Films have never really done it for me. 
It is probably that my attention span is too short, or it could be that I am just ignorant and fail to appreciate this form of art.
But the thought of losing more than two and a half hours watching an unshaven Leonardo Di Caprio grunting at some trees leaves me completely underwhelmed, no matter how many Biffos or whatever the film was awarded on Sunday.
However, I just love the title. The Revenant. Someone who comes back from the dead. A ghost.
I know this as ‘revenant’ is a word with which I was previously unfamiliar and which has lured me back into my beloved Shorter Oxford English Dictionary (which you will know is very, very long).
Usefully ‘revenant’ is also an adjective, as in ‘revenant financial crisis’. The markets were like a scene from Return of the Living Dead last week (I know I don’t watch films, but bear with me).
The financial crisis was supposed to be dead and buried but it is crawling out of its grave, its skeletal fingers clawing at the earth. This is no thriller. Deutsche Bank may have led the way, but for far too many banking shares it was like 2008 all over again.
We can argue over the reasons, but last week the world decided again that anything to do with banks – especially European banks – was toxic. Bonds, coco’s, equity: everything took a bigger bath than the Italian rugby team.
For the first time (in my blinkered view) in the bear market we saw a genuine flight to safety.
The 10 year Japanese government bond yield fell below zero, the UK 10 year gilt yield fell to an all-time low, the German curve is now negative out to 8.5 years, gold is the highest for a year.
Performance of indices in 2016
Source: FE Analytics
I hope it is not often that I have to say this, but that was scary. That was as close to 2008 as I ever want to see again.
The reason, I think, is that the markets are starting to cotton on to the reality that current monetary policy is failing. Far from encouraging investment, free money is now a symptom of an ailing global economy.
But even more than this, negative interest rates – designed to force cash off deposit and into the real economy – are terrible for bank profits.
And though we love to loathe them, the economy needs healthy and profitable banks. This morning the Financial Times features an article by Sir John Vickers, erstwhile Chairman on the Independent Commission on Banking.
The estimable Sir John argues that British banks require larger capital ‘buffers’, for when everything goes horribly wrong again. It is not for me to say that I disagree with this, but there are two enormous flaws.
First, if we ever do have a repeat of the Great Financial Crisis it really does not matter how large the buffers are. Whether equity capital is 10 per cent or 20 per cent will not matter a jolt: once confidence has gone, it’s gone (yes, an exceedingly obvious statement).
Performance of indices during the global financial crisis
Source: FE Analytics
It is the job of the central bank to make sure that never happens (please note, Lord King).
Second, there is a persuasive argument (which means I agree) that the recapitalization of the banks was the major cause of the recession that followed the Crisis.
Capital raised by banks is money taken out of the real economy. We need this like we need a dose of flu. The greatest risk is that stumbling monetary authorities allow paranoid and skittish markets to talk themselves into another crisis.
That this is wholly avoidable does not preclude its happening; monetary policy is gripped by the most almighty group-think. Not many took central banking as a career choice because of the opportunities for originality and creativity.
Above all, this is a crisis of the markets.
As Reckitt Benckiser has reminded this morning, on planet earth the majority of normal businesses are carrying on as, err, normal. If you turn off the television, the Bloomberg and BBC apps, the Today programme and CNBC then the rest of the world is still reassuringly ordinary.
And we like that. A lot.
Jim Wood-Smith is head of research at Hawksmoor and writer of the group’s weekly ‘Innovation’ blog. All the views expressed above are his own and shouldn’t be taken as investment advice.
