Western nations demanded that developing nations/emerging nations re-balance towards domestic demand. Four years after the so-called recovery began in 2009, emerging nations have done that remarkably well. What have western nations done to rein in leverage, to reduce the financial sector to a manageable size? Zilch. I deal with the first aspect in my today’s MINT columns. What the regulators in the West have not done on financialisation should form the subject of the next column.
The non-sense that is spewing out from American publications and on TV as to how the bond market has not brought the curtains down on deficit spending and debt has to be read/seen/heard to be believed. This is Orwellian propaganda. Where is the bond market? Is there a market for any financial assets? It is a cartel between the Federal Reserve, other central banks, Wall Street firms and Sovereign Wealth Funds. When the bond market was ‘free’, we saw what happened to bond yields in 1994 and later in Sweden and Canada in 1995-96.
‘I print; you borrow; I lend; you spend’ – where has the market been allowed to have a say in this cosy little insider game of immiserising savers and piling debt on debt?