Americans call it “the crack-up.” Economies are behaving like scared bivalves and hiding in their own shells. Protectionism, the economists call it. On the sand, populism from either end of the political spectrum is on the rise. The golden age of globalization — according to work by the Asian Hinrich Foundation — lasted almost 15 years, between 1993 and 2007. The value of trade increased by 6.8% annually, foreign direct investment flows grew by 21.3% in the period, and global wealth increased by 3.4% annually. It brought political liberalization, technological advances, multilateralism, and an unprecedented increase in trade, investment and economic development. Maybe it all ended when Donald Trump said: “I try to learn from the past, but I plan for the future by focusing exclusively on the present. That’s where the fun is.” The “present” and the “fun” for world trade is that bivalve, but what about financial movements? Are investments and their regulation also in hiding?
The omens are uncertain. The increasing fragmentation of the European banking system is a “failure” that increases financial vulnerability and burdens everyone with higher costs. This is the warning issued in the Financial Times by Andrea Enria, former head of supervision at the European Central Bank (ECB). His biggest “personal regret” was seeing how the eurozone market was “becoming more and more segmented” and countries were “guided along national lines.” If a…
