One of the most damaging effects of the pandemic was its impact on the treatment of medical conditions.
Coronavirus consumes so much energy that many other diseases fight for recognition, treatment and time.
This is how it works for the global economic system. All else is lost as policymakers focus so much on Covid-19’s monetary and fiscal response.
The monetary, fiscal and Covid-19 responses are so dominant that policymakers’ efforts fade away.
Omicron has quickly changed interest rates outlook, even though costs of living and laxity have not diminished.
In spite of strong labour markets, expectations of interest rate increases early in the future have been raised on both sides.
The Covid years were a time when traders had a right to be focused on the flaws in the financial system.
In recent transactions, bitcoin has seen a 20% correction. Many special purpose acquisition corporations (Spacs), are insolvent. A decline in the value of junk bonds and a 50% drop in airline stock values from preCovid levels is evidence of uneasy confidence.
Basle-based Bank for International Settlements has dispelled the belief that centralised financial ledgers can somehow be transparent or stabilising.
Decentralised Finance, otherwise known as DeFi or blockchain, reminds me of Alan Greenspan’s analysis in a 2005 speech made in London.
He said that derivatives held by global banks meant risk was spread more widely. Financial assets would be safer if the market burst, as it did only two years later.
It was clear that these derivatives parcels were cluster bombs. They detonated all over the world, taking down Bear Stearns (Lehman), Northern Rock, RBS, as well as much of the global banking system.
DeFi is a similar example. The capital and other shock absorbers that were put into place after the financial crisis are not available in this new area occupied by crypto-currency producers and traders, fintech banks and exchanges. The space, which is dominated by artificial intelligence (AI), has very few human interventions or central authorities.
There are significant risks without some type of governance. The DeFi rabbit hole has cost $247 billion.
Global finance has another unrecognized weakness: China’s credit exposures. Evergrande’s debt problem is still not resolved by the Chinese property conglomerate.
According to the firm, it has admitted that it cannot meet its repayments. This forced shares to fall 19.6 percent in recent trading.
Its difficulties are cascading down through Beijing’s real estate sector, raising questions about the stability of lenders.
Initially, China seemed to take the view that there would be no concept of ‘too big to fail’. But a decision by the People’s Bank to cut the reserve requirement of banks, in an attempt to ease the logjam, is recognition all is far from well. The tectonic plates move under the covid cover.
Risk taker
Clearing and derivatives are crucial to the London Stock Exchange Group’s (LSEG), and post-Brexit City.
The EU ambition to steal London’s thunder may have been derailed but Wall Street continues to nip at the heels of the Square Mile.
The LSEG (owner of London Clearing House) needs to be at the top in order to stay there.
The purchase for £274million of Quantile, which provides advanced risk management systems to hedge funds and banks, should support that quest to remain dominant.
The deal, which will greatly enrich Stephen O’Connor who co-founded Quantile in 2015, looks incestuous.
O’Connor is a former boss of the derivatives trade association and until August of this year was also an independent director of LSEG. This is how cozy.
Test times
Stefano Pessina aspired to rule the fallen worlds of wholesale and retail pharmacies in Europe, the USA and China.
Boots, and the coveted No 7 beauty brand would lead this assault. It hasn’t quite worked like that for the spry Italian octogenarian.
European drug distribution is being sold, and Boots appears to be the next. Walgreens must be paid off its debts as well as upgraded by the current owner.
This is not surprising, considering the numerous complaints received about rotten service from Walgreens personnel and labs testing for the pandemic.