Book of the Week: The Only Game in Town
11 Aug 2016
This week I read The Only Game in Town: central banks, instability, and avoiding the next collapse by Mohamed A. El-Erian. This book sort of just went through me without me absorbing anything. It feels like a brain dump by El-Erian. The chapters are really short and it doesn’t tell me anything I don’t already know. If you lived in the future and wanted to figure out what happened in the past, this might be an okay starting point, but other books go much deeper into specific subjects. The main issue is that we are going through a period of low growth, which has a lot of societal implications like inequality. If you want to read more about that, I recommend Piketty’s Capital in the Twenty-First Century. El-Erain keeps referring to a T-intersection, where things will get worst or they will get better. If that is the case, I might as well do a long straddle. Issues
- Repeatedly inadequate and unbalanced economic expansion, reflecting cyclical/secular/structural headwinds, highlights the extend to which many advanced economies still lack proper growth methods.
- Unemployment remains too high in far too many advanced countries; and it is getting more deeply embedded in the structure of these economies and, therefore, will become that much harder to solve.
- Fueled by an unusual combination of cyclical, secular, and structural factors, the worsening of income and wealth inequality has been so pronounced within countries that it now also undermines opportunities.
- The loss of institutional credibility is part of a more generalized erosion of trust in politicians and the “system” as a whole.
- National political dysfunction is still a headwind to overcome economic malaise and restoring genuine and durable financial stability.
- As national dysfunction undermines global policy coordination, traditional core/periphery relations fail and geopolitical tensions escalate.
- With systemic risks migrating from banks to nonbanks, and morphing in the process, regulators are again challenged to get ahead of future problems.
- When the market paradigm changes, as it inevitably will, the desire to reposition portfolios will far exceed what the system can accommodate in an orderly fashion.
- Yet none of these uncertainties and fluidities seemed to disturb financial markets that, operating with unusually low volatility, went form one record to another. As such, the contrasting gap between financial risk taking (high) and economic risk taking (low) has never been so wide.
- All of this adds up to considerable headwinds for the better managed part of national, regional and global systems.
As you can see, there are a lot of issues. One really interesting thing is that the big companies of the future will come from emerging markets. Purchase The Only Game in Town on Amazon.com or check it out from your local library.