Mark Riggall: Is this the start of another GFC?

The events over the past week bear an eerie resemblance to those of the 2008-9 Global Financial Crisis (GFC). Banks have failed, rumours swirl about the next victim and investors hold weekend vigils awaiting the next alphabet soup solution from banking authorities. So should we be concerned? Is there good reason to think that we are on the cusp of a major financial crisis, and should depositors fear the safety of their money?

The GFC sparked significant changes in the regulation of banks across developed markets to shore up the banking system and increase confidence. Banking regulation is an incredibly complex subject with differences across regions. However, the thrust of the regulation has delivered two key changes to banks over the past decade:

Oliver Hartwich: Germany is stumbling towards an uncertain future

It is summer in Germany, and traditionally that is not good news. Or rather, it is not a good time for news.

When non-stories suddenly dominate the front pages in the UK, they call it ‘the silly season’. The German equivalent is ‘the summer hole’, which is an apt term for the hot issue of this year: a party song called Layla.

Layla is a bizarre chart-topper for a country that once regarded itself as a Kulturnation. There is a diametrical difference between Layla’s musical quality and Beethoven’s, and the song’s lyrics insult the language of Luther and Goethe. The little content they contain is crude, rude, and disgusting. This is no wonder because the song is about a brothel and its lead employee, Layla (“She’s prettier, younger, hornier / La-la-la-la-la-Layla”).

Now, Layla should not be worth mentioning, least of all to an international audience. But its tasteless content has led to its banning at some folk festivals and radio stations. And that, in turn, has created a debate on freedom of speech and sexism.

Bryce Wilkinson: An update on the odds on a serious recession

We explained in our November research report "Walking the Path to the Next Global Financial Crisis" why concerns about prolonged economic stagnation, or even serious recessions, should be taken seriously.

During the 2008-2010 global financial crisis, governments' responses had turned a banking crisis into a public debt crisis. In response to Covid-19, governments doubled down on their debt, and central banks took unprecedented steps to lower interest rates and create money.

Many governments are in debt traps. Raising interest rates would make their debt problems even worse, but not doing so would fuel inflation.

David Skilling & Michael O’Sullivan: The beginning of the end

At the 10th anniversary of the start of the global financial crisis, the remedies put in place to staunch its financial and economic effects remain. However, in a sign that the global economy has stabilized, central bankers are signaling the end of their super-accommodative monetary policies.

The “great normalization” began with the U.S. Federal Reserve raising rates three times amid deafening silence from low-volatility markets. Other authorities have followed, notably the European Central Bank, with markets egging on the end of quantitative easing, and the Bank of England, where a debate on inflation is underway. Both the euro and the pound have risen against the dollar, but in both cases diminished political risk has played a role.

Simon Cowan: Will taxes on the super-rich solve budget woes?

Governments around the world are being dragged, in some cases kicking and screaming, into doing something about their budget deficits. The difficulty is that the public will neither pay more tax nor countenance any cuts to entitlements and services. Hence, recent state budgets have been using euphemisms such as ‘efficiency dividends’ and ‘trimming the fat,’ while senior politicians rush to reassure electorates that public service job losses will not affect frontline services.

However, such cloak-and-dagger methods can take you only so far, especially if (like the United States) you’ve got a trillion-dollar hole to fill. Perhaps, the thinking goes, where dissembling fails envy might succeed. After all, everyone knows that the super-rich are rorting the tax system; all we need to do is raise their taxes so they pay ‘their fair share’ and everything will be OK, right?