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he head of eurobond trading at Bank of America International in London was an intense and exacting man, not known for his sense of humour. So, as the new analyst in the securities dealing room, I had to be careful responding to the question he put to me: ‘Where is value?’ At first, I didn’t know what he meant. He dealt in financial securities, and there is no ‘value’ in them, only a price that goes up and down for reasons I had not yet fully worked out. Surely, this wasn’t an expression of existential despair. Did he want to chuck it all in and do something useful? No, he wanted to find a security that offered an attractive return, especially one whose price would not fall just after he had bought it. So I said, ‘I’ll have a look and get back to you in half an hour.’ This seemed to placate him, although he would not have been pleased to know I had barely gotten to grips with the array of flickering grey-green numbers on the terminal screens. That was in the summer of 1987, less than a...

It is not every day you read a book about global finance by a banker who quotes Lenin approvingly on page two. But then Tony Norfield is not your ordinary denizen of the City of London. He spent 20 years staring at Bloomberg terminals on bank dealing desks, rising to become head of foreign exchange strategy at Dutch lender ABN Amro before the financial crisis. But he never lost his scepticism about capitalism and financial services. This is a man who writes without irony about “financial parasitism”. In The City: London and the Global Power of Finance, he seeks to document just how the UK and the US extract their pound of flesh from the rest of the world by dominating the financial flows that make international trade possible. He argues that London’s leading role in foreign exchange trading, derivatives and overseas lending is an extension of its imperialist past. Creating complex financial products and charging for them has enabled the sector to requisition for the UK and London —...

She’s presumably referring to the possibility of an Elizabeth Warren candidacy. I understand why people like Ms Fiorina are allergic to any wealth-distributing progressive. But business people who’ve supported Mr Trump because of cuts to corporate taxes or promises of deregulation are playing a sucker’s game. They are also part of a bigger dysfunctional dance between business and politics that is explored in a new Harvard Business School report on US competitiveness. More accurately, the report focuses on an increasing lack of competitiveness, evidenced by everything from pessimism about America’s medium- to long-term growth prospects, the divide between the fortunes of business and workers, to the country’s declining fiscal position and skills gap. The study, which builds on eight years of research and surveys of thousands of Harvard Business School alumni (who represent a healthy proportion of top global executives) cites political dysfunction as the major reason for the decline i...

At the Maeil Business newspaper’s chat-fest called the World Knowledge Forum Thursday, big-name economists Paul Krugman, Nouriel Roubini and Barry Eichengreen shared the stage to talk about where the world is going at the moment. Of them, Eichengreen knows South Korea the best. He just finished writing a book called “From Miracle to Maturity: The Growth of the Korean Economy” with another American, Dwight Perkins, and a Korean, Shin Kwan-ho. They look at South Korea’s 50-year transformation from poverty to affluence in a new way – through data they believe shows what the country must do next. And their bottom line runs against  the economic chatter  coming out of the country’s presidential candidates: growth still matters. The concluding chapter of their book (published by Harvard’s East Asian Monograph imprint, so it should get some attention in South Korea) provides a set of recommendations to tackle improve the productivity of the country’s service sector, which they...

There were tell-tale signs early on. In 2009, Peer Steinbrück, a former German finance minister and later the Social Democrats’ candidate for chancellor, introduced the constitutional balanced budget rule. This later gave rise to Germany’s permanent fiscal surpluses and under-investment in critical infrastructure. In a joint study, Germany’s employers and trade unions recently put the investment shortfall at a staggering €450bn. So it is unsurprising that the SPD has lost political support during the years of its grand coalition with Angela Merkel’s Christian Democrats. In 2012, Italy’s government of technocrats, led by Mario Monti, imposed procyclical austerity in the middle of a recession. The goal was to prove that Italy was a good follower of the eurozone’s fiscal rules. The country has still not fully recovered from that shock. In 2014, François Hollande, the former French president, outed himself as a rightwing supply-sider when he cited Say’s law — that supply creates its own...

Hardly a week goes by without the implosion of a hedge fund. Last week it was Carlyle Capital, with an astonishing $31 of debt for each dollar of equity. But we should not be surprised. These collapses are inherent in the hedge-fund model. It is even conceivable that this model will join securitised subprime mortgages on the scrap heap. Getting away with producing adulterated milk is hard; getting away with an investment strategy that adds no value is not. That was the point made by John Kay, in a superb column last week (this page, March 11). With the “right” fee structure mediocre investment managers may become rich as they ensure that their investors cease to remain so. Two distinguished academics, Dean Foster at the Wharton School of the University of Pennsylvania and Peyton Young of Oxford university and the Brookings Institution, explain the point beautifully*. They start by asking us to consider a rare event – that the stock market will fall by 20 per cent over the next 12 mo...