Twelve years on from the peak in US house prices, 11 years on from the start of the credit crunch that gave us our great financial crisis, and ten years on from the bankruptcy of Lehman Brothers, the world still feels pretty unstable. The "solutions" to the crisis mostly super-low interest rates and endless rounds of money printing (quantitative easing or QE) might have headed off full financial collapse and depression, but they have had some nasty side-effects as well. Some of the problems that gave us our crisis are still with us pretty much intact. Global debt levelsarehigher, not lower, than in 2008 for example, and our banks are still too bigto fail: the top five control just as muchof the global financial system as theydid in 2008.
But QE and low rates have also produced some new problemsof their own think fast-rising wealth inequality and long-term political upheaval. What will the long-term legacy of the crisis be? And isthere another crisis on the way? Forsome of the answers to these questions turn to John's cover story. Spoiler alert: the answer to the second question is "yes". Historian Ray Perman reminded me this week (when we were having a nice chat about the crisis on the BBC) of James Grant's clever observation that, while learning in science is linear (we hang on to and then build on knowledge), in financial markets it is cyclical (everything always has to be learnt again). We can't tell you exactly when the next crisis will be or what will cause it (although we can't help noticing the vast debt that has built up in China since 2009). But we can tell you for certain that there will be one. John has some ideas on how to make sure your portfolio is as ready as it can be.
For those with more risk tolerance than most, we look at what's on offer at the Frieze Art Show and up for auction at Christie's Francis Bacon painting for £20m, anyone? For those who can't bring themselves to buy anything remotely overpriced right now, we look at the stockmarket bargains (or value traps time will tell) to be found in parts of Zimbabwe. And finally for those who think Africa's value stocks don't fit their risk profile, on page 6 we look at one of the veryfew inexpensive developed markets in the world the UK.
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With the UK in mind, I suspect many readers are worried about Brexit. Time's getting short and our leaders seem more than mildly incompetent (for which, by the way, we blame their failure to understand the fall-out from the financial crisis in time). The good news here is that should they choose to make Brexit relatively easy, thereis still a way to do so. It is (as we keepsaying!) EEA/EFTA, the best possible compromise Brexit. It might not make anyone 100% happy. But that of course isthe nature of a good compromise.
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Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
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Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
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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.
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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.
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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.
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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”.
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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.
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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.
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Car hire and the strangeness of the post-pandemic economyEditor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
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Why we need to get a grip on our governmentEditor's letter Our government is trying to do too much, enacting policies that are destructive to the private sector. It needs to drop the the feel-good nonsense and create policies that lead to long-term wealth, says Merryn Somerset Webb.
