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Bloomberg Markets Magazine

Bloomberg Markets Magazine July - August 2015

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Bloomberg Finance LP
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in this issue

2 min
gloves off

MARKETS ARE BUILT ON COMPETITION. Global finance pits country against country, company against company, investment against investment, idea against idea. Above all, the commotion of the marketplace is about people mixing it up with other people. Traders take on traders, CEOs vie with CEOs, finance ministers squabble with finance ministers. Rivalry, in short, is at the heart of everything we cover at Bloomberg Markets, and it’s the subject of this special issue. ¶ Rivalry can be respectful and rational, or it can be heated and petty. It is rarely quiet. And it is usually consequential. The war of words between Greek Finance Minister Yanis Varoufakis and his German counterpart, Wolfgang Schäuble, is not just about the ability of one relatively small country to pay its debts; it’s about the cohesion…

6 min
story time

A lot of the story of modern finance is that it keeps getting more boring. Finance looks like, and wants to be, a very rational activity. There’s a thing that you want to maximize—usually it’s money—and you go measure it and figure out how to maximize it. And the world being what it is, we keep getting better tools to measure and math to maximize. So the trend, as in much of modern life, is toward more science and less instinct. ¶ Investors once sought out star mutual fund managers for their wisdom and folksiness. Now they index. Actual human traders once roamed the floor of the stock exchanges, shouting and gesturing and eating cheeseburgers for breakfast. Now computers do the same work faster and more efficiently. Bank CEOs once…

17 min
it’s personal

YANIS VAROUFAKIS PUSHES away from his desk and strides across his office overlooking Syntagma Square in the heart of Athens. Dressed entirely in black, Varoufakis looks more like a hit man in a Quentin Tarantino movie than the finance minister of Greece. On this spring afternoon, the economist is spoiling for a fight. In 72 hours, Varoufakis is going to face Wolfgang Schäuble, Germany’s finance chief, and 17 other ministers who constitute the Eurogroup. They’ve been pressing Greece to slash public spending, privatize its biggest port, and collect more taxes from its citizens in exchange for disbursements from €240 billion in bailout loans. But the combative leftist government led since January by Prime Minister Alexis Tsipras promised Greeks it would end austerity, so it’s up to Varoufakis to negotiate a new…

3 min
krugman battles the austerians

Since the financial crisis, Nobel Prize–winning economist and New York Times columnist Paul Krugman has devoted no fewer than 74 columns and blog posts to what he calls “austerians”— supporters of government budget cuts in response to recession. Any fiscal adjustments most developed economies need are long-term, whereas austerity is short-term, he says. Krugman has also gone after central bankers who were too slow in lowering rates in response to the crisis and then too quick to raise them during the recovery, calling them “sadomonetarists” who enjoy inflicting economic suffering. Krugman has acquired powerful critics on the left and right who accuse him of everything from intellectual dishonesty to political naiveté Krugman accuses Sweden’s Riksbank of “sadomonetarism”—raising rates in 2010 and 2011 at a time when, though the economy was growing,…

2 min
putin defies all

AFTER RUSSIAN PRESIDENT Vladimir Putin annexed Crimea in March 2014 and went on to back separatists in Ukraine, the U.S. and the European Union slapped on sanctions. Putin was scornful, saying the deterrents would have a “boomerang effect.” He fought back with bans on Western food imports and on travel to Russia by dozens of European politicians while the economy went into a tailspin. By January, the ruble had lost half of its value. Making matters worse, the price of oil, Russia’s main export, sank to an almost-six-year low, further hobbling the economy. In the standoff, Europe, Russia’s biggest trading partner, has suffered only marginally, with 0.4 percent shaved off EU economic growth for 2015, according to a forecast by the European Commission. France suspended a €1.2 billion ($1.3 billion) contract…

11 min
crouching tiger, slowing dragon

JIM O’NEILL still vividly recalls a 2006 road trip he made from India’s capital, New Delhi, to a new industrial city named Gurgaon. On a two-lane road jammed with cars, motorcycles, rickshaws, and animals, it took O’Neill, then chief economist at Goldman Sachs, 2½ hours to travel 30 kilometers. “It was insane,” he says. ¶ O’Neill, who’s now a British government minister, repeated the journey in February. This time, the drive, on a new highway to what’s now more of a suburb, was less than an hour. Even better, the hotel car provided free Wi-Fi—the first time he’d encountered this perk anywhere in the world. “It sort of sums up the changes in India,” he says. Prime Minister Narendra Modi won the nation’s biggest election victory in 30 years in May…