FinanceWriter

Love can be a maddening diversion. Separation equally distracting. Love or divorce - what is the price of disruption in corporate or government liaisons?

As anyone who has ever loved knows, love can be maddeningly distracting. Whether making or breaking of a relationship can mean normality heading to hell in a handcart.

Kraft Heinz saw a merger with Unilever as a match made in heaven. It might have saved Kraft management having Cadbury’s Crème Egg all over their faces had they asked Warren Buffett first given his famous hostility to hostile takeovers.

Mergers are not just synergistic unions to achieved cost savings, they require the harmonisation of sometimes widely diverse cultures. If the process of merger commences with antagonism and resentment, it will not contribute to the perceived benefits of the union. Kraft had form when it took over Cadbury leaving a bitter taste in many mouths.

Arranged Marriages?

But even if both parties greet a merger gleefully there are still dangers. The corporate "brain" can only do so many things at a time. Someone in love may be unable to eat, sleep or concentrate; the boards of merging companies may struggle to downsize the workforce, upgrade the IT systems and present a united front while simultaneously maintaining sales, revenues, performance and profits.

The contribution and input from investment bank advisers, stockbrokers and consultants can only go so far: advice is not pixie-dust that once sprinkled magically, and instantaneously, transforms a problem into a solution. Advice is neither direction nor execution; it represents an idea or set of ideas in search of someone to implement it or them.

Waiting for Godot

Like marriage, the full synergistic benefits of mergers and acquisitions are seldom achieved in full. Indeed, Like Godot in Samuel Beckett’s play, sometimes they never arrive at all.

Corporate executives have businesses to run. How ever energetic or talented, taking over another large chunk of business will put them under pressure. Managing the pressure of the process itself can drain resources.

And mergers and acquisitions can result in something that is not focussed, streamlined and consistent. Kraft has form on this too: it decided to demerge its sweets and gum business, that included Cadbury’s, into Mondelez, a separate company, in 2011 having demerged its tobacco and consumer goods conglomerate, Philip Morris, a decade previously.

Taking the biscuit with Brexit

When Britain joined the European Economic Community 45 years ago it seems to have been a low budget wedding. Brexit, on the other hand, has the makings of a Hollywood blockbuster divorce. Celebrity lawyers calculate how long the new yacht they will be ordering will be depending on the wealth and acrimony of a celebrity divorce.

Before the promised benefits (or presaged costs) of the final outcome of Brexit, there is the cost of the process to be accounted for. And it is not just the phalanxes of civil servants and lawyers and trade negotiators whose noses will be firmly to the Brexit grindstone for many years to come: policy announcements by the British government are already overshadowed by Brexit news.

The amount of time Prime Minister May is devoting to the process means she must be emulating Mrs. Thatcher’s famed ability to survive on a couple of hours sleep a night. For better or for worse, for richer or poorer – indeed in sickness and in health, Brexit will prove a costly distraction from the day-to- day running of the country.

Gary Cohn promises to liberate the banking sector from tiresome regulations - as President Trump has asked him to do. But will this renown “attack dog’s” slashing red tape be an overreaction to the over regulation that was an overreaction to the last financial crisis or are these the stirrings of a financial services trade war?

Every time there is a financial crash regulators rush to produce a new sheaf of "never again" regulations to prevent a repetition. The fact that financial crises are repeated repeatedly is compelling evidence that regulators are as good at regulating as they alleged bankers are at banking.

A regulatory blizzard including, not only, the Frank-Dodd Act, a Single EU banking rulebook, Basel III and a host of other measures were supposedly the answer to the financial crash of 2008. Is Mr. Cohn’s proposed assault on Frank-Dodd going to swing the pendulum back to the lax rules that supposedly triggered that crash?

Mario Draghi, head of the European Central Bank and, like Mr. Cohn, a Goldman Sachs alumnus, is not so sure. He told the European Parliament recently that it was thanks to supervisors that financial risk had been reduced since the crash.

Frank-Dodd Dead?

The Frank-Dodd Act is seen by the likes of Mr. Cohn as an overreaction to the financial crisis in 2008 and regulatory and cost burden on banks (particularly the large banks who see him as their cheerleader). But Mr. Draghi, told the European Parliament, "The last thing we need is a relaxation of regulation… The idea of repeating the conditions of before the crisis is very worrisome."

