Finance

This is a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting in September.
Text removed from the September statement is in red with a horizontal line through the middle.

Text appearing for the first time in the new statement is in red and underlined.
Black text appears in both statements.
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The Swiss National Bank supplied a massive lifeline to stricken lender Credit Suisse after a collapse in shareholder and investor confidence led to massive customer outflows.
The SNB injected 168 billion Swiss francs ($185 billion) in emergency liquidity.
This bought time for the central bank, alongside regulator FINMA and the Swiss authorities, to broker Credit Suisse’s emergency sale to domestic rival UBS in March.

Thomas Jordan, president of the Swiss National Bank (SNB), speaks during the bank’s annual general meeting in Bern, Switzerland, on Friday, April 28, 2023.
Bloomberg | Bloomberg | Getty Images

Jordan suggested that without the ELA+ loan, which was not secured in the manner typically required by the SNB, Credit Suisse risked being unable to meet its financial obligations, jeopardizing systemic stability.
Jordan’s comments echoed those of FINMA CEO Urban Angehrn, who suggested in April that allowing Credit Suisse to fall into bankruptcy would have crippled the Swiss economy and likely resulted in deposit runs on other banks.

However, Jordan noted that that there were important lessons to be learned regarding liquidity regulations and protecting against faster and larger outflows of customer deposits, according to Reuters.
The Swiss government, SNB and FINMA faced criticism and legal challenges over their handling of the forced takeover, particularly over the lack of shareholder input and the wipeout of $17 billion of Credit Suisse’s additional tier-one (AT1) bonds, which were written down to zero while common stockholders received payouts. More

Billionaire investor Stanley Druckenmiller said the federal government has been spending recklessly and failed to issue debt at low rates in past years, mistakes that will ultimately lead to some tough choices in the future like cutting Social Security.
“We are spending like drunken sailors,” Druckenmiller said on CNBC’s “Squawk Box” Wednesday. “Don’t forget pre-Covid … the federal government was 20% of GDP in spending. Now it’s 25% of GDP … My father told me if you’re in a hole, stop digging Stan.”

The legendary investor, who now runs Duquesne Family Office, said he was disappointed to find out that the White House is seeking another $56 billion in emergency spending for disaster relief and childcare programs, in addition to the $106 billion the administration wants for Israel and Ukraine.
The federal government wound up its fiscal year in September with a deficit just shy of $1.7 trillion, up about $320 billion, or 23.2%, from fiscal 2022. The budget shortfall adds to the staggering U.S. debt total, which stood at nearly $34 trillion.
Druckenmiller said government entitlement programs, which make up almost half of the federal budget, might be forced to be pared down in the future. He proposed a cut in Social Security benefits.
“I want to go after entitlements. It’s where the money is,” he said. “This generation has got to take a cut….right now current seniors, you’re going to get 100 cents on the dollar. Future seniors looking at five or 10 cents on the dollar, is it not unreasonable for us to go to 85 or 90 cents on the dollar?”
Despite his calls to cut overall spending, the widely followed investor stressed that it’s necessary for the U.S. to support Ukraine and disagrees with Republicans urging to stop funding in that region.

“I was actually happy to see when the announcement the support for Ukraine and Israel $106 billion,” Druckenmiller said. “Do you know how much we’re gonna have to spend if Putin wins in Ukraine? It’s madness.”
The widely followed investor believes that the market will be “very challenged” in the current environment, and only disciplined stock pickers would be rewarded.
Druckenmiller once managed George Soros’ Quantum Fund and shot to fame after helping make a $10 billion bet against the British pound in 1992. He later oversaw $12 billion as president of Duquesne Capital Management before closing his firm in 2010.  More

