The world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan’s economy is struggling and China’s growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond. But the biggest economic threat, by far, comes from continental Europe.

Now that German growth has stumbled, the euro area is on the verge of tipping into its third recession in six years. Its leaders have squandered two years of respite, granted by the pledge of Mario Draghi, the European Central Bank’s president, to do “whatever it takes” to save the single currency. The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity. Prices are falling in eight European countries. The zone’s overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.

Optimists, both inside and outside Europe, often cite the example of Japan. It fell into deflation in the late-1990s, with unpleasant but not apocalyptic consequences for both itself and the world economy. But the euro zone poses far greater risks. Unlike Japan, the euro zone is not an isolated case: from China to America inflation is worryingly low, and slipping.

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The court, now entering its second decade under Mr Justice Brian McGovern, has shone a light into some dark recesses of Ireland’s financial and business world, exposing greed and human misery on a grand scale alongside some shoddy and dubious, accounting, auditing, banking, business, legal, regulatory and stockbroking practices.

It has heard of property and other deals involving misappropriation, forged signatures, deceit, lies and secret profits; suspect property and money transfers aimed at avoiding repayment; exorbitant expenses for senior bankers; and slipshod and questionable loans, investments and valuations.

It has also shown existing laws provide limited opportunity to penalise some of these practices and revealed gaps in legislation on corporate crime, including the absence of an offence of reckless lending.

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American banks are loading up on U.S. government debt, a sign they remain cautious on the economy even with the jobless rate at a six-year low and corporations at their healthiest in a generation.

Commercial lenders increased their holdings of Treasuries (BUSY) and debt from federal agencies in September by $54 billion to an unprecedented $1.99 trillion, data from the Federal Reserve show. Banks have now been net buyers for 12 straight months.

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The Federal Reserve took two steps toward winding down the historic easy-money policies that have defined its response to the financial crisis, but stopped short of the move markets are awaiting most: signaling when interest rates will start to rise.

With the economy gradually improving, U.S. central-bank officials plan to end the bond-buying program known as quantitative easing after October, hoping to finally stop expanding a six-year experiment in monetary policy that has left the Fed holding more than $4 trillion of Treasury and mortgage bonds.

The Fed on Wednesday also detailed a new technical plan for how it will raise short-term interest rates, something most officials currently don’t intend to do until next year. The central bank has kept the federal-funds rate near zero since December 2008 and offered assurances along the way about rates remaining low, another part of its varied efforts to boost the post-financial-crisis economy.

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In the Edinburgh rain, a striking number of voters have recently changed their minds. Michael Constantine says he and his parents all switched sides.

“My dad, he was a ‘no,’ ” says Constantine, 25. “In the past two months, he’s become a ‘yes.’ And then my mum was a ‘no’ initially. She became a ‘yes.’ ”

All three of them used to support keeping the U.K. intact. Now, they plan to vote for Scottish independence. Constantine says he wasn’t so much drawn to the ‘yes’ campaign; it’s more that unity drove him away.

“The ‘no’ campaign, the scaremongering and the fear they’re putting into people, really upset me,” Constantine says.

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At the heart of the nationalist campaign is the claim that Scotland would be a more prosperous and more equal country if it went solo. It is rich in oil and inherently decent, say the nationalists, but impoverished by a government in Westminster that has also imposed callous policies. They blame successive British governments for almost every ill that has befallen Scotland, from the decline of manufacturing industry to ill-health to the high price of sending parcels in the Highlands. Alex Salmond, Scotland’s nationalist leader, is broad in his recrimination: Labour and the Tories are of a piece, he suggests, in their disregard for Scotland.

But Scotland’s relative economic decline is the result not of southern neglect but of the shift of manufacturing and shipping to Asia. If Westminster has not reversed all the deleterious effects of globalisation and technology, that is because to do so is impossible. The nationalists know this, which is why, sotto voce, they would continue many of Westminster’s policies. Instead they make much of minor adjustments, such as abolishing the “bedroom tax”, a recent measure designed to nudge people out of too-large social housing. To break up a country over such small, recent annoyances would be nuts.

The nationalists’ economics are also flawed. Scotland would not, in fact, be richer alone. The taxes that would flow to it from the North Sea would roughly compensate for the extra cost of its lavish state, which would no longer be funded by Westminster (last year spending was some £1,300 per person higher in Scotland than elsewhere in Britain). But oil revenues are erratic.

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The 307-year-old union between England and Scotland has been one of history’s most successful, but a possible split has investors and lawmakers fearing the potential aftershocks.

