As the period of ultra-loose monetary policy in the developed world inches to a close, a paradox calls for explanation. Throughout this extraordinary monetary experiment managers of listed companies appeared to see risks everywhere and have been reluctant to invest in fixed assets despite enjoying the lowest borrowing costs in history. By contrast financial institutions have been fearless in propelling markets ever higher.
This dichotomy between subdued risk taking in the real economy and aggressive risk taking in financial markets has prompted Angel Gurría, general of the Organisation for Economic Cooperation and Dev-elopment, to remark that one or other of these views will be proved wrong.
With the US Federal Reserve now preparing to raise interest rates we may soon know whose judgment is dangerously flawed.
The behaviour of financial institutions, whether judicious or insane, is at least comprehensible. Central banks’ post-crisis bond buying programmes were precisely designed to prod investors to take on more risk. This has given further impetus to a secular decline in real interest rates that predated the financial crisis, reflecting such forces as the Asian savings glut, deficient in the west and adverse demographic trends. The outcome has been the much-discussed search for yield.
Downward pressure on yields has been reinforced by a shortage of so-called safe assets. Hence a stampede into sovereign bonds with negligible or negative yields — in effect, a search for non-yield. Even after the recent upturn in yields, investors are still paying some European governments to take their money.
In a speech in June Andrew Haldane, chief economist of the Bank of England, pointed out that there had been no precedent for such negative rates since the time of the Babylonians. Among the various potential explanations, Mr Haldane puts particular emphasis on the phenomenon of “dread risk”, a term used by psychologists to describe an exaggerated sense of fear and insecurity in the wake of catastrophic events.
英国央行(BoE)首席经济学家安德鲁霍尔丹(Andrew Haldane)在6月的一次讲话中指出，自巴比伦时代以来，人类历史上从未有过这样的负收益率先例。在多种可能的解释中，霍尔丹特别强调了“恐惧风险”(dread risk)现象，这是心理学家用来描述灾难性事件后放大的恐惧和不安全感的术语。
It certainly provides a plausible explanation of private sector savings behaviour after 2008. Back then, households and companies were running a combined financial deficit (income less spending) of 2.4 per cent of gross domestic product in the US and 1.5 per cent in the UK, while the eurozone was running a surplus of 2.4 per cent. So the private sector was neither saving nor dissaving to any great degree.
By 2010 the private sector had switched to a large financial surplus of 7.2 per cent of GDP in the US, 8.2 per cent in the UK and 5.8 per cent in the eurozone. Serious thrift had set in.
Yet there are limits to the explanatory power of dread risk. Why should a once-in-5,000-year event have struck now, rather than in the 1930s Depression, which saw far greater losses of output and employment?
Note, too, that the dichotomy between risk perceptions in the real economy and in the financial markets is partly an illusion. Industrialists are fuelling risk-taking in markets through buy-backs
In their recent Business and Finance Outlook, OECD economists identified flawed incentive structures as part of the reason for divergent perceptions of risk. They are surely right. The growth of buy-backs stems from equity-related incentives and performance-related pay. The most popular performance metrics, earnings per share and total shareholder return, are manipulable by management. No surprise, then, that survey evidence in the US has shown that profitable investment opportunities are routinely turned down in order to meet short-term earnings targets.
在最近一期《商业和金融展望》(Business and Finance Outlook)中，经合组织的经济学家们认为，风险认知不同的部分原因在于激励机制有缺陷。他们无疑是正确的。回购增长源于股权激励和绩效薪酬机制。最流行的业绩指标（每股盈利和股东总回报）可以受到企业管理层的操纵。难怪美国的调查结果表明，企业为了达到短期盈利目标，经常放弃有利可图的投资机会。
A different take comes from economists at the Basel-based Bank for International Settlements. For them, the people who suffer most from dread risk — though they do not use the term — are central bankers. The folk in Basel believe that low interest rates beget yet lower rates because they cause bubbles, followed by central bank bailouts. Their worry is that we risk trapping ourselves in a cycle of financial imbalances and busts. Unlike Mr Haldane, they would like to see an early return to monetary “normalisation”.
位于巴塞尔(Basel)的国际清算银行(Bank for International Settlements)的经济学家们提出了另一个见解。在他们看来，受恐惧风险（尽管他们没有使用这个词）影响最严重的是央行官员。巴塞尔的这些经济学家认为，低利率会进一步催生低利率，因为它们会引起泡沫，而泡沫破裂后央行会出手纾困。他们的担忧是，我们有可能陷入金融失衡和崩盘的循环。和英国央行的霍尔丹不同，他们希望货币政策尽早回归“正常化”。
This, though, would be painful. Even a modest move in the direction of historic interest rate norms could pose a threat to solvency, not least for banks whose balance sheets are stuffed with sovereign debt. The search for non-yield has made safe assets unsafe, while rock-bottom policy interest rates have restricted central bankers’ crisis management toolbox. Escaping from this once-in-5,000-year aberration may thus require Houdini-like skills.