GZERO Media logo

The Confidence Game

The Confidence Game

If you own stocks, anywhere in the world, there’s a good chance that the markets’ wild ride this week upset your stomach. But, worried as you were, you probably felt some confidence that the US and European economies are relatively stable, that governments in those places know what they’re doing and are relatively transparent about it, and that markets would recover.


Now consider a day in the (not-so-distant) future when a market meltdown begins not on Wall Street but in China. Imagine further that when that day comes, China is the largest economy on earth (by some measures, it already is). Will you be as confident in China’s leadership and markets are you are in the US and Europe’s?

A few thoughts:

1. In China, all the big political and economic decisions are made behind closed doors by seven men — the Politburo Standing Committee. No one alive today has ever lived in a world where the largest economy on earth was governed in such secrecy.

2. Last week’s stock market rollercoaster started in part because of expectations that the US Federal Reserve will soon raise interest rates to keep the economy from overheating. Investors don’t like higher interest rates, but they know how the Fed works and what it wants to achieve. The Fed has a responsibility to explain its decisions. Imagine the uncertainty when investors are instead hanging on the words of China’s central bank, where decisions must be approved by politicians who feel no need to explain their actions.

3. Starting this year, Chinese stocks are included in the MSCI EM index, one of the largest indices of stocks from “emerging market” economies. Because many American pension funds hold the MSCI EM Index, they — and maybe you — now have direct exposure to China’s domestic stock market for the first time, even if you’re not aware of it.

4. Today, China’s economy appears strong, but many analysts say economic statistics produced in that country are more vulnerable to political manipulation, particularly at the local level, than stats from countries like the US, Germany, or Japan. In fact, several Chinese provincial governments admitted recently that they faked their GDP data for 2016. Investors shrugged off this news because they’re confident in smooth sailing for China’s economy. But what happens when the waters get choppy and investors get queasy?

5. Investors know that, in a crisis, China’s leaders will worry about political stability first and the credibility of state-generated information a distant second. So even if China produces accurate info, will panicky investors believe it? How long will it take for confidence to be restored?

Confidence is the fuel that powers economies forward — at the local, national, and global levels. Today, China and its economic engine inspire confidence. That may no longer be true on the day when real trouble shakes an economy governed by secretive leaders who care more about political survival than the credibility of the information they share with the world.

That day is coming.

The role of the public library has evolved over time. As we move online at an even faster rate, knowledge, entertainment and opportunities for education and employment are found on the internet. Those living in well-connected, affluent places may have come to take internet access for granted. But there is a digital divide in the U.S. that has left people at a disadvantage – particularly since the arrival of COVID-19.

Finding ways to overcome that divide in a sustainable, community-led way could help bring the benefits of the internet to those who need it most. One solution is to use technologies such as TV white space to facilitate wireless broadband – as Microsoft's Airband Initiative is doing. To read more about Microsoft's work with public libraries, visit Microsoft On The Issues.

Who does Vladimir Putin want to win the US election? Given the Kremlin's well-documented efforts to sway the 2016 vote in Donald Trump's favor, it's certainly a fair question. And while there's no solid evidence that Russian interference had any decisive effect on the outcome four years ago, the Trump administration itself says the Kremlin — and others — are now trying to mess with the election again.

So let's put you in Vladimir Putin's size 9 shoes as you weigh up Donald Trump vs Joe Biden while refreshing your own personal PyatTridsatVosem (FiveThirtyEight) up there in the Kremlin.

More Show less

"The 'American exceptionalism' that I grew up with, the 'American exceptionalism' of the Cold War…I do think has outlived its usefulness." Those words coming from Anne-Marie Slaughter, a former top State Department official under President Obama, indicate how much the world has changed in the past few decades. Her conversation with Ian Bremmer is part of the latest episode of GZERO World.

Watch the episode: How a "President Biden" could reshape US foreign policy

Less than a week out from Election Day, 66 million Americans have already cast their ballots, and many of those are people who are voting "early" for the first time because of the pandemic. In fact, the early vote total alone this year is already equal to nearly half of all ballots cast in the 2016 general election, suggesting that 2020 turnout could reach historic levels. Most important, however, is how things are playing out in key battleground states where the outcome of the US election will be determined. In Texas, for instance, a huge surge in early voting by Democrats this year has raised the possibility that a state which has been won by Republican candidates since 1976 could now be up for grabs. Here we take a look at early voting in battleground states in 2020 as compared to 2016.

In a national referendum on Sunday, Chileans overwhelmingly voted in favor of a new constitution. But, why are people in this oasis of political stability and steady economic growth in South America willing to undo the bedrock of the system that has allowed Chile to prosper for so long?

More Show less
UNGA banner

GZEROMEDIA

Subscribe to GZERO Media's Newsletter: Signal

Cities on the frontlines

Living Beyond Borders Articles