Glass-Steagall cracked

Who is right? After all, the enfeeblement of the Glass-Steagall Act, creating homoeopathic dilutions of regulation, and the financial lifeboat launched for Long Term Capital Management in 1998 were both seen as contributing to attitudes to risk that laid the ground for the 2008 crash. Do we run the risk of the risk pendulum, which had swung too far in the direction of liberalisation before 2008 and too far towards rigid regulation post-2008 will swing yet again this time slicing through bundles of red tape (as Mr. Cohn sees it)?

Or is this part of a coming trade war in services between the US and the EU that will be waged with weapons of regulatory attrition and cutting the cost of regulation while increasing risk?

After all the EU Commission is planning to ease the restrictions on securitisation. They feel they are recognising the muscle in their re-regulation was an overreaction to the crash of 2008 that was, at the time, partly blamed on securitisation activity.

By relaxing those regulations the EU feel they can improve European banks’ capacity for lending to businesses and households allowing banks to use securitisation to free capacity for expanding loans.

Conditions of regulatory arbitrage are being created that will create competition that will allow international borrowers to cherry pick the price and the regulatory regime to which they wish to be subject.

Time will tell if the wheels of finance are being oiled or whether, as Mr. Draghi suggests, we face déjà vu all over, all over, again, again.

In 1919 a court ruled: "A business corporation is organised and carried on primarily for the profit of the stockholders." But today, can a "stockholder" hold all the cards in the face of "stakeholder" ascendency?

The nature and composition of the stockholder community has transformed over time. At the start of the twentieth century rich and powerful individuals controlled the banks, the railroads and other listed corporations.

But proprietorship mutated through the "shareholder democracy" of small, individual ownership of Britain's privatisation era, to an "ownership role" performed by institutional shareholders.

An institutional investors' role is less as an "owners" and more as fiduciary or trustee overseer. They hold shares on behalf of policyholders'. unit holders and other beneficial owners.

Securing the best

However, the primary duty fund managers owe is an extension of corporations' requirement to make profits for shareholders. Institutional investors are obliged to secure what is best for the beneficiaries encompassing all the indirect shareholders of the multiplicity of structures represented in institutional investment.

These indirect, beneficial owners nevertheless have a direct interest in the profitability of the corporations that ultimately pay their pensions and reward their investment.

Staking the ground

Companies vary in the extent to which they have a public face or engage with the general public: an investment bank, while its activities may have a large impact on employment, communities and even countries, may be little known to the general public.

An international mining company may not have a high profile amongst its indirect shareholders, but it engages directly with a range of different stakeholders.

Regardless of the "selfish" interests of shareholders' focus on profitability, a mining company has to deal its customers, it's suppliers, it's employees, the countries and communities that host it's potentially dirty and dangerous activities and corps of activists who may have an interest in everything from the corporation's contribution to climate change to its acquisition of mineral rights under the lands of aboriginal peoples.

In practical, if not legal terms it can no longer be said that corporations are driven solely by their need to generate profits for their shareholders. Customers, suppliers, employees, countries and communities are not stockholders. However, they are increasingly deemed to have a real "stake" in a corporation. That poses the question as to how these non-financial interests can be represented.

D-List celebrity

Anyone with the money can buy a share in a publicly listed corporation. That gives them the democratic right to vote on company resolutions or to raise issues at the companies annual general meeting. The attention of the BP board was focused by shareholder activists who protested at the AGM following the Deepwater Horizon oilfield disaster in 2010.

But should stakeholders' voices only be heard in protest or is it time for stockholders to reclaim ownership as many have done through delisting their companies?

In Continental Europe workers have seats on company boards. How would corporations, institutional shareholders and the beneficial owners of shares take to being obliged to listen to stakeholders on boards who have no "skin in the game"?

If non-shareholder voices become louder perhaps a court will again have to rule on the primary purpose of a corporation.

"This porridge is too hot". "And this porridge is too cold". "But this porridge is just right". Goldilocks's taste test of the bears' breakfast provides insight how to choose a financial writer.

It is said that if you want a job done properly you should do it yourself. But time-pressed bankers, fund managers, marketing and communications people are sometimes obliged to delegate writing tasks to trusted agents.

Financial writing is typical of projects that need to be outsourced: often the job is simply urgent, it needs someone who can complete it in time to meet a looming deadline for a speech or a newspaper article. Sometimes communicating complex issues to be addressed in, say, an annual report, thought leadership paper or case study may be too time-consuming for a busy executive.

