3 September 2019 FT — Articles to Read

3 September 2019


Question: According to MSN: Money, what is not covered by homeowners/renters insurance in case of a natural disaster?


Investors pump $5bn into gold as rising global risks fuel ‘fear trade’ – Pg. 1

  • Holdings in gold-backed exchange traded funds surged to their highest level in six years last month, as investors ploughed almost $5bn into the metal as part of a “fear trade” responding to mounting political risks
  • Investors’ demand for gold has helped propel the biggest gold-backed ETF – the SPDR Gold Shares – to become the 10th-largest in the US, …with assets under management of $43bn. It has narrowly outperformed the S&P 500 stock index this year
  • The recent tumble in bond yields globally has only added to gold’s appeal, since it lowers the “opportunity cost” of holding a metal that provides no yield…


Turkey shakes off recession fears after economy expands – Pg. 5

  • A surge in government spending and bank lending – aimed at boosting the economy ahead of important local elections – lifted the country out of recession in the first part of the year …


Central banks need new tools to tackle the next downturn – Pg. 9

  • The most consequential policy mistake in economic history was the lack of proper response to the financial crash of 1929. Central  banks failed to recognize the impact of bank failures and debt-deflation dynamics, and monetary policy was too tight
  • Until now, monetary policy has essentially worked by lowering interest rates to stimulate demand and the appetite for risk
  • A third of all government bonds globally – and two-thirds in Europe – have negative yields. Even in the US, which still enjoys moderate growth, long-dated Treasury yields are at or near record zero in a recession
  • To be feasible, a policy of going direct should have the following elements. First, a clear definition of the circumstances that call for such unusual policy co-ordination.  Second, an explicit inflation objective that fiscal and monetary authorities are jointly held accountable for achieving.  Third, a mechanism that enables the prompt deployment of productive fiscal policy measures, without the negative policy impact on inequality


Answer: Damage from flooding and earth movement