The world was on fire last weekend, but the financial markets reacted to almost nothing. And that has everything to do with the fact that there’s so much more going on, says Professor Arnoud Boot. “Financial markets operate in two ways: dampening or hyperactive.”
As for the latter, Boot talks about scenarios where nothing is wrong until something is right. “Increasingly, financial markets have started responding this way,” says Boot. “And this has obvious reasons: if governments permanently support the economy, any ripples will be absorbed.”
While the old patterns may have resulted in currency fluctuations and a weaker euro, Boot knows it. “When there is unrest, the dollar is always the safe haven. That’s why I thought the dollar would go up,” he continues. “Especially when you look at Europe’s position and energy dependency.”
But things are decidedly different, notes Boot. “And then that puts unimaginable pressure on central banks, but also on governments,” he says.
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(…). And it’s these governments that are complaining too much, says Boot. Especially since last Friday’s CBS data showed that middle-income households have improved in terms of purchasing power. “During the corona crisis, there was a reason to support the economy, and now we will continue with it,” says Boot. “And there is no politician – not even in the Netherlands – who opposes it.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