Sequels are never as good as the original. And when the original was terrible, there is even more reason to dread the next episode. So it is with “Tariff Man Part Two”. In the White House, Donald Trump put more new tariffs on American imports than any president in nearly a century. His philosophy was simple: “I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.”Mr Trump’s protectionism made America poorer, did little to help exporters and fed the inflation still raging. If he wins the Republican presidential nomination (a likely outcome) and goes on to win the election (too close to call), he has vowed to ramp up things. He is mulling an across-the-board levy of perhaps 10% on all products entering America. In one fell swoop, his plans would more than triple the average American tariff. The direct costs would be bad enough, with the tariffs functioning as a tax on consumers and hurting most producers. Yet they would also tear at America’s ties with its allies and threaten to wreck the global trade system.To get a sense of the impact, look back. On January 23rd 2018, a year after Mr Trump was sworn in, he got started with tariffs, hitting washing machines and solar panels. A couple of months later he went after aluminium and steel. A few months after that, it was Chinese goods. By 2021 American duties were worth 3% of the country’s total import value, double the level when Mr Trump took office. Tariffs on Chinese imports rose from 3% to 19%, calculates Chad Bown of the Peterson Institute for International Economics, a think-tank.image: The EconomistMr Trump’s first aim was to slim the trade deficit. He thought tariffs would bludgeon other countries into submission, leading them to rejig policies to America’s advantage. Memorably, he declared that “trade wars are good, and easy to win.” But instead of shrinking, the deficit widened. Instead of buckling, China tripled its tariffs on America. Many allies retaliated, too.The consequences were dismal. Industries that were protected by tariffs reaped benefits, enjoying greater market share and fatter profits. Most others suffered. America’s International Trade Commission (usitc), a bipartisan agency, found that industries downstream from tariff-coddled producers faced higher input prices and lower profitability. The Peterson Institute estimated that steel users in effect paid an extra $650,000 per job created in the steel industry. Studies have calculated that almost all the costs have been borne by Americans, rather than foreign producers. The usitc found a near one-to-one increase in the price of American imports in the wake of tariffs on China. image: The EconomistMr Trump did unquestionably succeed in one respect. He helped remake politics. According to a recent survey from the Chicago Council on Global Affairs, a think-tank, 66% of Americans think the government should place restrictions on imported foreign goods to protect jobs at home, up from 60% in 2018. On the campaign trail in 2019 Joe Biden criticised tariffs as a costly policy. In power he has rolled them back only a little. The array of levies on China remains intact. Whatever the merits of lifting tariffs, the White House appears fearful of blowback from looking soft on China.At the same time, Mr Biden has concocted an enormous industrial policy, fuelled by more than $1trn in subsidies for electric vehicles, offshore wind, semiconductors and the like. It is a more thoughtful and deliberate approach than Mr Trump’s, but it still looks likely to fail to bring about a manufacturing renaissance, is very expensive and, in lavishing subsidies on American factories, discriminates against other countries. It is, in short, rather Trumpist. image: The EconomistHow much worse could things get? If Mr Trump wins the presidential election in 2024, the world may discover that the answer is: “Rather a lot.” In August Mr Trump was interviewed on Fox Business, a television channel, by Larry Kudlow, his former economic adviser and a long-time media personality. Mr Trump put forward two ideas. First, all foreign firms selling to America would face a 10% levy. Second, if any country placed a high tariff on anything American, he would hit back with exactly the same tariff. “Call it retribution,” said Mr Trump. “Reciprocity,” interjected Mr Kudlow, using the politer label.The lineage of these ideas can be traced back to thinkers who crafted policy during Mr Trump’s presidency, and who are working on new, more detailed plans. Robert Lighthizer, United States Trade Representative under Mr Trump, recently laid out his vision in a book, “No Trade is Free”. One of his ideas is the universal tariff on all imports, to be used as a lever to bring America’s trade flows into balance, so that the country no longer runs a big deficit. Mr Lighthizer would not limit the tariff to 10%. Rather, he writes, America should impose the levy “at a progressively higher rate year after year until we achieve balance”.Project 2025, a coalition of conservative groups, published a book earlier this year with blueprints for almost every facet of government during a second Trump administration. In the trade chapter, Peter Navarro, another economic adviser to Mr Trump, bemoaned the fact that countries like China and India have higher levies on America’s goods than America does on theirs, arguing that this has led to “systematic exploitation of American farmers, ranchers, manufacturers, and workers”. In principle, reciprocity could be achieved in two ways—either by persuading other countries to lower tariffs or by America raising its own. Mr Navarro leaves no doubt as to his preference.Action, reactionIf Mr Trump has his way, other countries will probably respond by slapping their own tariffs on America. The spread of universal tariffs would be akin to a giant tax on cross-border transactions, making international commerce less attractive. Meanwhile, Mr Trump’s hopes of shrinking the trade deficit would run headlong into the economic forces that actually determine the balance of exchanges between countries. In America’s case the crucial factor is the country’s low saving rate, which is almost certain to continue as a result of persistently high consumer spending and widening government deficits.Mr Trump has pointed to one ostensible virtue of his tariffs: they generate income. The Committee for a Responsible Federal Budget, an advocacy group, estimates that a 10% tariff may bring in up to $2.5trn in extra revenue during its first decade of implementation, which could be used to reduce America’s budget deficit. But this money could also be brought in by other methods. Raising tariffs simply means picking them as a tax over others such as, say, a higher income or inheritance tax.Every tax has pros (eg, generating public revenue or discouraging bad behaviour) and cons (eg, hurting growth or imposing costs on individuals). The cons of tariffs are