Lost in the woods - or the trees?

Writing material can be a challenge for an expert: they may be so steeped in the language of their field that they can’t see the wood for the trees. That is a barrier when they have to convey a concept, a narrative or an enthusiasm for their complex subject to a wider audience whose attention needs to be secured who may have a sketchy grasp of the subject matter.

Subject specialists can do the job and may have the knowledge, but they often lack the vital ability to be able to communicate clearly and concisely. In these circumstances, the porridge would definitely be, "Too hot".

Writers have expertise and experience in a wide range of disciplines. However, someone who is an authority on, and can write with a great elegance about, architecture and the built environment, wouldn’t be the choice for drafting a speech for a banker about prospects for interest rates. The time consumed explaining bonds, Treasuries and Gilts to an architectural specialist would be wholly disproportionate in the management time required to brief them. Here it is clear the porridge would be, "Too cold".

Just right

Getting porridge that is "Just right" means finding someone who has a knowledge and understanding of the subject matter that enables them to quickly and intelligently explore the issues with the originator of the project.

If a financial writer has direct experience and engagement in financial markets they can "hit the ground running": they know the background and what questions to ask to clarify the brief.

Audience participation

The writers' background must also mean they understand the audience to which a message is to be communicated. The financial writer needs to appreciate what the audience wants to receive in the communication. Perhaps more importantly, the writer needs to grasp what messaging the client wants to convey to and how that will impact the audience.

This requires the ability not only to articulate complexities in an accessible way, but an understanding of nuance and the use of narrative to express concepts with authority in a way that will engage the readership, the audience or the marketplace.

Blockchain transactions verified by "miners" are seen not merely as the future for financial markets. Admittedly in a wholly a totally different context, Mark Twain warned, "a mine is a hole in the ground with a liar standing next to it." Are blockchains the future or a will they be a geomagnetic flash in the pan or a Chinese stirfry?

The inelegance of the term "blockchain makes it sound like something extra, extra secure to stop for your slaves escaping. But any initial impression belies blockchains’ claimed liberating potential in financial markets.

Far from "blocking" or "chaining" anything blockchain technology, in its most hyped exposition, promises freedom from the oppression of third-party intermediation. "Oppression" being a relative term. But costing billions of dollars in transactional inefficiencies each year intermediation could, apparently, disappear through decentralising the execution and clearing of transactions.

Blocking progress

It used to be assumed that anyone who understood blockchains or has used Bitcoins is a drug dealer, arms merchant or money launderer. Their freedom from oppression was the inability of the police to get their heads around the dark web.

Now a blockchain expert is more likely to be a "rocket scientist" working in the product development department of an investment bank.

Banks, institutional investors, clearing houses, brokers – any outfit that is dependent on third parties for timely and secure settlement of transactions is seeking a blockchain strategy.

Set in digital stone

Advocates of blockchains point to the advantages of speed, accuracy, transparency and that transactions can be verified indeed, with no sense of irony, they claim virtual deals can be set in stone "set in stone" (that would be a virtual stone I guess).

However, there are warnings, such as those from the Federal Reserve Bank of Atlanta and the OECD that the effect of geomagnetic disruption arising from a solar storm could scupper power supplies and compromise information technology functions. Counter arguments are that a solar storm would have to be extreme to pop the Cloud.

But closer to home (back on Earth) the failure of the Bitcoin exchange Mt. Gox or the current crack down on Bitcoin by the Chinese central bank or hacking of a billion names on Yahoo! and other failures attributable to crime or incompetence could be enough to induce a bout of Ludditism in the face of "Cloud clearing" and other possible iterations of blockchain activities.

Cloud clearing

Perhaps of greater concern is the threat posed to the intermediaries who will question the security and reliability of blockchain disintermediation. They may really be the block in the chain of blockchain development. A truth clearinghouses will have to confront is that the massive investment is taking place in Silicon Valley and in the financial sector is occurring because the potential cost savings of blockchains are huge.

Ironically it is cost savings that have driven the structure of the centralised clearing industry we have today that will ultimately put into question its existence.

Is the post-Christmas, post-New Year lull a time to consider your "post-truth" strategy?

Such has been the penetration of the "post-truth" era that reached rich fruition in the political arena is 2016, it must be worth anticipating whether "post-truth" can be applied to other forms of communication – like financial and corporate communications perhaps?

