The Turkish government has been in the news for all of the wrong reasons in recent weeks. Corruption scandals, accusations of a potential coup and fears that the government is trying to erode the independence of the judiciary have led to widespread protests. Prime Minister Erdogan’s reputation at home has undoubtedly been eroded in recent months; however the bad news could be spreading further afield.
Financial markets are a good gauge of international sentiment towards a country and right now they are dumping Turkish assets by the bucket load. The Turkish lira plunged to another record low against the US dollar this week and the Istanbul index has bucked the global trend and has fallen nearly 20% in the past 12 months.
There was widespread dismay at a recent survey that ranked Egypt as the worst Arab country to be a woman. The poll, conducted by the Thomson Reuters Foundation, found that an astonishingly high 99% of women and girls experience sexual harassment, and worst of all the perpetrators of this abuse often go unpunished. Egypt scored poorly in every category of the poll including violence against women, reproductive rights and their inclusion in politics and the economy.
The poll surveyed 366 respondents – aid and healthcare workers, policy makers, journalists, academics and lawyers – and asked their opinion on women across Arab League countries. Although this is a perception poll, it is useful to get an idea of how the outside world view women’s role in society, politics and the economy. Perhaps the most interesting finding is that three out of five Arab Spring countries were ranked at the bottom of the pile. Discouragingly, it looks like revolution has not brought women the freedom they campaigned for in Tahrir Square in 2011.
After a crisis the most unusual thing can be that things remain the same. For example, apart from media stories of doom and gloom, by and large if you managed to keep your job then the bankruptcy of Lehman Brothers and ensuing financial crisis may not have affected you acutely and life may have, more or less, gone on in the same fashion albeit with a bit more banker bashing than before.
Change as a result of a crisis can take years to manifest itself into a tangible difference. But five years after the financial crisis, and three years after European sovereign debt implosion, some of the long-term market and psychological effects are finally starting to be felt. Here are a few examples:
The UK lost one of only three female CEOs on the FTSE 100 on Tuesday, as Burberry CEO Angela Ahrendts quit. My concerns about females at the top aside, the interesting thing about Apple’s new hire is the link between Apple and fashion and what it tells us about the evolution of the tech industry.
Ahrendts is a smart choice to become the head of retail and online stores for Apple. Firstly, her marketing skills are second to none. During her tenure at Burberry she has completely transformed the consumer experience at the iconic British brand. The stores are beautiful. The central London branches are styled just as well as the brand’s catwalk stars; they look more like a high-end boutique hotel in Paris or Milan than a high street shop.
The events in Washington over the last couple of weeks have shown two things: how a system of checks and balances government can be extremely frustrating and get nothing done, and how the Republican Party is in desperate need of a major change.
The guiding principle of the U.S. Constitution is to never allow any individual or party to get too much power. The ideal is to have a President and Congress at odds with each other so that one ideology is not given a preferential position. Thus, what we have seen over the last few weeks in Capitol Hill is, in essence, exactly what the Founding Fathers orchestrated back in the late 18th century.
If you asked someone to list the chief qualities needed to be a good central banker I assume that the list may include: good communicator, wise, attention to detail, clear thinking, credibility, and good with numbers. However, in recent months these qualities have been sadly lacking, most notably last week when the Federal Reserve wrong-footed the markets and failed to start tapering its enormous QE programme.
The market had expected asset purchases to be tapered because: 1, Ben Bernanke had dropped fairly big hints at his June press conference that tapering was likely to take place sooner rather than later and 2, because the unemployment rate has consistently declined all year and if it continues moving in this direction then it could hit the Fed’s 6.5% target rate in the coming months.
It was only a few days ago that George Osborne declared victory on economic malaise saying that the UK economy has turned a corner. The economic data has improved dramatically in the last six months, which gave Osborne a battering ram to launch a political attack on the Labour Party. Osborne used his moment in the sun to prove Ed Balls and all on the other side of the political bench wrong, saying that his austerity programme is right for Britain.
However, a little over 24 hours after Osborne’s speech a report from the Local Data Company made for uncomfortable reading as it detailed grim conditions on the UK’s high streets. High Street vacancy rates remain stubbornly high; out of 650 town centres in the UK the average vacancy rate is 14.1 percent, which is basically unchanged since February.
We are at the stage of the financial cycle where central banks turn into circuses and central bankers become the circus performers. The market is transfixed by the show, watching every move and trying to anticipate what trick or shock will come next.
What is interesting about this particular circus is that the Ringmaster is about to leave, their replacement is turning into a whole new show of its own.
The new governor of the Bank of England has shaken things up at the Old Lady. Not only has he brought a touch of glamour to the Bank, he is considered a George Clooney look-alike by some, but he has dramatically altered the way that the Bank does things. Since he arrived a little over a month ago we’ve had statements released after meetings and now the Bank has adopted forward guidance.
But has this central banker with a twinkle in his eye run into a brick wall at the BOE? The forward guidance that he announced during the August Inflation Report went down like a lead balloon. The markets immediately challenged the Bank’s pledge to keep interest rates low until 2016, UK Gilt yields at one point rose to their highest level since before he joined as Governor, and the pound also jumped sharply.
“Don’t cry for me, RBS” could certainly be the lament being sung by Stephen Hester, outgoing CEO of bailed out Royal Bank of Scotland, after the shock announcement that he will have left the bank by the end of this year. CEOs of banks come and go; however, the government stake in RBS makes this CEO particularly important.
There are two things that make Hester’s departure fascinating: firstly, the fact that the RBS board along with the Treasury have concentrated on how a new leader is needed to privatise the bank. Secondly, the fact that Hester doesn’t seem to want to go.
During an interview with BBC Radio 4 less than 24 hours after the announcement was made, Hester admitted that he wanted to take the bank through its privatisation process “for me that would have been the end of the journey.” However, that was not meant to be, and he said he “understood” that “new blood” at RBS was a good thing.