big. Ahmad Lashkaripour of Indiana University estimates that a global tariff war would shrink American gdp by about 1%. Most countries would suffer falls closer to 3%. The drag on smaller, trade-reliant economies would be greater still. Tariffs are also regressive since they hurt those on lower incomes twice. They tax more of their spending, by raising the price of consumer goods, and more of their earnings, since many work in industries, such as construction, that face higher material costs. If the bulk of the tariff bill is passed on to American consumers, as occurred with the first round of Mr Trump’s tariffs, a 10% duty would cost each American household about $2,000 per year.image: The EconomistThe toll from universal tariffs would go beyond their economic impact. International commerce, and the system that enables it, built after the second world war, allows countries to challenge each other’s policies at the World Trade Organisation (wto). But the wto’s role in dispute settlement has been disabled since 2019, when the Trump administration blocked appointments to its appellate body, preventing the institution from making binding rulings. The result is that countries which object to Mr Trump’s tariffs would lack a suitable way to confront them. “The system would fall apart in a much greater way than it did even during his first term,” says Douglas Irwin of Dartmouth College.Mr Biden has not been a model free-trader. His industrial policy is built on lavish subsidies that, by incentivising investment in America, are unfair to other countries. Yet even if somewhat hamfisted, he has worked to cobble together supply chains and trade networks that bring America and its allies closer together. This is part of an attempt, still in its infancy, to lessen dependence on China. Mr Trump’s tariffs would reverse Mr Biden’s progress. It would no longer be America and (occasionally reluctant) friends versus China—it would be America versus the world. “Trump would view it as a badge of honour if other countries were upset. He’d say, ‘See, I’m fighting for you and we’re sticking it to them’,” predicts Mr Irwin.Mr Trump would lack outright authority to implement a universal tariff. The constitution gives Congress the power to regulate commerce; the president can intervene only by using special justifications. Mr Trump previously drew on two statutes: section 232 of trade law allows the president to restrict imports in order to protect national security (the dubious basis for tariffs on steel and aluminium); section 301 allows a president to impose tariffs against a country with discriminatory trade behaviour (the more reasonable basis for actions against China). But both require time-consuming investigations, which would cut against the desire of Mr Trump and his advisers for rapid executive actions.Another option would be to invoke the International Emergency Economic Powers Act, which Mr Trump used in 2020 to order the removal of TikTok and WeChat, Chinese social-media goliaths, from American app stores. In this scenario Mr Trump would declare a national emergency and then announce a universal tariff as the response. “It is less clear exactly what national emergency would be declared,” says Jennifer Hillman, a former general counsel with the us Trade Representative. “Perhaps that the trade deficit is threatening American competitiveness? Or that the size of the trade deficit is unsustainable?”Few economists would endorse such thinking. Far from being a weakness, appetite for imports comes from America’s strength. The country has run deficits for the past half-century, a period of economic dominance. More crucially, legal experts would also take a dim view of a declaration. “Trump would be bending the law in a direction that it was never intended to apply,” says Alan Wolff, a veteran of trade law. “There would be court challenges, and they might well be successful.”Reciprocal tariffs might seem tidier, but even an attempt to impose tit-for-tat duties would get messy. Mr Navarro loves to point out that American tariffs on cars are just 2.5%, whereas the European Union charges 10%. What he omits is that America has long placed a 25% tariff on imports of pick-up trucks, not to mention hefty duties on some imports of lumber and some foods. Any line-by-line examination of tariffs would turn up scores of examples where American levies are higher than those of other countries.Indeed, a guiding principle of the wto is that countries can negotiate across different product categories to set tariffs that protect politically sensitive sectors, so long as they keep tariffs down overall. Letting countries hammer out unique tariff regimes is a core part of diplomacy. Pure reciprocity would descend into absurdity.Politically, Mr Trump would also face opposition. Despite his embrace of protectionism, many in the Republican Party are less committed. Consider Project 2025, the coalition drawing up policy plans for Mr Trump’s second term. It is quite clear in all of its positions—except for that on trade. Its chapter on trade is split in two: Mr Navarro’s plea for tariffs is set against a free-trade argument by Kent Lassman of the Competitive Enterprise Institute, a think-tank. Mr Lassman lays out what he dubs a “conservative vision for trade”, calling for tariff cuts to reduce consumer prices, as well as more ambitious trade deals.Mr Trump’s domestic opponents would receive support from abroad. A trade official with an American ally says that his government is braced for tariffs at the start of a new Trump administration, and that he and his colleagues have a damage-limitation playbook, honed during Mr Trump’s four years in office. They would work with firms and politicians in Republican districts that enjoy the benefits of trade—from Iowa’s corn-growers to Tennessee’s car industry—and try to persuade Mr Trump to carve out exceptions.Yet both legal challenges and lobbying would take months, if not longer, to play out. In the meantime, the global trade system would be plunged into uncertainty. Other governments would slap retaliatory tariffs on America. Mr Biden’s work to repair ties with America’s allies would be torn apart. As firms try to assess the risks, they could well turn more cautious in their investment, which would weigh on economic growth. Companies with border-straddling operations would face pressure to retrench. Smaller countries that are dependent on trade would be vulnerable.One of the lessons of Mr Trump’s first stint in the White House is that he can cause great damage with the stroke of a pen, and that the damage is not easily reversed. Most of his tariffs are still on the books. The wto remains neutered. The America-first ethos that he preached, once a fringe preference, is now a force in the political mainstream. The consequences of a second Trump presidency for global trade would be grave and enduring. ■ More

