Jeff Mason is a White House Correspondent for Reuters and the 2016-2017 president of the White House Correspondents’ Association. He was the lead Reuters correspondent for President Barack Obama's 2012 campaign and interviewed the president at the White House in 2015. Jeff has been based in Washington since 2008, when he covered the historic race between Obama, Hillary Clinton and John McCain. Jeff started his career in Frankfurt, Germany, where he covered the airline industry before moving to Brussels, Belgium, where he covered the European Union. He is a Colorado native, proud graduate of Northwestern University and former Fulbright scholar.
Twitter handle: @jeffmason1
LONDON (Reuters Breakingviews) - Inflows into exchange-traded funds (ETFs) approached $500 billion last year, according to ETF.com. Even with February's market ructions, another $64 billion arrived in just the first two months of the year. The rapid growth of these index-linked financial products is “worse than Marxism”. So argued the analysts at Bernstein back in the summer of 2016. Bernstein claimed that investors who adopt passive strategies are free-riders who abrogate their responsibility to allocate capital intelligently. The research firm may have a point. But a more pressing, and less widely aired, concern is the threat posed to financial stability by the newfound dominance of benchmark-tracking funds.
LONDON (Reuters Breakingviews) - China’s economy has long defied the doom-mongers. In place of their ominous critique, a more constructive view of economic management in the People’s Republic has surfaced. Beijing, we are told, has found the right balance between state and market forces, and is best positioned to exploit exciting new technologies, such as big data and artificial intelligence. Politically fractured and economically sclerotic western nations can only look on in envy.
LONDON (Reuters Breakingviews) - Investors who have earned big bucks by betting against VIX futures were hammered when volatility spiked on Monday. The global stock markets also dipped sharply. Conventional wisdom suggests it’s a good thing to take a little froth out of the market. Besides, the economy's fundamentals remain robust, adds U.S. Treasury Secretary Steven Mnuchin. And it's true that investors quickly recovered their nerves in the following days.
LONDON (Reuters Breakingviews) - It’s easy enough to identify bitcoin and its ilk as being caught up in a speculative mania. A more difficult and important question is whether crypto-currencies have any future as money. In a world where the stability of conventional currencies is threatened globally by the vast expansion of central-bank balance sheets, high government indebtedness and the myriad ill consequences of ultra-low interest rates, it would be nice to believe this was the case. Yet bitcoin and its peers are not money and, unless they change fundamentally, never will be.
LONDON (Reuters Breakingviews) - Bubbles aren’t just about the madness of crowds - nor are they simply manifestations of excess liquidity and leverage. But both of these factors are present in the extraordinary rise of bitcoin over recent months. Every spectacular bubble involves a premonition of the future. The trouble is that they turn out to be deeply flawed premonitions. In this respect, bitcoin has much in common with great historic speculative manias.
LONDON (Reuters Breakingviews) - The late Hyman Minsky described capitalism as an inherently unstable system. The Australian-born economist Steve Keen was a prominent follower of Minsky’s long before the global financial crisis made his unorthodox views fashionable. Thus, we can anticipate the answer to the question posed in the title of Keen’s new book, "Can We Avoid Another Financial Crisis?" A capitalist economy can no better avoid another financial crisis than a dog can avoid picking up fleas - it’s only a matter of time. And, if Keen is correct, we don’t have long to wait before the next blowup arrives.
Central-bank money printing hasn't produced the spiralling prices that plagued the Weimar Republic. It has, though, delivered some of the social disquiet of 1920s Germany. Policymakers urging more extreme monetary actions need to exercise caution lest they get what they wish for.
On April Fools' 10 years ago Breakingviews suggested Washington fund itself with perpetual bonds paying no interest. The idea is now being seriously touted by some monetary policymakers. For households with cash and other assets that would evaporate, this is no laughing matter.
The rich have enjoyed most of the fruits of globalisation, just as they did in 19th-century America. Unless politicians can enact benign policies to rectify the widening gap between the have-somes and have-lots, more unpleasant alternatives will loom on the horizon.
The British elected to pop the UK’s bubble economy, which delivers appalling productivity growth and unequally distributed gains. Turmoil unleashed by the vote could put the economy on a sounder footing. As asset prices deflate, the distribution of wealth becomes less unequal.