Financial markets, politics and the new reality

by George Friedman

After the global financial crisis, it is clear that our economic system is not a machine but a political compact.

Louis M. Bacon is the head of Moore Capital Management, one of the largest and most influential hedge funds in the world.
Last week, he announced that he was returning one quarter of his largest fund, about $2 billion, to his investors.
The reason he gave to The New York Times was that he had found it difficult to invest given the impossibility of predicting the European situation.
He was quoted as saying, "The political involvement is so extreme -- we have not seen this since the postwar era.
What they are doing is trying to thwart natural market outcomes.
It is amazing how important the decision-making of one person, Angela Merkel, has become to world markets."

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