The US government has shut down. Leaders across Europe are locked in terminal bickering. And as Matthew Lynn notes, our politicians are vying to offer the most ridiculous bribes to voters before the 2015 election (they never remind us that they are bribing us with our own cash, of course).
Much of this turmoil is a direct result of politicians handing responsibility for economic management to the world's central bankers.
In America, market reaction to the shutdown has been fairly muted, because the government stalemate makes it more likely the Federal Reserve will keep printing money.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Over here, Ed Miliband and David Cameron may disagree on whether we should be taking energy prices back to the 1970s, or merely freezing taxes on petrol. But ask either man for his view on where interest rates should be, and they'll each gratefully pass the buck to the Bank of England. (Chancellor George Osborne has now even handed responsibility for his flagship housing bubble reflation scheme Help to Buy to the Bank.)
As for Europe, well, eurozone politicians gave up economic sovereignty to the European Central Bank when they joined the euro.
The trouble is, the central bankers' solutions only make things harder politically. Quantitative easing (QE) has driven up asset prices. This is deliberate as regular contributor James Ferguson says, the point of QE is to bail out banks by the back door.
Pushing up asset prices does just that. But it also means that ever more of the world's wealth is becoming concentrated in the hands of fewer and fewer people because those with the most money also tend to own the most assets.
In turn, the wealthier you are, the easier it is to pick and choose a tax jurisdiction. This comes at a time when most developed-world nations have promised their citizens far more than they can ever realistically afford to deliver.
That can only mean one thing higher taxes and fewer benefits for the merely well-off' rather than the super-rich, regardless of what politicians say this side of an election.
What does this mean for investors? For one, even if you don't see yourself as especially well-off, you are likely to be a target for paying more tax. As we've said in the past, pensions are favoured places for governments to go snuffling for treasure, because most people don't pay them much attention.
So, make sure you have some investments sheltered in an individual savings account (Isa) too they're likely to be further down the hit-list. Be wary of easy corporate targets: utilities may be attractive income-payers, but they are also less mobile than other firms.
Finally, avoid government debt (still). When politicians start floating wacky policies such as fixing prices, there has to be a growing chance that markets will lose their desire to keep funding that country regardless of how much money the central bank prints.
-
Water companies blocked from using customer money to pay “undeserved” bonusesThe regulator has blocked three water companies from using billpayer money to pay £1.5 million in exec bonuses
-
Will the Bitcoin price hit $100,000?With Bitcoin prices trading just below $100,000, we explore whether the cryptocurrency can hit the milestone.
-
Inflation may be slipping but there is still plenty of misery aheadEditor's letter Inflation may be a little lower than last month as the prices of petrol and diesel fall back, but it remains structural and long-term, says Merryn Somerset Webb. And there are no painless solutions.
-
Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
-
The public may have reached its limit for tax risesEditor's letter The UK tax burden is now at a 70-year high. And, while there may be some reason to hold off on cuts right now, taxes are too high because the state tries to do too much. Perhaps it should do less, says Merryn Somerset Webb.
