Macroeconomics, markets and geopolitics after the crisis

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It is a great pleasure to welcome you to the pictet report, an occasional publication in which we address the issues of the day with an eye on the longer term. the themes for this, our first edition, examine how the great credit crisis will affect developed economies and markets; how it will affect global geopolitics; and what its implications may be for emerging economies and markets. We have gathered and compiled the thoughts of some seasoned and authoritative contributors, who joined us – this year in dresden – for our annual Reaching Higher Ground symposium.

As politically inspired central regulation begins to exert a powerful influence on our banking systems, we can at least take the reassurance of history that there is always life after socialism, and this applies no less to the banking community than to any other field of endeavour.

At pictet, we intend to assist this renaissance in every way we can, and in doing so hold firmly to our long-term perspective and our commitment to asset and wealth management, continuing to invest steadily in the face of global retrenchment. in particular, we are alive to the opportunities we see to work with talented individuals on good terms.

Michel pictet, still active as an adviser to the Bank, was a partner during the great depression and recently offered words of courage and caution with the benefit of this remarkable hindsight. his advice was to fear just one thing: not endless bear markets, nor collapsing investment banks, but only the spectre of default by a major
Western government.

Certainly it’s clear that increases in government debt are unsustainable, and the infusion of public money into the financial system cannot be offset quickly. excessive debt cannot be taxed away, it must be destroyed gradually through monetary policy and growth. in the meantime, the threat of default remains all too real.

Clearly these conditions carry enormous geopolitical impact, demanding close consideration by independent minds. through the combined perspectives of our contributors, and their inevitable differences of opinion, we may yet forge a practical vision for the future – and a plan to reach it that at least helps to avoid the more deadly possibilities of the financial crisis. in the following pages we invite you to share their thoughts.