A “no” vote against Scottish independence was once a foregone conclusion for the Sept. 18 referendum, but a recent narrowing of polls ”” with some putting “yes” in the lead ”” has made the United Kingdom’s biggest constitutional change since the Irish Free State’s creation in 1922 a distinct possibility.

Secession could throw a wrench into the U.K.’s economic recovery, which has been among Europe’s strongest. Scotland’s share of U.K. gross domestic product is around 9.2%, or 148 billion pounds ($238.3 billion). Its 5.3 million residents comprise 8.3% of the total population.

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Florida Blue, the state’s largest health insurer, is increasing premiums by an average of 17.6 percent for its Affordable Care Act exchange plans next year, company officials say.

The nonprofit Blue Cross and Blue Shield affiliate blames higher health costs that are a result of attracting older adults this year who previously lacked coverage and are using more services than expected.

Florida insurance regulators plan to release rate information for all companies next week. The exchange plans cover individuals who are not covered by employer-based policies.

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The Church of England’s prolonged struggle to sell its stake in Wonga, the payday lender, illustrates the problems that investors can encounter when they lock up their capital in illiquid private vehicles instead of buying publicly traded securities that offer a straightforward exit.

However, buying and selling positions in existing private equity funds in the secondary market is becoming increasingly popular, attracting growing interest from institutional investors.

Ardian, a Paris-based manager, raised $9bn earlier this year to create the largest private equity secondary market fund to date while Lexington Capital Partners is looking to raise $8bn to $10bn for its latest secondary vehicle.

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Clemens Fuest, from the Mannheim-based organization best known for its widely-watched economic sentiment index – told German business daily Handelsblatt that the euro zone region could be at a “turning point.”

“I’ve got a bad feeling about this…I am concerned by the danger that the ECB is producing new bubbles with its policy of cheap money,” he told the newspaper.

“We have all the ingredients of a bubble: The prices of real estate and stock markets continue to rise, and on the bond markets, yields are falling despite high risks.”

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The European Central Bank cut its deposit rate below zero and said it would announce further measures later today as policy makers try to counter the prospect of deflation in the world’s second-largest economy.

ECB President Mario Draghi reduced the deposit rate to minus 0.10 percent from zero, making the institution the world’s first major central bank to use a negative rate. Policy makers also lowered the benchmark rate to 0.15 percent from 0.25 percent.

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The bond markets have grasped something that continues to elude many economists. We live in a confused world. Yet the underlying story is simple. The US middle continues to hollow out, even as the economy continues to grow.

But the latter’s upside is limited by the crisis in the former. Unless the middle class starts to post healthy income gains, we will be stuck in what has been annoyingly named the “new normal”.

Neither the Democratic nor the Republican party ”“ nor most of their European counterparts ”“ appears to have an answer. President Barack Obama pushes for a higher minimum wage, which would certainly help the poorest sections of the US labour force. But it would do nothing to fix the central problem. And Republicans keep arguing for lower taxes on the wealth creators. Ditto. They have argued each other to a standstill.

Both parties might find it instructive to look north to Canada, which has endured its harshest winter in 20 years.

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The Church Commissioners’ total return on its investment in 2013 was 15.9 per cent. This means that the Church Commissioners fund has exceeded its target return of RPI + 5 percentage points over the past one year, three years, ten years and twenty years. It has also has performed better than similar funds over the same periods. Details have been published today in their full Annual Report and Account (link below) for 2013.

The Commissioners’ fund is a closed fund, taking in no new money, and has performed better than its target return of RPI +5.0% p.a. and its comparator group over the past, one, three, 10 and 20 years.* The results confirm the fund’s strong long term performance

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The euro zone’s economy expanded at a weak pace last quarter despite a strong recovery in Germany, putting added pressure on the European Central Bank to enact fresh easing measures to prevent the region from sliding into a lengthy period of low inflation and economic stagnation.

Gross domestic product grew 0.2% in the euro zone during the first quarter compared with the final three months of 2013, the European Union’s statistics agency Eurostat said Thursday, well short of the 0.4% quarterly gain expected by economists.

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The man responsible for the Church of England’s £6bn endowment has defended plans to increase its investment in hedge funds, arguing that not all of the industry has “devil’s horns”.

Andreas Whittam Smith, First Church Estates Commissioner, told the Financial Times that the Church’s own ethical watchdog sanctioned short selling, providing it was done in a responsible way.

He added that the group “does not have ethical concerns about short selling per se as an investment practice,” and “did not make an ethical distinction between seeking to profit from a rise in the value of a security as against seeking to profit from a fall.”