The U.S. Department of Labor proposed a rule on Tuesday to crack down on so-called junk fees in retirement accounts like 401(k) plans and individual retirement accounts.
These fees are financial conflicts of interest that sometimes exist when financial advisors give investment advice to retirement savers, the White House said.
The rule targets three areas: recommendations to roll over money from 401(k) plans to IRAs; to buy “non-securities” products like indexed annuities; and to offer certain investments to 401(k) participants.
The Obama administration also tried to rewrite so-called “fiduciary” rules. Its measure was killed in court.

Julie A. Su, nominee for deputy secretary of Labor, testifies during her Senate Health, Education, Labor and Pensions Committee confirmation hearing in Washington, D.C., on March 16, 2021.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

The Biden administration is cracking down on so-called “junk fees” in retirement accounts.  
The U.S. Department of Labor on Tuesday proposed a rule that would raise the bar for financial advisors, brokers and insurance agents who give investment advice to Americans saving in 401(k) plans, individual retirement accounts and other types of savings vehicles.

Specifically, the proposal seeks to close “loopholes” in current law that sometimes allow trusted advisors to recommend investments that aren’t in a saver’s best interest but may pay the advisor a higher commission, administration officials said.
More from Personal Finance:Inherited IRA withdrawal rules are ‘so complicated’It may take $10 million to achieve ‘financial freedom’Retirement withdrawal rules are ‘crazy’ this year
The rule targets financial advice in three areas: rollovers from 401(k) plans to IRAs; “non-securities” products like indexed annuities and commodities like gold, which generally aren’t regulated by the Securities and Exchange Commission; and recommendations made to employers on which investment funds to offer in 401(k) plans, according to the White House.
There’s a 60-day period for the public to submit comments on the proposal.

Financial conflicts of interest are ‘hidden costs’

The proposal, if codified, would impact millions of investors.

