Investors live in three overlapping worlds: economic, financial and political. The state of the first two is open to discussion but globally the last is looking distinctly poor. Just last week, the weak-government club won two new members: Italy with defections from the ruling coalition and the Netherlands with the formation of a fragile minority government.
The club is far from exclusive these days. Say that full membership requires the lack of a workable legislative majority, while half-membership is given to governments crippled by unpopularity. A rough count puts 85 per cent of the G8’s gross domestic product in this organisation of weak rule. The UK and Canada are non-members for now and France is half-in. The rest qualify fully, including the US, where the president’s own party shows little loyalty.
Overall, the ruling class is stronger around the developing world. Take the non-G8 members of the G20. These nations, with China in the lead, contribute about 30 per cent of the G20’s GDP. In this group, only about 20 per cent of GDP comes from weak-government club members.