Saturday, June 11, 2011

The Age of Financial Regression

The Economist's Buttonwood teaches basic lessons of economics to a Nobel Prize winner (here and here) while bringing forward a note by the Deutsche Bank that uses an interesting public choice argument to explain how we're seeing the rise of the age of financial regression:
With such a large overhang of Debt across so many developed countries it's likely that the financial markets regress back some way towards the controls that were commonplace for decades post WWII. The alternative if this doesn't happen is the risk of widescale Sovereign and Bank defaults across Developed markets over the next few years. So we'd argue that the next few years could be characterised by 'financial regression' as the financial system deals with the huge debt problem by pulling back from the free unfettered, free flowing cross border capital markets developed over the last 30 years.

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