Insight
We provide insight into key macroeconomic trends and risks that affect the global political and business environment
How I learned to stop worrying and welcome a housing crash
By John Rapley
It was a big mistake to ever sell housing as a good investment. First off, it rarely is. Plot the long-term returns of property and stocks in the world’s most dynamic economies and you’ll see that it’s almost always a laggard (as the one percent know all too well, which is why they seldom put much of their portfolio into real estate).
Ramaphosa’s Last Chance
By John Rapley
On December 13, South Africa’s embattled president, Cyril Ramaphosa, survived a vote in Parliament on whether to impeach him over misconduct allegations. Less than a week later, he won a second term as head of the ruling African National Congress (ANC). But Ramaphosa now faces the challenge of his political career. Although Ramaphosa’s grip on his party may be fragile, his ultimate success in the ANC leadership race may finally have given him the mandate he needs to tackle the deep-rooted corruption that is eroding the state and strangling the economy. But it is also possible, as his critics allege, that with or without the authority to tackle the problem, Ramaphosa lacks the will. South Africans are about to find out.
We’ll never get back to low inflation, and we shouldn’t even try
By John Rapley
This week’s U.S. and British inflation reports continued recent trends across Western countries, with inflation pulling back from recent highs. Next week’s Canadian figures will probably bring similar holiday cheer. Thrilled that central banks appear to be winning the war on inflation, investors have started their celebrations early, launching year-end rallies in stock markets and driving bond rates down. But while the news is unquestionably good, those celebrations may be premature. There’s a sting coming in inflation’s tail, and you can spot it in the bowels of the figures.
When it comes to China and Taiwan, the West should take a page out of its Ukraine playbook – don’t fight, but provide arms
By John Rapley
The game-theorists are furiously at work, mapping out decision-trees to assess what might happen if China invades Taiwan. Tension is rising. As Xi Jinping’s rhetoric grows bellicose, he gives every indication he’ll define his tenure by the reintegration, if needed by force, of the renegade province into the rest of China. But after more than seven decades of separation from China, and its evolution into a vibrant liberal democracy, Taiwan wants to set its own course. As it distances itself from Beijing, the government in Taipei has been deepening ties to the United States-led alliance, which includes not only its NATO partners but regional powers like Japan, Australia and India. But talk of a confrontation between China and the West presumes the two sides will come to blows. What if the alliance instead used the approach it has employed rather effectively in Ukraine? What if it made it clear it would stand aside during the fighting, but give Taiwan all the weaponry and support it needed to defend itself?