Qauntitative easing is slowing down. 2014, will see further slowdowns in Fed bond purchases causing more volatility in commodity markets. As Western economies gradually recover, growth will migrate from East to West.
Worries persist over Chinese banks' loan books, with fears Chinese banks are overleveraged and loans are of poor qaulity. These banking concerns will trigger slowing growth in developing countries that have become reliant on Chinese infrustructural support. In the medium term, growth in developing nations is threatened by a strenghthening dollar and reductions in aid both from East and West.
Africa will see slight growth driven by primary industries. Volatility in commodity prices, all through 2014, willl limit medium term growth for developing nations. Western Europe has started rebalancing its books and recovery is on the cards with economies adjusting to structural rebalancing.
Thursday, 19 December 2013
Saturday, 14 December 2013
Missing Morality Crisis
Global finance's existential crisis is worsened by assumptions that lie at the heart of economic theory. These assumptions are not only adopted in financial economics (high finance) they also provide profiteers an alibi to rip-off with impunity. A 'greed is good' and 'it is OK if one does not break the law' mentality allows for grey areas to be used as profit opportunities and unfair contracts to be drafted that fit within 'law'.
Self-interested cultural paradigms define business rules,operational manuals and legislation. Lacking a truly moral motive, and being legalistic in nature, these rules remain inadequate to ensure fair play in business. Whats needed is a fresher approach to encourage natural fair play.
Reintegrating morality and ethics into all levels of economic study, discourse and policy formulation is a starting point. Adam Smith introduced his economic theses by looking at moral considerations with regards the economy. After morality was encouraged- in Moral Sentiments; capitalism's treatise-The Wealth Of Nations,was presented. As such, more legislation will not bring about more ethical business. Without morality, more rules only encourage more cunning. Lacking ethical interpretation this global financial crisis will not be resolved at its root.
Self-interested cultural paradigms define business rules,operational manuals and legislation. Lacking a truly moral motive, and being legalistic in nature, these rules remain inadequate to ensure fair play in business. Whats needed is a fresher approach to encourage natural fair play.
Reintegrating morality and ethics into all levels of economic study, discourse and policy formulation is a starting point. Adam Smith introduced his economic theses by looking at moral considerations with regards the economy. After morality was encouraged- in Moral Sentiments; capitalism's treatise-The Wealth Of Nations,was presented. As such, more legislation will not bring about more ethical business. Without morality, more rules only encourage more cunning. Lacking ethical interpretation this global financial crisis will not be resolved at its root.
Wednesday, 11 December 2013
Amoral Economics
Economics is missing its moral root. Moral Sentiments, written by Adam Smith before The Wealth Of Nations, provided the moral founding assumptions of economic thinking. In essence, morality should be the bedrock of economic thinking.
All the classic thinkers, in philosophy and science, depended on ethical standards based on a moral foundation. Economics, which prides itself as a science, has great difficulty demonstrating its moral stance, as it has gradually ignored all the ethical ethos of the humanities. By emphasising 'self interest' and ignoring 'do the other no harm'-a moral sentiment, the science of economics is in reality a biased collection of self-serving hypotheses.
As modern economists go further away from the founding traditions of classical thinking, emphasised in moral philosophy, economics and its derivatives has totally ignored considering the impact of experiment, or practice, on human welfare. It is emphasised in all scientific pursuit that experiment and demonstration should always maintain high ethical standard.
Financial economics which has driven global finance into perpetual crises is the domino result of a science that lacks morality. Driven by economic assumptions-devoid of moral and ethical consideration, greed has been encouraged and the market persists in eternal turmoil.Only ethical considerations and a moral socialisation of economic thought can bring back sanity in financial exchange.
All the classic thinkers, in philosophy and science, depended on ethical standards based on a moral foundation. Economics, which prides itself as a science, has great difficulty demonstrating its moral stance, as it has gradually ignored all the ethical ethos of the humanities. By emphasising 'self interest' and ignoring 'do the other no harm'-a moral sentiment, the science of economics is in reality a biased collection of self-serving hypotheses.
As modern economists go further away from the founding traditions of classical thinking, emphasised in moral philosophy, economics and its derivatives has totally ignored considering the impact of experiment, or practice, on human welfare. It is emphasised in all scientific pursuit that experiment and demonstration should always maintain high ethical standard.
Financial economics which has driven global finance into perpetual crises is the domino result of a science that lacks morality. Driven by economic assumptions-devoid of moral and ethical consideration, greed has been encouraged and the market persists in eternal turmoil.Only ethical considerations and a moral socialisation of economic thought can bring back sanity in financial exchange.
Sunday, 1 December 2013
Currency manipulation-fact or fiction?
Just like LIBOR, PPI, money laundering scandals and other financial concerns, raised over the past few months, currency trading has also followed suit. Statistically this was bound to happen given the size of the foreign currency market and higher banking's bonus culture.
Focusing from one banking business, to the other, will not solve the biggest flaw of financial markets which is financial economics. Financial economics is founded on the principles of neoclassical economics: self interest and profit being the sole motive of enterprise.
Founded on skewed assumptions finance will deliver more scandals. The $700 trillion dollar plus derivatives market is still waiting in the wings to deliver the biggest scandal yet. Scandals like forex trading, PPI and etc are mere warm ups to the real issues the markets are ultimately needing to resolve.
Subscribe to:
Posts (Atom)