Coppola Comment

In a broad-ranging discussion the other day about the path of political and economic policy over the last decade, I found myself returning again and again to events in 2014. Events that were apparently unrelated: Bulgaria's banking crisis , Moldova's banking fraud , the collapse of Banco Espirito Santo , the election of Syriza in Greece, the first Scottish independence referendum, UKIP's success in two Westminster by-elections as well as local and European elections. And in Ukraine, the Euromaidan revolt followed by Russia's annexation of Crimea and invasion of Donbas. "Why do all roads lead back to 2014?" I found myself asking.  The financial and political eruptions of 2014 marked the start of a major shift in the global geopolitical landscape. But it was not clear where the faultline lay. Lots of people thought it was between the Western "old order" and the emergent economies of Asia, led by China. And others, including me, thought it was a revolt

This post was first published on Pieria in July 2013. I have re-posted it here on Coppola Comment because it now seems terribly, terribly timely.  I have been reading James Rickards' book Currency Wars . In this, Rickards reviews the use of fiat currency over the course of the last century, and concludes that the present global fiat currency system is inherently unstable and on the point of collapse. He calls for return of the gold standard to stabilise firstly the US dollar and, following on from that, international trade currency. I am no historian, but the first thing that struck me about this book was its partial view of history. Rickards does not discuss the reasons for the classical gold standard being abandoned in 1914. Indeed since he writes almost entirely from an American perspective throughout this book, the European historical dimension is seriously neglected. There are two major omissions:  - the background to World War I and its consequences  - the collapse

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

The last week has been extraordinary, even by the standards of these extraordinary times. A flurry of Executive Orders from the new President of the United States has thrown the global order into chaos and sparked outrage throughout the world. But he has only done exactly what he said he would do. There is nothing in the Executive Orders signed so far that was not announced during the Presidential campaign, repeatedly and to loud cheers from his many supporters. The President was lawfully voted in by the people of the United States on the basis of the promises he made to them, and he is now following through on those promises. Frankly, I find this hard to criticise. If his decisions are illiberal, discriminatory and racist, that is because a substantial proportion of the American people are illiberal, discriminatory and racist. The problem is not the President, it is those who elected him. I do not understand why those who cherish liberal values and human rights convinced th

Are inheritance taxes unfair? Many people think they are. "Why should I be taxed twice on money I've earned during my lifetime?" they say. This is, of course, a fallacy. Dead people don't pay taxes. Living ones do. So inheritance tax is not double taxation of money the dead person earned while they were still alive. It is taxation of an unearned windfall for the people to whom they leave their assets, usually their children. Other forms of unearned income, such as interest on savings and capital gains, are taxed. Why should someone be taxed on unearned income they receive as a result of investments made from their own earnings, but not on unearned income they receive as a result of investments made from someone else's earnings? That doesn't look very fair, does it? Surely taxing that unearned windfall must be fair.  No. According to the economist Greg Mankiw, taxing inheritance is fundamentally unfair: From my perspective, the estate tax is a

There has been a huge amount of analysis about the reasons why British people voted to leave the EU. Some of it is very good : some of it less so, saying more about the biases of the writers than it does about the motivations of the British (no, I won't link any of those posts here!). I confess, I have added to the literature myself . I leave it to you to judge into which of these categories my contributions fall. But in all the vast verbiage written on this topic, there appears to be a no-go area - a taboo, if you like. And it is not immigration, nor even racism and xenophobia. Nor is it the loss of Britain's manufacturing and the seizure of its fisheries. Nor the divide between London and other areas, the old-young split, the fact that people with degrees tended to vote to Remain. Plenty has been written on all of these. No, the taboo subject is the legacy of World War II and the loss of the British Empire. I grew up in the shadow of war. My parents were children dur

In response to my post about the lessons of history , Claudia Dias sent me this clip from The Times, March 31st, 1939: Four months after Kristallnacht , and two weeks after Hitler's annexation of Czechoslovakia, the British government was still repatriating Jewish refugees. This group knew they were being sent back to almost certain death. No wonder they were hysterical. Today, refugees in Greece face deportation to Turkey, and from there probable repatriation to their own countries. If they are denied the opportunity to claim asylum, as appears to be the case for some, this would contravene the Geneva convention on refugees. UNHCR representatives and aid agencies are being refused access to refugees sent back to Turkey. There are reports that refugees threaten to commit suicide rather than be sent back. Desperate people, desperate times. We have learned nothing. Related reading: When the world turns dark