From Raghuram Rajan to Kuroda, fairy-tale metaphors gain currency

RBI Governor Raghuram Rajan is warning against 'beggar-thy-neighbour' policy while his counterparts abroad have got 'Peter Pan' and 'Alice in   Wonderland' to lean on when talking about the complexities of   global economic situation.

A popular fictional character, Peter Pan is a mischievous boy who can fly and never grows up. On the other hand,   'beggar-thy-neighbour' was a popular card game played by   children, but has become an economic jargon used for a policy of generating gains at the expense of other countries. The central bankers and other financial commentators are   also using expressions like 'rabbit hole' and other metaphors  from the fair tales to summarise the uncertain global economic  scenario as also for flagging their concerns.  

Raghuram Rajan, credited among the few to have seen the 2008 financial crisis coming, recently mentioned 'beggar-thy- neighbour strategies' in his remarks about policies followed by major central banks.   He warned that policies followed by major central banks globally were in danger of slipping into the kind of beggar- thy-neighbour strategies that were followed in the 1930s.   In a reflection of how difficult it is becoming to describe as well as navigate the staring uncertainties, Bank   of Japan's Governor Haruhiko Kuroda cited the antics of Peter   Pan to describe the country's monetary policy stance.  

Kuroda referred to Peter Pan while talking about the need  for unconditional faith in the inflationary impact of Japanese   monetary policy.   Quoting Peter Pan, he said, "the moment you doubt whether you can fly, you cease forever to be able to do it". German banking giant Deutsche Bank, while summarising such  metaphors, said in a report that financial market these days   commentaries are often laced with expressions such as 'topsy-turvy' and 'Alice in Wonderland'.  

"It is probably no coincidence that increasing use is   being made of metaphors from the world of fairy tales. Indeed, this reflects the widespread despair about how to explain the   latest developments in the financial markets," the bank said. Recently, the Bank for International Settlements (BIS)   also said that unthinkable risks are becoming the routine and   the new normal while referring to continuing low interest   regime in different parts of the world. Globally, interest rates have been extraordinarily low for   an exceptionally long time, in nominal and inflation-adjusted   terms, against any benchmark. Such low rates are the most   remarkable symptom of a broader malaise in the global economy,   according to the annual report of BIS, a grouping of banking   regulators.  

"The unthinkable risks becoming routine and being   perceived as the new normal," the report said.   With Greece becoming the first developed country to default on loan repayment to the International Monetary Fund,  more catchy words might find a place in financial lexicon to   describe the existing desperate situation