Coppola Comment

It is 2.30 am, and I can't sleep. Today I must file my final piece for American Express's FXIP blog , which is being mothballed. Writing for that blog has been my main source of income for the last four years. Once it is gone, my income will once again become precarious and inadequate, as it has been all too often in the past. Hence my sleeplessness. To be perfectly honest, I'm not sorry that the blog is closing. I've done some interesting work for it, and learned a lot. And it has been a reliable source of income during the difficult times of the last three years. For that, I am grateful. But I don't enjoy writing for it. The house style is dry to the point of desiccation, devoid of all opinion, emotion and metaphor. It is also SEO-driven, so I am constantly trying to find ways of including key words assigned by someone else. True, the key words are set from the brief, but it means there is no flexibility. I can't simply go where my mind leads, as I do wh

With only six months left to the moment when the UK leaves the EU, the Brexit end game is upon us. If there is to be a Withdrawal Agreement at all, the Northern Ireland border problem must be solved within the next couple of weeks. But at present, both sides are well dug in and showing no inclination to budge. No-deal Brexit is looking increasingly likely. Nonetheless, the game is still afoot. In Salzburg, the EU appeared to strike a mortal blow to Theresa May's Chequers proposal. After this, surely she had to compromise on her red lines? Not a bit of it. Mrs. May is sticking to her Chequers proposal, apparently hoping that eventually the EU will blink. She remains, as ever, oblivious to the mortal damage that this would do to the EU as a political project. But agreeing a deal with the EU is not Mrs. May's top priority anyway. With the Tory party conference approaching, continual rumours of a leadership challenge, and Boris trying to make himself look like Churchill-in

So Toby Young was eventually hounded into resigning from the board of the Office for Students. I confess, I was one of those who hounded him. I thought, and still think, that his appointment was wholly inappropriate. I was not sorry to see Jo Johnson subsequently moved out of the Department for Education, either, though personally I would have sacked him. Johnson, who was instrumental in bringing about Young's appointment, defended it to the House of Commons on the extraordinary grounds that Young was on a "developmental journey". It's absolutely fine for Young to go on a developmental journey, of course, but not paid for by my taxes or affecting the lives of my children (my daughter is currently a university student). But there is a much bigger issue here. Why was Young ever appointed in the first place? He admitted to me on Twitter that he did not have the academic experience the Department of Education said he did, but then said that it did not matter becaus

In August 2014, I wrote this post arguing that harsh austerity during the Depression caused Hitler's rise to power. At the time, my argument seemed controversial, at least in Germany. There, it is not the austerity of 1930-32 that is blamed, but the debt-driven hyperinflation of a decade earlier. Germans remain terrified of both inflation and debt to this day. I am certainly not the only person to identify a causative link between austerity and Hitler. Here is Paul Krugman slapping down Eduardo Porter in 2015, for example: Yes, there was a hyperinflation in 1923, which may have helped radicalize German politics. But the proximate factor in Hitler's rise to power was the great deflation of the 1930s, brought on by a disastrous attempt to stay on gold.  Disastrously staying on gold might of course have been due to the recent experience of hyperinflation. In 2014, when Bulgaria was unable to pay insured depositors for six months after a bank failure, the central bank ref

Peter Praet's speech at the Money, Macro and Finance conference last week was a goldmine. I've already discussed the central bank credibility problem revealed by his final slide. But his presentation went far, far wider than central banks. It raised serious questions about the future of the global economy. This slide - the first in his presentation - shows that there have been three significant global shocks in the last decade, not one: The first, obviously, is the deep global recession caused by the failure of Lehman Brothers in September 2008. But what are the other two? As Toby Nangle's annotations to Peter Praet's second chart show, the second is the Eurozone crisis, and the third is the emerging market crisis triggered by the unwinding of the oil & commodities boom: Looking at these charts made me think of ripples on a pond. When you drop a pebble into a pond, it initially creates a deep hole in the water, with raised sides and splashing. The

On the evening of Friday, September 22nd, the credit ratings agency Moody's downgraded the UK's credit rating. Admittedly, it was only by one notch. But coming as it did hard on the heels of Theresa May's grand speechin Florence , it was a shattering blow.  Credit ratings agencies lost much of their lustre in the financial crisis of 2008, when they were revealed to have been complicit in the mispricing of complex financial derivatives – the “toxic waste” that brought down some of the world’s largest financial institutions. So it is tempting to dismiss Moody’s action as pointless and its analysis as economically illiterate. I confess that I have done so myself, in the past. But this time, Moody’s is on the money. It tells a story of a tragically weakened government struggling with a legacy of policy errors from previous governments as well as the growing likelihood of a chaotic and potentially disastrous Brexit. Moody’s gives two main reasons for the downgrade:

A year ago, I attempted to look beyond the shock of the Brexit vote and its associated economic disruption, and see into the distant future. I saw a completely different political paradigm, though I could not discern its shape. And I saw a possibility that, like Hong Kong in 1997, the fears of economic disaster would prove baseless, and Britain would have a bright future, though one which I could not imagine. I called on everyone to try to make Brexit work: Not for a long time has the future been so uncertain. In the short-term, there will be pain. But in the longer-term, the future could be exciting. I did not vote for this, but this is what my compatriots chose, and I accept their decision. So this is what we - collectively - have chosen. Now we must embrace it, fully. For only by committing to our post-Brexit world can we have any hope of making it work. While we hanker after the past, and try to find ways of hanging on to it, we remain condemned to a stagnant future. Risk i