THE TELEGRAPH: The trouble with protectionism is that both the efforts to prevent it and the disastrous effects it can have have been painted as boring. So often do politicians around the world drone on about confronting the threat that it has become increasingly difficult to convince people of its importance. I can tell you that protectionism is, as I see it, the biggest worry I have about the next couple of years, both economically and diplomatically. I just worry that we’ve become anaesthetised to such comments.
I wrote about protectionism in my column last week, so no need to repeat myself, except to give an update. I mentioned that although there are growing examples of the rise in “traditional” protectionism - stuff like trade barriers, subsidies for domestic companies and so on - the real threat remains the more invisible, insidious element of financial protectionism. This works in two ways: first, that governments around the world, by dint of supporting their banks, are (by helping them survive) giving them anti-competitive support to the detriment of foreign competitors (particularly those with less generous governments ). Second, that governments are invariably ordering their banks to withdraw cash and operations from overseas in order to fund more lending for domestic businesses and consumers.
The first is perhaps unavoidable; the second is inexcusable in a globalised world.
And yet it is happening at alarming pace. There is anecdotal evidence: there were explicit clauses when Royal Bank of Scotland that stipulated that it should ensure more cash was lent to domestic customers. There is statistical evidence. The latest Bank for International Settlements quarterly report showed that the flows of cash around the world have continued to slide. But I fear that far worse is yet to come. …>>> Edmund Conway | Monday, September 28, 2009
