The chill that has spread in international commercial relations during the past three years is impacting unpleasantly on the world’s major economies. Though they have escaped recession, a sense of uncertainty has grown.
Given such a state of affairs, those who would in “normal” circumstances feel encouraged to invest, keep back. That’s what happened this time as well. During the last ten years, investment levels stayed low to very low. That experience was reinforced by the dissonances which emerged during the last two to three years.
The blame for this can squarely be laid at the door of the Trump administration in the US. It insisted that America be given a better treatment in the countries where it sells its products and services. If it was not given satisfaction, the US would exclude its “partners” from American markets.
Meanwhile, despite the chill he engineered in the economies of US allies, Trump’s initiatives did not affect his country’s economy badly. In recent years it continued to grow at the same rate as in previous years.
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LOW INTEREST RATES
The present period is one during which there has been a strong decline in interest rates; these have even turned negative. The turn of events has pleased some, displeased others.
Borrowers, existing and prospective, surely were happy. With the reduction in interest, the cost of carrying debt shrunk. If borrowings went to fund consumption, the growth in sales served to boost the economy. Buyers, one presumes, included people who wished to have their own house and they could now borrow cheaply to do so. Construction and the industries which produce home furnishings were among those who did well on this basis, or so one assumes.
By contrast, banks which were accustomed to make a good part of their profits on the interest that they charge for loans, found they were losing out on their revenues. Similarly pensioners: many used to supplement their pensions with income accruing from the savings they had made during their lifetime. Not any more.
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CONFLICTS OF INTEREST
When Thierry Breton, the candidate chosen for the European Commission by the French government, was being grilled at the European Parliament before the vote on his nomination was taken, an interesting development took place. For a number of years, Breton ran important enterprises which had enjoyed a good relationship with the European Commission. The latter had even extended to them not insignificant contracts and subsidies. How could Breton now become become the Commissioner responsible for the same sectors where “his” companies were in business? Would not enormous conflicts of interest arise?
Breton sold all his shares in the companies involved. He guaranteed that the sale had not been made to members of his family or to people who were in his confidence. He promised that in all future instances where “his” ex-companies were dealing with the Commission, matters would be transferred to some other Commissioner.
Furthermore, he promised that if he had any meetings with representatives of the same companies, he would make sure to be accompanied by some other third person.
It had been expected that Breton would have a difficult hearing. But his nomination was approved by the European Parliament without too much difficulty.