The Rise Of The State

Tuesday, November 15, 2011
By Paul Martin

by Tyler Durden
ZeroHedge.com
11/15/2011

The ever increasing un-invisible hand of intervention, manipulation, and disintermediation by central planning regimes around the world is an oft-quoted topic among our discussions. UBS’s Global Macro Team published a thoughtful piece late last week on global political issues and the rise of the state.

From Paul Donovan of UBS Global Macro Team

The Rise Of The State

Governments are encroaching into more and more areas of the world economy. This is not just through political drama (as we have seen in the Euro area), nor even through the conventional mechanisms of foreign exchange intervention. Regulation (and regulatory uncertainty), sovereign wealth funds, bond market manipulation and default risks all play a role in financial markets, and all are intensely political in their nature.

There Is No Place Like Home

A more politically nuanced world raises an interesting unintended consequence for global financial markets. Directly, as a result of increased regulation, or indirectly, as a result of increased costs associated with assessing foreign political risk, investors may feel that the rise of the state will increase the home country bias of capital flows - exactly as leaders look for global burden sharing.

The Rest…HERE

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