The US — finally — is back. Strong growth, falling unemployment, rising confidence and a buoyant stock market all say so. The rest of the world, meanwhile, seems stuck in the doldrums. Should this divergent dynamic concern investors?
The past few months have brought a spree of frightening developments in the global economy. There’s been the slow crash of the Chinese property market, the eurozone’s slide into deflation and the relentless strengthening of the US dollar, to begin with.
But there is no doubt what the biggest and most baffling development of all has been: the collapse in the price of oil, from more than $100 per barrel as recently as last September to less than $50 per barrel today.
Why has it happened – and what does it mean? You can read my best guesses in an Observations piece I just published in the New Statesman here.
On January 14, 2015, Robert Skidelsky and I appeared at the London School of Economics in conversation on the topics covered by Are Markets Moral?, a new book edited by Robert and his son Edward Skidelsky. A podcast of the event is available here.
My contribution to Are Markets Moral? is an essay called “The Meaning of Money”. It is available in pdf format here: The Meaning of Money.
Michael Lewis’s new book Flash Boys is quite rightly generating a lot of attention because it argues that High Frequency Trading is a scam.
I think that Lewis’s story holds an even more important lesson, however, concerning one of the seminal problems of our age: the unintended consequences of technological innovation.
You can find an archive of my Real Money columns here.