The Era of Epic Economics

2008-01-24T11:20:00.000-08:00

Pulling into Davos this week on a twee little train, it’s difficult to get away from a sense that we are in the middle of gargantuan geoeconomic times. It’s not just the crunch, or the crash, or the behemoth of bailouts being planned for the monocline monster.
I was flicking through a Merrill Lynch report that suggested the credit crunch was now over, and it had been replaced by the Credit Pandemic (© Merrill Lynch).
Right now we may be seeing the crystallisation of global economic shifts that will tower over our lives in the coming decades. These are changes to global economic systems that influence our house prices, that enabled mortgage companies to throw money at desperate prospective homeowners, that see capital circulate around the world.

Can the Britain’s credit-fuelled consumer economy run post the credit crunch? What happens when the US
Is the dollar decline permanent? Will European politicians continue to be relaxed about prolonged sterling decline? Anyone for competitive devaluations? Is a profit-maximising Chinese sovereign wealth fund allowed to short the dollar?
Where do the recycled petrodollars and Sinodollars go now? What happens to inflation when rising living standards in China means that average Chinese per capita meat consumption reaches, say 65 kg per year, up 30 per cent from today (for context that will still be half the average consumption in the US? Will Chindia really sacrifice economic growth for the sake of alleviating carbon emissions?

These issues are at the junction of geopolitics, and economics, so you could call it geoeconomics. Or you could say that these are plate-shifting tectonic economic shifts and say it’s Tectonomics. But my favourite description at the moment is that we are entering an ‘era of epic economics’. It’s not microeconomics. And the word ‘macroeconomics’ is too piddly. So welcome to Epicnomics.

www.epicnomics.blogspot.com