Currency was given "post-truth" in 2016 when experts were belittled and banished by Michael Gove in the Brexit debate and with the triumph of Donald Trump's untested assertions about, about...well about most things actually, via his preferred channel of Twitter.

Is "post-truth" really new?

"Post-truth" was declared "Word of the Year" by Oxford Dictionaries defining the term as, "Relating to or denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief". Oxford Dictionaries parent, the Oxford English Dictionary (OED) (online edition), widely considered the august pillar of the ultimate truth, seems to have been taken by surprise by the word and doesn't yet include it.

By contrast Wikipedia, that child of the "post-truth" playground, the internet, already has its definition to hand:

"Post-truth politics (also called post-factual politics) is a political culture in which debate is framed largely by appeals to emotion disconnected from the details of policy, and by the repeated assertion of talking points to which factual rebuttals are ignored. Post-truth differs from traditional contesting and falsifying of truth by rendering it of 'secondary importance'".

So according to Wikipedia a lovers' tiff which, "...is framed largely by appeals to emotion disconnected from the details of policy, and by the repeated assertion of talking points to which factual rebuttals are ignored," could well belong to the "post-truth" era. But haven't lovers been at it forever? And doesn't that make "post-truth" and "ante-truth" term? Ages are identified by falling before or after the birth of Christ – BC or AD. Do we need to demarcate when truth passed from being before – to after truth.

Calibrating truth

Isn't "post-truth" just a euphemism for lies – lies of a variable intensity? Where does "post-truth" fit into Mark Twain's calibration of untruths: "Lies, damned lies and statistics"? Does it fall between "lies" and "damned lies" or after "statistics"?

On a scale of deception, the Gold Standard of lies must have been set by Goebbels or Pol Pot. But is it a crime to appeal to the emotion? Do people "love" Coca-Cola because, if its branding and marketing are to be believed, it brings happiness, youthful good looks and startling white teeth?

Journalism cannot escape the taint of "post-truth"; many a report has been crafted by a tabloid hack that would, "Never let the facts to get in the way of a good story".

Or perhaps we in corporate and financial communications can, in a post-Orwellian twist, claiming credit, with our branding campaigns, messaging for being in the very vanguard of "post-truth" for years!

"Big data" may be the munificent resource in this new age of data mining. But it's not shovelling this mass of information that firms need, but refining it into content that is pure gold.

What bronze was to the Bronze Age and steam was to the Industrial Revolution, data is the raw material of our age. Mountains of it, oceans of it, a seemingly limitless supply that can be turned into, into er, into what exactly?

A survey claims the to ten benefits of “Big Data” include improved:

1. Decision making
2. Collaboration and Information sharing
3. Productivity
4. Agility
5. Reliability and security
6. Customer satisfaction and retention
7. Operational costs
8. Risk management
9. Revenue
10. Employee retention and morale

Perhaps it should be renamed “data alchemy” for the claims made for it that it will convert raw data from “base metal into gold”!

[However, one can’t help noticing that “revenue” is way down the list and that “customer satisfaction and retention” (to which revenue is inseparably connected) only makes the bottom half of the list.]

Klondike

It is claimed that in gold rushes, like that in the Klondike that turned men’s minds in the final years of the nineteenth century, it was not the bearded prospectors staking their claims and endlessly and panning, who made the money. Some say it was the guys who sold them the shovels. But was it?

Who, in the “data rush” is going to benefit most? Those who collect the data or those who mine with the modern equivalent of shovels – the algorithms? Or will it be those who interpret data to make decisions?

Golden nuggets

Let us extrapolate. The data is mined. The “geeks” apply their algorithmic magic sorting the dross from the gold-bearing ore. But even golden nuggets are not as valuable in the icy wastes of the Yukon as when they been refined, transported and minted into coinage or crafted into jewellery.

A similar and allied debate is raging in the world of information and content. Information too is a raw material. There is any amount of it and most of it is dross. But refined and polished information is transformed into engaging and effective content. And, like gold, it is rare; gold standard content is very rare indeed!

It is only through the processes of refinement when information is analysed, interpreted and written that it becomes valuable content: content that can be used by decision makers in the form of case studies, research reports, printed and digital magazines and newsletters, blogs, thought leadership papers and other customer communications.

Krugerrands and wedding rings are the value added products of mining. Decisions, like marketing strategies and communications made with content are the end product of mining and refining information.

