on circumstances.

A reduction in the fiscal deficit must be offset by shifts in the private and foreign balances. If fiscal contraction is to be expansionary, net exports must increase and private spending must rise, or private savings fall. Thus, experience of fiscal contraction is going to be very different when it occurs in a few small countries, not in many big ones simultaneously; when the financial sector is in good health, not impaired; when the private sector is unindebted, not highly leveraged; when interest rates are high, not close to zero, when external demand is buoyant, not feeble; and when real exchange rates depreciate sharply rather than remain fixed.

In short, when, as now, the economies affected by financial sector fragility make up half of the world economy (indeed, together with the still feeble Japanese economy, close to 60 per cent); when the most dynamic large economy in the world – China – is mercantilist; when interest rates are near zero; and when businesses and households are credit-constrained, the view that an early fiscal tightening will prove strongly expansionary is surely heroic. I hope it will be true. But there is little reason to believe it.

Another study, by the US Committee for a Responsible Federal Budget, examined the cases of Canada, Denmark, Finland, Ireland and Sweden. What emerges is the importance of external demand and, in several cases, of huge exchange rate depreciations (see chart). Are these successful examples really relevant to the US and European Union today? I very much doubt it.

Yet another approach is to find a situation that is indeed quite like today’s. The closest parallel is the 1930s, in terms of the proportion of the world economy affected by the crisis, the low interest rates and the disinflationary (or, in that case, deflationary) background. A study published last year concluded that fiscal stimulus was effective when tried.** It follows that fiscal tightening would have been – indeed was – contractionary at that time.

In current circumstances, the belief that a concerted fiscal tightening across the developed world would prove expansionary is, to put it mildly, optimistic. At this stage, I will inevitably be asked: what is the alternative? If these huge deficits continue, markets will take fright, interest rates will jump and the debt dynamics will become truly awful.

I have two responses to this.

The first, one I made a week ago, is that the deleveraging cycle is generating huge private sector financial surpluses across the developed world. Unless we expect a shift into aggregate external surpluses (and corresponding deficits in the emerging world), these surpluses must now to be invested in government liabilities. This helps explain why yields on the bonds of safer governments remain so low.

The second response is that if governments need to run deficits, to support demand at a time of private sector weakness, they can always borrow from central banks. Yes, this is “printing money”. It is also an insanely radical policy recommended by no less insane a radical than Milton Friedman, back in 1948. His view was that the government could expand the money supply during recessions and contract it in the subsequent booms. A country with a fiat currency and a floating currency could, thus, stabilise the economy without destabilising credit markets. The neat thing about this proposal is that one does not have to decide whether fiscal policy or monetary policy is doing the heavy lifting: they are two sides of one coin.

The argument for aggressive monetary expansion remains strong, though not equally everywhere, since the growth of broad money and nominal GDP is weak (see chart). So Friedman’s policy of “quantitative easing”, as it is called, still makes good sense. Am I recommending the economics of Robert Mugabe? No. As in everything else, it is the context that matters. At present, we have “too little money chasing too many goods”. In this environment, monetary policy must be aggressive. When the economy recovers, the monetary effects should be withdrawn, via budget surpluses obtained via long-term control over spending. In the short term, changes in reserve requirements can offset the impact on monetary expansion of the rise in deposits of commercial banks at the central bank. Since, in practice, the money supply is driven more by the demand for credit than reserves, this may be unnecessary.

The conventional wisdom is that a strong and co-ordinated structural fiscal contraction, focused on spending, will promote the growth of a thousand private blooms. I hope this will prove true. But I doubt it. Governments should hurry slowly. If they all hurry quickly, they – and we – may regret it nearly as soon.

* Large changes in fiscal policy, working paper 15438, www.nber.org

** Almunia et al, The effectiveness of fiscal and monetary stimulus in depressions, www.voxeu.org

OS MALEFÍCIOS DA QUEDA DOS PREÇOS

Fear must not blind us to deflation´s dangers
By Martin Wolf

A consensus is forming that policymakers should tighten fiscal policy, sharply, in countries with large fiscal deficits. Yet what makes these policymakers sure that business and consumers will spend in response to austerity? What if they find that it tips economies into recession, or even deflation?

In last weekend’s communiqué of the Group of 20 leading economies, finance ministers and central bank governors stated that “countries with serious fiscal challenges need to accelerate the pace of consolidation”.Yet the world economy confronts two risks, not one: the first is, indeed, that much of the developed world is going to be Greece; the second is that it will be Japan.

As Adam Posen, outside member of the Bank of England’s monetary policy committee, pointed out in a recent speech, fiscal contraction, along with persistent banking problems and insufficiently loose monetary policy, generated the negative shock in 1997 that entrenched deflation in Japan.* Many economic historians argue that the US made a similar mistake in 1937.

How, I wonder, will the world look back on what is now being planned? Germany’s commitment to greater fiscal austerity across the eurozone is powerful, if hardly surprising. Judged by the UK prime minister’s speech on Monday, the UK is on the same path. Happily, the US has not joined the consensus – as yet.

Japan is stuck firmly in deflation. Germany’s most recent rate of annual core inflation was just 0.3 per cent. In the US, core inflation is 0.9 per cent. Another economic shock could shift these economies into deflation, with all the attendant difficulties of trying to make monetary policy bite in a world of post-bubble deleveraging.

Moreover, despite the heroic efforts of central banks, growth of broad monetary aggregates is subdued, mainly because the transmission mechanism is impaired: over the latest 12-month period, US and eurozone M2 grew just 1.6 per cent. Monetarists should be quite relaxed about the risks of inflation. They should be concerned, instead, that central banks are failing to give the private sector the liquidity it wants.

