Join John Fell, the Deputy General Director for Macro Prudential Policy and Financial Stability at the ECB, as he dives into the chaotic world of global finance. He discusses the impacts of geopolitical uncertainty and US tariffs on Europe’s financial landscape. Discover how increased defense spending could offer unexpected economic benefits and innovation. John shares insights on navigating financial instability, emphasizing the importance of robust macroprudential policies, plus a hot tip that every aspiring economist should consider!
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insights INSIGHT
Geopolitical Shifts Pose Risks
Rapidly shifting geopolitical events create high uncertainty that can destabilize Europe's financial system.
Known vulnerabilities combined with unpredictable triggers heighten the risk of tail events without trade conflict resolution.
insights INSIGHT
US Treasuries Lose Safe Haven Status
US Treasuries usually act as safe havens, but recently sold off alongside equities during market stress.
This correlation breakdown raises concerns about financial stability and challenges the reliability of traditional safe havens.
insights INSIGHT
Defense Spending's Growth Impact Varies
Increased defense spending amid fiscal pressures depends on its growth impact.
Evidence shows defense spending multipliers vary, with higher impacts during recessions in advanced economies like Europe.
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When Genius Failed is a detailed account of the spectacular collapse of Long-Term Capital Management (LTCM), a hedge fund that was founded by Nobel Prize-winning economists and managed by some of the most brilliant minds in finance. The book explores the fund's rapid ascent, its complex trading strategies, and the catastrophic events that led to its downfall. Lowenstein provides a gripping narrative that delves into the psychological and financial factors that contributed to LTCM's failure, offering insights into the risks and consequences of high-stakes financial speculation.
A Mathematician Plays the Stock Market
A Mathematician Plays the Stock Market
John A. Paulos
We live in an increasingly uncertain world. But what are the economic and financial implications of such turbulent times? What does it mean for Europe’s banking and non-bank sectors, companies, households, and government finances? And how can Europe navigate such volatility?
Our host Paul Gordon discusses these questions and more with expert John Fell in the latest episode of The ECB Podcast.
The views expressed are those of the speakers and not necessarily those of the European Central Bank.
Published on 22 May 2025 and recorded on 16 May 2025.
In this episode:
01:50 Geopolitical developments and global financial imbalances
How did markets react to the high level of uncertainty?
05:10 Safe havens
What are safe havens? What happened to US government bonds?
09:08 Europe’s reaction
Can Europe afford the increased spending in security and defense? What happens to other structural challenges?
13:18 Potential unexpected consequences
What positive benefits can defence spending bring? Can it boost growth? What are the solutions to instabilities that might bring?
16:33 Our guest’s hot tip
John shares his hot tip with our listeners.
Further readings:
Financial Stability Review, May 2025
https://www.ecb.europa.eu/press/financial-stability-publications/fsr/html/index.en.html
Our guest’s hot tip: When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein
https://www.amazon.de/-/en/When-Genius-Failed-Long-Term-Management/dp/0375758259
European Central Bank
www.ecb.europa.eu
The ECB Podcast 
