Here It Comes: The Next Meltdown

emerging-markets-crash-1400x788The average cycle time between financial crashes is ten years. A decade is about as long as it takes for bad debts to be purged, for financial risk-taking to swing from appetite to aversion and back to appetite again. In other words, the world is about due for some trouble. The only question – usually – is where the epicentre will be. But that’s easy: it will be in the emerging economies.

First published on CapX: read more here.

 

Russia’s World of Digital Control

red-web-1400x788In the English language the words ‘spy’ and ‘Russia’ are fellow travellers. The Russian state is secretive by nature and the methods of the secret state are the methods of the spy services: surveillance, interception, and information control. All of these techniques are part of the political management system of Putin’s Russia, and they have all been greatly enhanced in the last fifteen years. Thanks to two outstanding Russian journalists, Irina Borogan and Andrei Soldatov, we now know much more about how Russia uses and co-opts the worlds of digital communication and information flow to monitor its citizens at home, and shape their world view. On a recent visit to London, Borogan and Soldatov joined CapX for a conversation about their recent book The Red Web on Russia’s domestic programme of surveillance and censorship.

First published on CapX: read more here.

Chinese Competition? You Ain’t Seen Nothing Yet

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What’s the biggest economic risk from China? A GDP growth crash? A bond price meltdown? Low-cost knock-off competition? Copyright theft and counterfeiting? Actually it is quite likely that the answer is none of the above. The biggest risk from China is competition, but not the sort of cheap-and-cheerful competition that Western companies have grown used to. It’s something much more scary than that.

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White Is The New Amber

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Edmund de Waal, a celebrated potter and ceramicist who had one of the literary hits of 2010 with his biographical memoir The Hare with Amber Eyes has now written a study of the remarkable history and nature of porcelain. De Waal has devoted much of his working life to porcelain, and this is not a mere history of the white ceramic that helped shape the wealth of nations from its discovery in China more than two thousand years ago. It is an attempt to capture the inner nature of porcelain, its power to mesmerise and to bankrupt its addicts.

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China Hasn’t Crashed. Yet.

1chinaFor as long as I can remember I have been reading financial reports about the coming ‘hard landing’ in China – and explanations from the financial wizardry as to why there won’t be a hard landing as long as the Communist Party is in charge and in funds. Last week it seemed that the wizardry had finally been proved wanting, with consecutive days of near 10% falls in the mainland and Hong Kong stock markets, and enough downs and ups in Western markets to make it seem as if the day of doom was close to hand. Is this the end of the China boom? Is it the beginning of the next recession? Could this be the final, violent phase of the global crash that began in 2007?

First published in Capx.co: read more here

Corbyn Has Found the Fear

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Jeremy Corbyn, an awkward unclubbable left-wing activist who thinks Venezuela is the model of how a society should be managed, is coming closer to winning the leadership of the Labour Party, Britain’s main opposition party. Of all possible responses from Labour to its humiliation in the recent general election, the Corbyn surge is the least-expected. The Conservatives cannot believe their luck. The focus-group centrists of Labour are banging their heads on their keyboards in despair. The great mass of disinterested onlookers are going ‘what? who? why?’, before changing channel. And Corbyn surges on.

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Is Capitalism a Good Thing?

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Capitalism: Money, Morals & Markets by John Plender

John Plender, a journalist on the Financial Times, has written a book about capitalism and whether it is a good thing – and that is taking ‘good’ in its broadest sense, to include ‘moral’ as well as ‘useful’. Now, there are those who would object that a journalist on the famously pink  paper is the last person who would know anything about capitalism. But let’s not cavil and trade insults like economists: Plender’s book, Capitalism: Money, Morals and Markets is a good thing, on balance, all things considered. And that is pretty much Plender’s verdict on capitalism.

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India Needs a Total Reset

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Earlier this year, India’s finance minister used the occasion of his budget to declare a truce. There would be no more multi-billion tax raids on big foreign companies in India. Investors could rest easy: the days of ‘tax terrorism’ were over. One month later, the London-listed Cairn Energy opened a brown envelope to find that the Indian authorities were demanding $3.2 billion in extra tax. Cairn had just joined countless other investors who have learned that India’s economy is schizophrenic. It will extend one hand as a friend, and the other as an enemy. If India is to get anywhere near its massive potential, it needs treatment.

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How to Crack the Knowledge Code

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Why is Switzerland so rich? Why is Portugal so poor? And what exactly is the recipe for going from poor to rich? These are the sorts of questions that development economists and policy folk from a thousand think-tanks spend their days and nights puzzling over. But according to a group of economists and data-crunchers at Harvard’s Center for International Development, the answers may not be as elusive as some fear.

