{"id":27766,"date":"2017-11-08T19:57:32","date_gmt":"2017-11-09T00:57:32","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27766"},"modified":"2017-11-08T19:57:32","modified_gmt":"2017-11-09T00:57:32","slug":"the-real-risk-to-the-global-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27766","title":{"rendered":"The Real Risk to the Global Economy"},"content":{"rendered":"<h3 class=\"listing__title\"><a href=\"https:\/\/www.project-syndicate.org\/commentary\/real-risk-global-economy-by-christopher-smart-2017-11\">THE REAL RISK TO THE GLOBAL ECONOMY<\/a><\/h3>\n<p data-line-id=\"548d62cab09d4ee5ba264d6b003da0f2\">WASHINGTON, DC \u2013 One of the great mysteries of today\u2019s global markets is their irrepressible enthusiasm, even as the world around them appears on the verge of chaos or collapse. And yet, investors may be more rational than they appear when it comes to pricing in political risks. If investing is foremost about discounting future cash flows, it\u2019s important to focus precisely on what will and will not affect those calculations. The potential crises that may be most dramatic or violent are, ironically, the ones that the market has the easiest time looking through.<\/p>\n<aside class=\"inlay inlay--slide slide__container show-for-medium editorpick-container\">\n<article id=\"editor-pick-5a0322cd78b6c719648b25ac\" class=\"listing slide \" data-url=\"real-risk-global-economy-by-christopher-smart-2017-11\" data-page-area=\"editorpicks\">\n<figure class=\"image image--ratio-16-9\"><picture><source srcset=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.16-9-medium.1.jpg\" media=\"(max-width: 450px)\" data-srcset=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.16-9-medium.1.jpg\" \/><source srcset=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.16-9-small.1.jpg\" media=\"(max-width: 1200px)\" data-srcset=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.16-9-small.1.jpg\" \/><source srcset=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.16-9-medium.1.jpg\" data-srcset=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.16-9-medium.1.jpg\" \/><img decoding=\"async\" class=\" lazyunload lazyloaded\" src=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.jpg\" alt=\"A man walks past a display showing bank notes\" data-src=\"https:\/\/webapi.project-syndicate.org\/library\/c249b8c6a738f73f49622f869c71e2bf.jpg\" \/><\/picture><\/figure>\n<header class=\"listing__header\"><\/header>\n<\/article>\n<div class=\"inlay__controls\" aria-hidden=\"true\">\n<div class=\"flex button__group slide__nav\">Far more dangerous are gradual shifts in international global institutions that upend expectations about how key players will behave. Such shifts may emerge only slowly, but they can fundamentally change the calculus for pricing in risks and potential returns.<\/div>\n<\/div>\n<\/aside>\n<p data-line-id=\"e0079a244ddd4b6dba994069601fe386\">Today\u2019s market is easy to explain in terms of fundamental factors: earnings are growing, inflation has been kept at bay, and the global economy appears to be experiencing a broad, synchronized expansion. In October, the International Monetary Fund updated its <a href=\"http:\/\/www.imf.org\/en\/Publications\/WEO\/Issues\/2017\/09\/19\/world-economic-outlook-october-2017\" target=\"_blank\" rel=\"noopener\">global outlook<\/a> to predict that only a handful of small countries will suffer a recession next year. And while the major central banks are planning, or have already begun, to tighten monetary policy, interest rates will remain low for now.<\/p>\n<p data-line-id=\"fbb4ec641a694b0aa11d8ac8600ad655\">Political crises, however sensational they may be, are not likely to change investors\u2019 economic calculus. Even after the greatest calamities of the twentieth century, markets <a href=\"http:\/\/us.spindices.com\/documents\/commentary\/20130903-sector-watch-shocks-and-stocks.pdf\" target=\"_blank\" rel=\"noopener\">bounced back<\/a> fairly quickly. After Japan\u2019s attack on Pearl Harbor, US stock markets fell by 10%, but recovered within six weeks. Similarly, after the terrorist attacks of September 11, 2001, US stocks dropped nearly 12%, but bounced back in a month. After the assassination of President John F. Kennedy, stock prices fell less than 3%, and recovered the next day.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>THE REAL RISK TO THE GLOBAL ECONOMY WASHINGTON, DC \u2013 One of the great mysteries of today\u2019s global markets is their irrepressible enthusiasm, even as the world around them appears on the verge of chaos or collapse. And yet, investors may be more rational than they appear when it comes to pricing in political risks. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[4075,16933,150,366,368,690],"class_list":["post-27766","post","type-post","status-publish","format-standard","hentry","category-economics","tag-chaos","tag-christopher-smart","tag-collapse","tag-global-economy","tag-global-markets","tag-risk"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27766","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27766"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27766\/revisions"}],"predecessor-version":[{"id":27767,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27766\/revisions\/27767"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}