The refinement of information by writing it into measurable, consistent, diverse and engaging content can achieve the stated objectives of big data namely, the collaboration, productivity, agility data promotes through information sharing; the lower cost and reduced risk that enhance customer and employee satisfaction. But content may recalibrate the list to put retention is increased revenue and profitability at the top.

While conventional and traditional medicine remain poles apart, alternative investments seem to be converging with the more traditional kind setting the market for growth.

The term “alternative medicine” initially evokes pictures a snake oil or quackery before focussing on a good osteopath, acupuncturist or naturopath. Mention “alternative investments” and investors’ eyes light up. That is unsurprising: the rout in interest rates has caused stampede to find better-yielding assets. While some are currently unsure which way to stampede, the market is starting to give a clearer direction.

The search for alternatives to equities, bonds and cash bonds is wide- ranging. In the inflation of the 1970s investors could be seen holding wine glasses to the light at their Mayfair wine merchants, inquiring as to the provenance of an antique, meditating a Monet at Sotheby’s or peering at a Penny Black through a magnifying glass. Just about anything that would not fall victim to corrosive inflation seemed to be a good bet.

Caribbean soirée

More recently, pursuit of capital protection has been replaced by the search for yield. Wealth managers, inhibited by regulatory constraints in Europe and the US, migrated to places like the Cayman Islands and British Virgin Islands. The freedoms in these jurisdictions led to an innovative and creative era for investments where large fees for managing high-yielding hedge funds became de rigueur. Hedge funds morphed into alternative investments that included forest and agricultural land, financial derivatives, private equity, carbon credits and even exploring opportunities in crypto currencies.

Ironically, problems in paradise arose when innovation and creativity strayed beyond propriety. Too-lax regulation tarnished the reputations of these financial centres raising concern among investors that their own reputations would be tarnished by association.

The thoughts among asset managers also turned to how these profitable investment structures could be offered to a wider customer base.

However, jurisdictional, liquidity and distribution issues inhibited development.

Landlocked island

Now a significant change is underway that will give retail investors the same opportunities to diversify their investments and reduce the correlation of their with traditional assets. With the wider adoption of the EU Alternative Investment Fund Managers Directive and the fall out of reputational damage in the Caribbean, places like Luxembourg have seized the baton.

Luxembourg lays claim, not only to being home to 75% of internationally traded funds, but to already having 20% of assets under management in the form of alternative investments. Investment managers in the principality have been hiring experienced money managers to structure, create and most importantly, develop distribution channels for alternative investments taking them into the mainstream.

The trend is underwritten by research that shows the expected global growth of alternative investments rising from $10 trillion in assets today to $18.1 trillion by 2020.

Alternative investments look to become conventional. But alternative medicine may take a little longer to converge.

Anyone who has said, “Oh! */?%^!” recently, because their car hit a pothole, can count themselves familiar with the need to upgrade infrastructure. The question is why it is taking governments so long to start what will be long-term projects.

If your household spending has to be focused on the mortgage payments, electricity bills and local taxes, then there is always the option to put off painting the flaking window frames, repairing the leaking gutters or fixing the wiring, all of which need "doing", but do not have the same immediacy as the red warnings on the bills coming through the post.

Countries do the same. The US and Britain, in particular, have been concentrating on meeting day-to- day expenses of running their governments. In consequence, they have postponed "fixing the roof" – maintaining the integrity of their nations' infrastructure.

Past its sell-by date

As any businessman knows, lack of investment or "disinvestment" using your capital projects beyond their replacement dates means extra maintenance, breakdowns and loss of output. Business investment pays for itself through improved productivity.

When the bridges start collapsing, municipalities are being sued because of the damage to cars resulting from unrepaired potholes and the health and safety people start closing schools and hospitals because their structures are unsafe, nations know they can’t defer infrastructure spending any longer.

When investment in new infrastructure would give productivity a shot in the arm it would seem to be time to sharpen the needle.

The argument against such expenditure is often that it means government spending is competing with the needs of the private sector. That can push up prices for labour and for money. Raised wages and interest rates push up the rate of inflation.

False inflation fears

But when the private sector has not taken the investment baton offered to them via artificially low interest created by central bank stimulus and employment figures are weak, the risk of inflation is low while the productivity flags.