For example, in 2020, about 5.7 million Americans rolled a total $618 billion into IRAs, according to most recent IRS data. Individuals also funneled $79 billion into indexed annuities in 2022, an annual record, according to LIMRA, an insurance industry group. And 86 million people were actively investing in 401(k)-type plans as of 2019, according to the Congressional Research Service.
The “hidden costs” of financial conflicts in retirement plans amount to “junk fees,” Lael Brainard, director of the White House National Economic Council, said during a press call Monday evening. They can reduce a middle-class household’s retirement savings by 20% — amounting to perhaps tens or even hundreds of thousands of dollars, she said.

“It’s time to get junk fees out of the retirement savings market,” said Julie Su, acting secretary of the Labor Department, during the call.
Critics think regulating the retirement market in such a way would do harm, however.
Sen. Bill Cassidy, R-La., and Rep. Virginia Foxx, R-N.C., sent a letter to the Labor Department in August saying its efforts to rewrite existing protections were “misguided” and risked creating confusion in the marketplace, unwarranted compliance expenses and instability for retirement plans, retirees and savers.

How the proposal seeks to raise investor protections

The Labor Department has jurisdiction over retirement accounts. Its proposal would subject financial advisors and others who work with retirement investors to a “fiduciary” legal standard under the Employee Retirement Income Security Act of 1974, according to administration officials.
Here’s why that’s important: These fiduciary protections are generally the highest known to law, relative to other rules covering financial advice and recommendations, according to attorneys.
That would generally mean investment advice must be given solely in investors’ best interests, and that advisors must set aside their own self-interests.

National Economic Council Director Lael Brainard speaks during the daily press briefing at the White House on Oct. 26, 2023.
Anna Moneymaker | Getty Images News | Getty Images

There are certain contexts in which these protections don’t apply under current law: for example, if an advisor makes a one-time recommendation to an investor to roll over money to an IRA and doesn’t maintain an ongoing relationship with that saver in the future.
And while the SEC separately raised its bar for investment advice in 2019, its purview doesn’t extend to popular retirement products like indexed annuities, a popular insurance product that’s not regulated as a security.
However, the Labor Department can regulate them if sold in a retirement account, according to a Biden administration official speaking on background.

It’s time to get junk fees out of the retirement savings market.

acting secretary of the Department of Labor

Sales of these annuities, which are “relatively complicated” and opaque, are “too frequently driven by financial incentives” and not by what’s right for the investor, the official said.

The Obama administration tried to rewrite similar rules

The Labor Department also tried to rewrite so-called fiduciary rules during the Obama administration. However, the Fifth Circuit Court of Appeals killed that measure in 2018.
Some groups believe a new Labor Department rule would stifle uptake of certain investments that are helpful for savers. When the Obama-era rule initially took effect, 29% of brokerage firms reduced advice to investors and 24% eliminated it, according to a Deloitte survey commissioned by the Securities Industry and Financial Markets Association, a brokerage industry trade group.
“Unfortunately, a fiduciary-only regulation would shut off access to important retirement tools, and hurt the very people the regulation intends to help,” according to the American Council of Life Insurers, a trade group.
However, this new proposal is more narrowly applied, said the Biden official speaking on background.
“There are a number of fairly significant differences between the two,” the official said.
The Biden administration has been cracking down on junk fees in other contexts, too, like banking, rental housing and concert tickets.   More

Almost half, 46%, of retirees in 2023 said they stopped working earlier than planned, according to the Employee Benefit Research Institute.
This often happens due to unforeseen circumstances such as job loss or health complications.
Retiring early can have negative financial effects, like drawing down savings and claiming Social Security before the optimal time.

Daniel Gonzalez | Moment | Getty Images

Working longer is among the best ways to ensure you don’t outlive your retirement savings. The problem is, you can’t count on it as a strategy.
When it comes to retirement age, there’s a big gap in expectations versus reality. Americans generally retire earlier than planned — often due to factors beyond their control, such as poor health or job loss, research shows.

In 2022, the average expected retirement age was 66, according to a Gallup poll. But the actual retirement age was 62, on average. While the averages have varied somewhat over the years, there has been a consistent gap of about five years between expected and actual retirement ages since 2002, Gallup said.