Against this background, what would a big tightening of fiscal policy deliver? In the absence of effective monetary policy offsets, one would expect aggregate demand to weaken, possibly sharply. Some economists do believe in “Ricardian equivalence” – the notion that private spending would automatically offset fiscal tightening. But, as Mr Posen argues of Japan, “there is no good evidence ... of strong Ricardian offsets to fiscal policy.” In developed countries today, fiscal deficits are surely a consequence of post-crisis private retrenchment, not the other way round.

This is all very well, many will respond, but what about the risks of a Greek-style meltdown? A year ago, I argued – in response to a vigorous public debate between the Harvard historian, Niall Ferguson, and the Nobel-laureate economist, Paul Krugman – that the rapid rise in US long-term interest rates was no more than a return to normal, after the panic. Subsequent developments strongly support this argument.

US government 10-year bond rates are a mere 3.2 per cent, down from 3.9 per cent on June 10 2009, Germany’s are 2.6 per cent, France’s 3 per cent and even the UK’s only 3.4 per cent. German rates are now where Japan’s were in early 1997, during the long slide from 7.9 per cent in 1990 to just above 1 per cent today. What about default risk? Markets seem to view that as close to zero: interest rates on index-linked bonds in the France, Germany, the UK and US are about 1 per cent. What, for that matter, does the spread between conventional and index-linked bonds tell us about inflation expectations? We can say that these are, happily, still well anchored, at about 2 per cent in the US, Germany and France. In the UK, they are somewhat higher.

The question is whether such confidence will last. My guess – there is no certainty here – is that the US is more likely to be able to borrow for a long time, like Japan, than to be shut out of markets, like Greece, with the UK in-between.

As borrowers, the US and UK have advantages: first, their private sector surpluses cover some three-quarters and 90 per cent, respectively, of their fiscal deficits; second, many private-sector investors need assets that match liabilities in their domestic currency; third, because these countries have active central banks, bondholders suffer no significant liquidity risk; fourth, they have floating exchange rates, which take some of the strain of changes in confidence; fifth, they have policy autonomy, which gives a reasonable prospect of near-term economic growth; and, finally, the US offers the world’s most credible reserve asset. That gives the US government the position vis-a-vis the world that the Japanese government possesses vis-a-vis Japanese savers.

Critics could argue that these arguments downplay the risks of a “sudden stop” in financial markets. But risks arise on both sides. When Japan – or Canada or Sweden – tightened in the 1990s, a buoyant world economy could absorb excess domestic supply. There is no world economy big enough to offset renewed contraction in Europe and the US. Concerted fiscal tightening could, in current circumstances, fail: larger cyclical deficits, as economies weaken, could offset attempts at structural fiscal tightening. For countries in southern Europe, this is already a danger. Much of the world could end up in a beggar-my-neighbour position towards an increasingly fiscally stretched US.

The G20 did stress “the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances.” That seems fair. In so doing, policymakers must recognise that deflation is a risk, too, and that tighter fiscal policy requires effective monetary policy offsets, which may be hard to deliver today, above all in the eurozone.

Premature fiscal tightening is, warns experience, as big a danger as delayed tightening would be. There are no certainties here. The world economy – or at least that of the advanced countries – remains disturbingly fragile. Only those who believe the economy is a morality play, in which those they deem wicked should suffer punishment, would enjoy that painful result.

DESTA VEZ É DIFERENTE

This time is different

Carmen M. Reinhart

Keneth Rogoff

How likely is financial repression?

Martin Wolf

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First comes financial crisis; then comes sovereign debt crisis; then comes financial repression. This is the view of Carmen Reinhart, co-author of This Time is Different, the masterly study of financial crises through the ages. I recently had a fascinating conversation on this topic with her, here in New York, where I have been living since the beginning of April.

So the question for the exchange is: how likely is financial repression? What forms might it take? Might this even be the end of the era of globalised finance?

Her argument is very plausible. It is also supported by the history of both advanced and emerging countries. First, governments encourage credit expansion by the financial sector. As a result, a mountain of bad debt is piled up. Then, at some point, comes panic. At this stage, governments nationalise the liabilities of their financial sector and, more important, find their revenues collapsing, along with the economy. Huge fiscal deficits then emerge and public debt starts to soar. Of course, frequently, governments short-circuit this financial route and simply run huge and unsustainable fiscal deficits in good times. Either way, an unsustainable fiscal position leads, sooner or later, to a sovereign debt crisis, particularly if governments borrow in foreign currencies, short term, or both (as often happens, in such situations).

What do governments do when it becomes expensive to borrow? They promise to mend their ways, of course. But, by now, it is often too late: nobody believes them. So they tell the central bank to buy their bonds, which starts a run on the currency. Pegged exchange rates collapse and floating exchange rates fall. Inflation becomes an imminent threat.

At this point, desperate governments look for ways to force institutions to hold their bonds, willy nilly. This is the point at which financial repression begins: banks are forced to hold government bonds, for “liquidity”; pension funds are forced to hold government bonds, for “safety”; interest rate ceilings are imposed on private lending; to prevent “usury”; and, if all else fails, exchange controls are imposed, to ensure nobody can easily escape from such regulations.

So how likely are such measures in the advanced countries that are now in difficulty? How easily would financial markets find it to evade them? What might governments do in response? Could financial globalisation even disintegrate? This is a subject on which I plan to write a column soon. I look for comments on this theme.