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The Church of England is ramping up the exposure of its £6bn endowment to alternative investments such as hedge funds and private equity in a move that will cement its position as one of the UK’s largest single investors in these types of assets.

The Church Commissioners who manage the endowment will meet next month to decide on the fund’s allocations and are set to increase its exposure to alternative investments, which also include residential property and farm land, according to a Church spokesman. Alternatives already account for almost a third of the fund.

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There are still many things to love about Argentina, from the glorious wilds of Patagonia to the world’s best footballer, Lionel Messi. The Argentines remain perhaps the best-looking people on the planet. But their country is a wreck. Harrods closed in 1998. Argentina is once again at the centre of an emerging-market crisis. This one can be blamed on the incompetence of the president, Cristina Fernández, but she is merely the latest in a succession of economically illiterate populists, stretching back to Juan and Eva (Evita) Perón, and before. Forget about competing with the Germans. The Chileans and Uruguayans, the locals Argentines used to look down on, are now richer. Children from both those countries””and Brazil and Mexico too””do better in international education tests.

Why dwell on a single national tragedy? When people consider the worst that could happen to their country, they think of totalitarianism. Given communism’s failure, that fate no longer seems likely. If Indonesia were to boil over, its citizens would hardly turn to North Korea as a model; the governments in Madrid or Athens are not citing Lenin as the answer to their euro travails. The real danger is inadvertently becoming the Argentina of the 21st century. Slipping casually into steady decline would not be hard. Extremism is not a necessary ingredient, at least not much of it: weak institutions, nativist politicians, lazy dependence on a few assets and a persistent refusal to confront reality will do the trick.

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The Church of England has appointed a New York-based specialist to screen its portfolio of assets in the wake of its embarrassing Wonga debacle last year.

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The gruelling hours were even more important, however. In his valedictory emails, perhaps wary of the cliché, Mr El-Erian avoided saying he wanted to spend more time with his family. But that is, in fact, his main reason for leaving, according to people close to him.

One tells me that on an average day Mr El-Erian’s alarm clock goes off at 2.45am. He usually gets to the office by 4.15am, gets home to his family about 7pm, eats, goes to bed by about 8.45pm and does it again.

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Although the Fed expects to keep reducing the program “in measured steps” next year, the timing and the course isn’t preset. “Continued progress [in the economy] is by no means certain,” Mr. [Ben] Bernanke said. “The steps that we take will be data-dependent.”

If the Fed proceeds at the pace he set out, it would complete the bond-buying program toward the end of 2014 with holdings of nearly $4.5 trillion in bonds, loans and other assets, nearly six times as large as the Fed’s total holdings when the financial crisis started in 2008.

Still, officials””worried that investors would quake at the thought of less Fed support””went to lengths to demonstrate that they would keep interest rates low for years to come, even after the bond-buying program ends.
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Wall Street faces more intensive government scrutiny of trading after U.S. regulators issued what they billed as a strict Volcker rule today, imposing new curbs designed to prevent financial blowups while leaving many details to be worked out later.

The Federal Reserve, Federal Deposit Insurance Corp. and three other agencies formally adopted the proprietary trading ban. The rule has been contested by JPMorgan Chase & Co., Goldman Sachs Group Inc. and their industry allies for more than three years.

Wall Street’s lobbying efforts paid off in easing some provisions of the rule. Regulators granted a broader exemption for banks’ market-making desks, on the condition that traders aren’t paid in a way that rewards proprietary trading. The regulation also exempts some securities tied to foreign sovereign debt.

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Pope Francis called for renewal of the Roman Catholic Church and attacked unfettered capitalism as “a new tyranny”, urging global leaders to fight poverty and growing inequality in the first major work he has authored alone as pontiff.

The 84-page document, known as an apostolic exhortation, amounted to an official platform for his papacy, building on views he has aired in sermons and remarks since he became the first non-European pontiff in 1,300 years in March.

In it, Francis went further than previous comments criticizing the global economic system, attacking the “idolatry of money” and beseeching politicians to guarantee all citizens “dignified work, education and healthcare”.

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..before realtors get too confident about the future, it is worth looking at some sobering research from the International Monetary Fund, buried deep inside this autumn’s Global Financial Stability Report. This analysis, which looks at mortgage real estate investment trusts (M-Reits) ”“ which invest in packages of mortgage bonds ”“ did not make headlines when the IMF met last month, because M-Reits are a fairly specialist sector. That is a pity, given that the IMF says the rapidly expanding world of M-Reits has the potential to deliver nasty surprises if, or when, US interest rates rise.

Most notably, even a modest increase in rates could spark fire sales of mortgage-backed bonds, which would raise mortgage interest rates sharply for consumers. And that could not just hurt housing markets but produce knock-on waves of instability in other areas of finance.