Why retiring later can have a ‘dramatic’ impact

Delaying retirement by just a few years can have a “dramatic” positive financial effect, Blanchett said.
Such people continue to get a regular paycheck, so don’t have to live off their savings. Meanwhile, they have extra time to save and for their assets to (hopefully) grow. Further, they can likely delay claiming Social Security benefits, guaranteeing a higher monthly payout for the rest of their lives.
But retiring earlier than anticipated can have the opposite impact, experts said.
Largely, this disproportionately affects people who plan to retire in their early 60s or later, according to Blanchett’s research.

Those who target a retirement age past 61 end up making it about half as far as expected, he found. For example, someone who aims to retire at 69 would actually retire around age 65.
Yet, countervailing trends are pushing workers to retire later.
Social Security’s full retirement age has gradually been pushed back, to as late as age 67 for anyone born in 1960 or after. Americans are living longer, meaning they need to amass more savings to fund their lifestyles in old age.
The shift from pensions to 401(k)-type plans is also a factor, said Richard Johnson, senior fellow at the Urban Institute. Pensions generally offer an incentive to start collecting benefits at a certain age, whereas no such trigger exists in 401(k) plans, he said.

Early retirement is largely due to unforeseen events

Momo Productions | Digitalvision | Getty Images

One-third of workers expect to retire at age 70 or later — or not at all, according to EBRI. But only 6% of retirees said they did retire at 70.
In 2023, 35% of people who said they retired earlier than planned did so because of a hardship like a health problem or disability, according to EBRI. Another 31% did so due to changes at their company.
“The key is, these are things you aren’t going to be able to control,” Blanchett said.
Of course, a large share — 35% — also said they could afford to retire early, EBRI found. And almost half of retirees said they were able to stop working at about the time they planned.

Job loss is ‘really consequential’ for older adults

More than half, 56%, of full-time workers in their early 50s get pushed out of their jobs (due to circumstances like a layoff) before they’re ready to retire, according to a 2018 paper published by the Urban Institute.
“Job loss at older ages is really consequential,” said Johnson, a report co-author. He attributes much of that workplace dynamic to ageism.
Just 10% who suffered an involuntary job separation in their early 50s ever earn as much per week after their separation as before it, the Urban Institute paper said. In other words, 90% earn less — “often substantially less,” Johnson said.
Many may not be able to find a new job altogether.

Johnson’s research shows that in the aftermath of the Great Recession (from 2008 through 2012), workers 50 to 61 years old who lost a job were 20% less likely to be reemployed than workers in their 20s and early 30s. Those age 62 and older were 50% less likely to have a new job.
“Working longer is in theory a good option to shore up your retirement savings,” Johnson said. “But when workers are preparing for retirement, they shouldn’t bet to be able to stay in their jobs for as long as they want.”
Today’s strong labor market means it may be easier for older workers to find a new job, Johnson said. However, it’s unclear how long that strength will last.
It may also be easier for many retirees today, especially those who can work from home, to find part-time gigs to help blunt the financial impact of earlier-than-expected retirement from full-time employment, experts said. More

