The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Inside investment: Flip-flopping to double-dip?

Ultimately, the deficit must be repaid. But changing demographics and larger savings pools suggest relatively high levels of government indebtedness might be sustainable in the short and medium term. The bigger risk is that austerity plunges a credit-constrained world into a nasty double-dip recession.

People crave clear narratives. The first series of NBC’s TV show ­Heroes was showered with Emmys, Golden Globes and Baftas. It could be summed up in six words: “Save the cheerleader, save the world.” On April 2 2009 the G20 communiqué gifted to markets another simple narrative. It promised among other things: “to restore confidence, growth and jobs”, “repair the financial system” and “an unprecedented and concerted fiscal expansion”. This helped the global economy heal after the great recession and equity markets to rally faster than at any time since the 1930s.

The final series of Heroes, which was canned in May, was rather more confusing. It was populated by strange carny-folk who looked like extras in a Nick Cave video directed by Terry Gilliam. The latest outpourings from the G20 are similarly odd. Its last press release went out of its way to praise “the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”. This is a remarkable policy flip-flop in the space of 14 months.

Unnecessary pain

Governments are seemingly in thrall to bond vigilantes and FX traders. Greece’s sovereign debt crisis and the euro’s moment of existential angst have prompted some to reach for the fiscal hair shirt.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree