Pulse: Finance, Banking, and Regulation
I normally feel after reading, reviewing, and discussing the events of the previous week that I’m able to discern a direction or constructive theme. Today however, every corner of the world seems mired in some degree of turmoil, and markets are reacting. There is so much noise that it is difficult to decide what is causing this new volatility. Is it China, the Fed, the Mueller investigation, Yellow Jackets, or technology run amuck?
Originally published by FIIG’s The Wire blog.
When Lehman Brothers filed for bankruptcy on Monday 15 September 2008, I was in what would turn out to be my last year as Chief Economist at ANZ Bank (not that I knew it then – I didn’t decide to leave until almost exactly three months later, and then took another seven months to put that decision into effect).
The gap in small business lending, which the easy-money policies of the Federal Reserve were supposed to fill, are well documented. It's more difficult for small businesses to get small loans from banks, in large part because it's less profitable for banks of all sizes to make small-dollar loans.
I agree with a Twitter commentator today who said that US-China trade relations was giving him whiplash after President Trump’s volte-face on ZTE. For context, I recommend two new books with a longer view on the changes taking place in China. The first, “The End of an Era” by Carl Minzer is truly a must-read for any China watcher. Devin Stewart at the Carnegie Council conducted a wonderful interview with Prof Minzer, which I’ve included below.
Expect state government agencies and legislators to move most quickly on providing regulatory clarity on FinTech regulation in the United States. U.S. federal regulatory agencies have initiated enforcement actions against some of the most egregious cryptocurrency investment practices and are watching the industry closely.
What a week it was! Equity markets and cryptocurrencies, both of which appeared to defy the laws of gravity, and the US dollar took a dive. However, the story of synchronized global growth does not seem to have changed. Have we finally escaped the long dark shadow cast in 2008? Renowned Japanese economy expert Takatoshi Ito thinks that things are changing at the Bank of Japan, the institution that invented and led the world in quantitative easing. This could be a signal of things to come in a new global monetary policy environment.