Europe had been moving towards the slaughterhouse for years, and by 1914 a conflict was all but inevitable—that, at least, is the argument often made in hindsight. Yet at the time, as Niall Ferguson, a historian, noted in a paper published in 2008, it did not feel that way to investors. For them, the first world war came as a shock. Until the week before it erupted, prices in the bond, currency and money markets barely budged. Then all hell broke loose. “The City has seen in a flash the meaning of war,” wrote this newspaper on August 1st 1914.Could financial markets once again be underpricing the risk of a global conflict? In the nightmare scenario, the descent into a third world war began two years ago, as Russian troops massed on the Ukrainian border. Today Israel’s battle against Hamas has the frightening potential to spill across its borders. American military support is crucial to both Ukraine and Israel, and in Iraq and Syria the superpower’s bases have come under fire, probably from proxies of Iran. Should China decide it is time to take advantage of a distracted superpower and invade Taiwan, America could all too easily end up being drawn into three wars at once. The rest of the world risks those wars interlocking and turning into something even more devastating.This scenario would of course place financial damage a long way down the list of horrors. Even so, it is part of an investor’s job to consider exactly what it would mean for their portfolio. So far the possibility of a world war has barely caused a tremor in the markets. True, they have for some time now been more seized by fear than greed. Bond prices have been turbulent, even for supposedly “risk-free” American Treasuries, and yields have been climbing for most of this year. Stock indices in America, China and Europe have fallen for three consecutive months. Yet this choppiness can all be plausibly explained by peacetime factors, including outsized government borrowing, interest-rate expectations and shareholders whose previous optimism had got the better of them.In short, it does not look anything like the panic you might expect if the odds of the world plunging into war were edging higher. The brightest conclusion is that such odds really are close to zero. A darker one is that, like the investors of 1914, today’s may soon be blindsided. History points to a third possibility: that even if investors expect a major war, there is little they can do to reliably profit from it.The easiest way to understand this is to imagine yourself in 1914, knowing that the first world war was about to arrive. You would need to place your bets quickly—within weeks, the main exchanges in London, New York and continental Europe would be closed. They would stay that way for months. Would you be able to guess how many, and which way the war might have turned by then? If you wisely judged American stocks to be a good bet, would you have managed to trade with a broker who avoided bankruptcy amid a liquidity crisis? You might have decided, again wisely, to trim positions in soon-to-be war-strained government debt. Would you have guessed that Russian bonds, which would experience a communist revolution and Bolshevik-driven default, were the ones to dump completely?War, in other words, involves a level of radical uncertainty far beyond the calculable risks to which most investors have become accustomed. This means that even previous world wars have limited lessons for later ones, since no two are alike. Mr Ferguson’s paper shows that the optimal playbook for 1914 (buy commodities and American stocks; sell European bonds, stocks and currencies) was of little use in the late 1930s. Investors in that decade did try to learn from history. Anticipating another world war, they sold continental European stocks and currencies. But this different war had different winning investments. British stocks beat American ones, and so did British government bonds.Today there is a greater and more terrible source of uncertainty, since many of the potential belligerent powers wield nuclear weapons. Yet in a sense, this has little financial relevance, since in a nuclear conflagration your portfolio’s performance would be unlikely to rank highly among your priorities. The upshot of it all? That the fog of war is even thicker for investors than it is for military generals, who at least have sight of the action. If the worst happens, future historians might marvel at the seeming insouciance of today’s investors. They will only be able to because, for them, the fog will have cleared.■Read more from Buttonwood, our columnist on financial markets: Investors are returning to hedge funds. That may be unwise (Oct 26th)Why it is time to retire Dr Copper (Oct 19th)Investors should treat analysis of bond yields with caution (Oct 12th)Also: How the Buttonwood column got its name More

The U.K. government published its response to a consultation paper issued earlier this year, which outlined recommendations on how the crypto industry should be regulated.
The government received views from crypto native and fintech companies, industry associations, traditional financial services firms, members of the public, academia, and legal and consulting firms.
The government aims to introduce laws for the crypto industry before Parliament by 2024, according to the paper.

Bitcoin, the world’s largest cryptocurrency, has been stealthily rising in 2023.
Chris Ratcliffe | Bloomberg | Getty Images

The U.K. government on Monday confirmed plans to regulate the cryptocurrency industry, announcing in a consultation paper that it will look to bring in formal legislation for crypto activities by 2024.
The government published its response to a consultation paper issued earlier this year, which outlined recommendations on regulating the crypto industry.

In the Monday paper, the government said it intends to bring a number of cryptoasset activities under the same regulations that govern banks and other financial services firms.
“I am very pleased to present these final proposals for cryptoasset regulation in the UK on behalf of the Government,” Andrew Griffith, the U.K. financial services minister, said in a statement.
“I look forward to our continued work with the sector in making our vision a reality for the UK as a global hub for cryptoasset technology.”
The government’s proposals include stricter rules for exchanges, custodians that store crypto on behalf of clients, and crypto lending companies.
The U.K. also proposes stricter regimes for market abuse and cryptoasset issuance and disclosures.

The government aims to introduce laws for the crypto industry before Parliament by 2024, according to the paper.
It is not immediately clear at this stage what U.K. laws on crypto will look like.
The EU set out a clear framework for digital assets with its MiCA (Markets in Crypto-Assets) regulation, including a licensing process for crypto firms.
The U.K. is further ahead in the process than other tech leading nations. Numerous bills are going through Congress, but the U.S. is far behind others when it comes to bringing about formal federal laws for the crypto industry. More