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Calcutta: The City of Questions

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People say a lot of things about Calcutta, but one thing they never say is that Calcutta is a pleasant place. Intense, chaotic, corrupt, and confusing, yes. Unremitting discomfort and infinite inconvenience, yes. Pleasant, no. Calcutta (or Kolkata if you insist on following the endless name-changes inflicted by the government of West Bengal) is never going to be your ideal destination for a quiet relaxing break. But it is unforgettable: addictive, insistent, and amazingly friendly (for a place that is so violent). Calcutta is India in highly concentrated form. Use with caution.

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The Spook In The Machine

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Book Review: Intercept by Gordon Corera

Keeping secrets, sending secrets, stealing secrets: it’s a very ancient trade. The business of intercepting and deciphering communications has been going on for as long as people have had brains enough to profit from knowing more than their enemies. And today, as this bleakly entertaining new book from Gordon Corera reminds us, the branch of intelligence known as signals intelligence is now conducted on an industrial scale. The dream of the East German Stasi – that everyone should be spied on, all of the time – is close to becoming a nightmarish and universal reality.

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Meet the Baboons Who Broke the Banks

Llloyds-1-1400x788Book Review: Black Horse Ride by Ivan Fallon

On the Sunday of the ninth of September 2007 a meeting was called in the Treasury. It was, as they say, fateful – although none of the participants realised it at the time. That afternoon the course of the UK economy and political life was altered for years to come. If things had been decided differently there might have been no collapse of Northern Rock, no bank bailout, the Labour government might have emerged from the financial crisis with its reputation enhanced instead of ruined, and Gordon Brown might still be Prime Minister.

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How to Lose a Lot of Money in Africa

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If you haven’t heard what investors call the “Africa Story”, here it is. Africa south of the Sahara is on a roll. The once debt-ridden disaster zone of the world economy is back on its feet, and fighting. Sub-Saharan Africa is now growing faster than any other region of the world: from bankruptcy to boom in the space of less than a generation. The only bad news is that Africa is back in debt. And for some African economies, debt will turn to disaster. Soon.

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Egypt’s New Pharoah

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Last week a suicide bomber killed himself in a failed attack at the Temple of Karnak in the Egyptian city of Luxor. A day later the attack was claimed by a group claiming to be part of the Islamic State movement, the same group that claimed responsibility for a rocket attack the previous week in Egyptian-controlled North Sinai. In the same week there was a gun attack at the Pyramids of Giza to the south of Cairo.Is Egypt slipping back to the dark days of the Islamist insurgency of the 1990s?

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The Dream Economy

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Doubtless you have heard of Uber, the online taxi-hailing service. Most likely you have heard of Airbnb. And Snapchat? Probably. Dropbox? Very likely. Spotify? Of course you have. Even if you haven’t used them yet they are sitting there on your smartphone, just waiting for the day when you suddenly find that you want whatever it is they offer. But be quick: most of these companies will soon be forgotten.

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The Corporate Death Wish

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If all goes according to plan, the next few weeks or months should see many if not most of us made measurably poorer. It’s nothing to do with taxes, crashes, or meltdowns. It’s nothing to do with politics. It’s something that will happen as a result of a well-established routine run by investment banks, financial advisors, and a host of big companies with very familiar names. It’s a kind of capitalist death wish, and something that hasn’t been seen for a while – but now it’s back.

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The Dictator’s Cut

Omar-al-bashir-1400x788 (1)Four years ago the popular uprisings which optimists called the Arab Spring swept through North Africa. One after another dictatorial governments collapsed while populations danced in the public squares. But there was one striking regional exception. In Egypt’s southern neighbour Sudan which was and is ruled by a sour-faced soldier  called Omar Al-Bashir, there was rather little sign of revolution. A couple of demonstrations quickly started but equally quickly they were put to an end by Sudan’s uninhibited security services. As Field Marshal Al-Bashir himself grimly put it, ‘Anyone waiting for an Arab Spring in Sudan is going to be waiting a while.’

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Africa Wants To Go School

Africa-schools-2-1400x788Africa is the fastest-growing continental economy in the world today, thanks in large part to the fact that its population is so young. But one consequence of having a lot of young people is that Africa faces a massive practical problem, the problem of how to educate its millions of poor young people in the knowledge and skills that can make them prosperous. As it happens, a very large number of poor Africans have already found a solution to that problem. But some of the best known aid agencies and international organizations don’t like this solution at all, and indeed some are campaigning hard to put a stop to it.

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