Interest rates are at historically low levels, commodity prices have descended from the dizzy heights of the "commodity supercycle" and pension funds and other investors need long-term paper to meet their liabilities when government bonds are offering negative interest rates and people are living just too darn long! Oh yes, and productivity is languishing and companies are sitting on cash piles that are costing them money to keep in banks vaults.

It’s difficult to see in these circumstances why countries are deferring infrastructure spending. Fund managers are looking for investments, pension funds are looking for long-term equity and bond opportunities to replace government paper offering a negative return and investment banks have the skills and capacity to advise, corral and syndicate.

The voices of children

"Nay sayers" argue that there are no "shovel ready projects". But surely the shovels are ready to fix potholes and repair infrastructure before new projects can get underway? Repairs of existing infrastructure still represent investment in infrastructure. And it bestows the same benefits. Indeed it is questionable whether some of the “prestige projects” that are in the infrastructure pipeline are what economies need.

It is an old saw that we should not leave debts for our children to pay off. That can be countered by saying that we can bestow the benefits by giving our children use of the infrastructure for which debt has been raised or on which a return is being paid where equity investment has been applied to infrastructure schemes. Perhaps its time governments got a “*/?%^!” move on!

The impact of globalisation has been as fundamental as the changes to the abolition of the British Corn Laws in the nineteenth century. There was no going back from the Corn Laws, but recently it have been suggestions that globalisation may be going into reverse.

The argument that won the case for the abolition of the Corn Laws was that they would improve prosperity in Britain. The Corn Laws protected the landed classes by restricting gain imports thus supporting the price of corn. Their abolition was a shot in the arm for manufacturers: lower bread prices gave workers more disposable income as food, and bread in particular, made up a large proportion of ordinary people’s spending.

That is essentially the argument for globalisation, that it would allow workers in developing countries to make things cheaper than those in developed countries. Developing countries would benefit from investment and jobs while the developed nations would benefit from greater competition and lower prices resulting in more disposable income.

Globalisation a “good thing”

It is without question that globalisation has been successful in these primary aims: emerging economies like India, China, Indonesia and Thailand have thrived with massive foreign direct investment, the creation of millions of jobs and increased prosperity.

On the other side of the world, economically speaking, consumers in developing countries have reaped the benefits of the growing economies of scale leading to lower consumer goods prices that have put more money in their pockets.

So globalisation is unquestionably a good thing. Well, not if you are a highly paid worker in a developing country whose job disappeared or was “outsourced” to China. Some argue that developed countries businesses have not just maximised the economies of scale in a global market place, but have created jobs in the developing world to exploit all the opportunities to pay “slave wages” in a race to the bottom.

Into reverse?

But now voices are being raised that globalisation has run its course and that for a variety of reasons it is going into reverse.

The sluggishness of the world economy and the dampener that has been put on world trade is attributed, in some quarters, to the low interest rates and over investment in production capacity in the developing world prior to the 2007 financial crash.

But there are additional, but less obvious factors at play: one is the by Western consumers, alarmed by the poor working conditions in factories making goods for the clothing giant Primark and others, to insist that workers in developing countries enjoy better working conditions. On the other side of the coin workers in emerging economies, such as those who work at the technology giant Foxconn, are also starting to realise they have labour power.

Fuelling the reversal

Even though transport costs are currently low when added to the time lag of transport to market they are reducing the margins arising from globalisation. Even within China manufacturing is relocating closer to the coast to counter these factors.

But even the comparative advantage of lower labour costs (working conditions) is wearing thin: computerisation, digitisation and robotics are making production cheaper, giving superior quality control and removing the need for long distance transport.

Super-communications notwithstanding, quality and management control half a world away is not half as good as doing it on your doorstep. As the developed world manufacturing focuses on customised or high quality goods this is becoming a factor driving businesses home.

Secular stagnation vs infrastructure creation

Performance of emerging economies is currently “fair to middling” while developed countries teeter on what Harvard academic Alvin Hansen called, “secular stagnation” from which he accurately warned the US economy would suffer following the Crash of 1929.

The question for developing economies is, given the opportunities that opened to them as globalisation took hold, whether they will be able to maximise the momentum.

This will depend on whether globalisation was merely the building of factories for exports or provided the foundations of infrastructure – both physical, in improving education, power supplies, road and rail distribution - and financial. Have they generated and harvested the savings that need banks to recirculate capital within these economies and provide investment? Are we seeing the emergence of a services sector to cement the advances they have made?