“Rapid M-Reit deleveraging has important spillover implications,” the IMF report warns.

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Standard and Poor’s (S&P) has cut France’s credit rating to AA from AA+.

The moves comes almost two years after the country lost its top-rated AAA status….

S&P said in its statement: “We believe the French government’s reforms to taxation, as well as to product, services and labour markets, will not substantially raise France’s medium-term growth prospects and that ongoing high unemployment is weakening support for further significant fiscal and structural policy measures.”

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Elite business-school graduates are increasingly heading to work in technology over finance as the lingering aftereffects of the financial crisis””along with Wall Street’s long hours and scaled-back pay””sends newly minted M.B.A.s elsewhere.

At Harvard Business School, 18% of job-seeking students landed tech-sector spots this year, up from 12% in 2012. A similar shift is under way at the business schools at Yale University and Cornell University, where the share of graduates going into tech more than doubled over the past two years.

Meanwhile, just 27% of Harvard Business School graduates took jobs in finance this year, down from 35% last year. That figure dropped to 16% from 27% at the MIT Sloan School of Management.

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Religious faith is a “powerful and increasingly influential global reality” which must be taken seriously, especially in the City of London, according to the Archbishop of Canterbury.

The Most Rev Justin Welby said God and mammon ”“ material wealth or greed ”“ are not mixable, but this did not mean there was no place for faith in the City.

“That’s on the authority of Jesus Christ who said you can’t serve God and mammon. God and the City, by contrast I think, are eminently mixable.”

He was speaking at a Mansion House dinner hosted by Roger Gifford, a senior banker and Lord…

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The bishops might have been promoting a strictly Democratic line, but U.S. Senate Chaplain Barry Black was more ecumenical. Amid the shutdown, Rev. Black offered a daily prayer in the Senate chamber asking God to “save us from the madness. We acknowledge our transgressions, our shortcomings, our smugness, our selfishness, and our pride.” Later he condemned the “hypocrisy of attempting to sound reasonable while being unreasonable.” His listeners in one party no doubt assumed he was talking about the other side.

It is one thing to spiritually shame politicians, as Rev. Black did. Trying to do their jobs is another. The bishops and other clergy in the Circle of Protection go well beyond their competencies when they make such policy prescriptions. Speaking about the moral issues of the day is certainly within their pastoral purview, but the bishops’ calls to raise revenues (aka taxes), for instance, or eliminate “unnecessary” military spending are not.

Bishops routinely assert their authority as “pastors and teachers,” as Bishops Blaire, Gomez and Pates did, but according to the tradition of their own church, they have no teaching authority when it comes to politics.

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With just two days to go before an Oct. 17 deadline to raise the nation’s debt limit, 51% of the public views a rise in the nation’s debt limit as “absolutely essential” in order to avoid an Half View Debt Limit Increase as Essential, More than a Third Say it is Noteconomic crisis, while 36% think the country can go past the deadline without major problems.

Public concern over breaching the debt limit deadline has risen only slightly from a week ago, when 47% said a rise in the debt limit was essential and 39% said it was not.

Those who see no dire economic consequences resulting from going past Thursday’s deadline are not only skeptical about the timing ”“ most say there is no need to raise the debt limit at all. Nearly a quarter of all Americans (23%) ”“ including 37% of Republicans and 52% of Tea Party Republicans ”“ believe the debt limit does not need to be raised at all.

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Top Senate leaders on Monday said they were within striking distance of a deal to sidestep a looming debt crisis and reopen the federal government two weeks after a partisan deadlock forced it to close.

Fourteen days after a partial government shutdown began, senators signaled a bipartisan resolution could come soon.

“I’m very optimistic we will reach an agreement that’s reasonable in nature this week to reopen the government, pay the nation’s bills and begin long-term negotiations to put our country on sound fiscal footing,” Senate Majority Leader Harry Reid (D., Nev.) said on the Senate floor.

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When the Archbishop of Canterbury was embarrassed by the revelation earlier this year that the Church had invested indirectly in Wonga ”“ after he had announced plans to take on the payday lender ”“ it served as a bleak reminder that even the best-intentioned investor can be let down by their so-called ethical investments.

If you are looking to put your spare cash to good use by investing “ethically”, be warned that you could face similar nasty surprises unless you keep a keen eye on the investment criteria. A close examination of the ethical fund sector shows investments in some unexpected areas. They include oil companies operating in tar sand fields, deemed harmful by some environmentalists; arms manufacturers; and businesses that have exposure to fur and animal testing.

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