As the slow unwinding of the eurozone continues, attention in Britain has turned to the monetary implications of a different unwinding: the possible break-up of the United Kingdom through Scottish independence. What do we mean by a currency union, and what conditions are needed to make such a union possible – and sustainable?

January 2012 has ended and it’s worth taking stock of where returns, valuations and economic data stand before considering the swirl of news that can confuse as much as enlighten. Equity markets shrugged off a poor 2011 and posted strong gains. The broad MSCI All Countries World Index was up 4.2% in sterling over the month, led higher by emerging markets, and recovering a good deal of 2011’s 6% fall. The MSCI Emerging Markets Index itself was up 9.7% on the month, taking a big bite out of the near 18% decline in 2011.

Adam Smith understood the difference between policies that favoured free trade and policies that favoured established business. “The interest of the dealers in any particular branch of trade or manufacturers,” he wrote, “is always in some respects different from, and even opposite to, that of the public.” He went on to observe that any proposals coming from business “ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention”.

The weather has been unseasonably mild in both London and on the eastern seaboard of the United States which I visited a few weeks ago. Equity markets have basked in benign conditions and have maintained their brisk start to the year, leaving bonds trailing in their wake. The MSCI All Countries World Index (gross, sterling return) was up 1.5% on the week, with the MSCI Emerging Markets Index up 2.8% in sterling, led this week by Brazil (+4.5%), India (+4.6%) and Turkey (+5.9%). Once again one of the strongest sector performances came from banks, up 3.5% in sterling, joined by semiconductors (+3.9%) and Insurance (+3.6%).

The year’s batch of New Year market forecasts has been the usual source of interest. Not, obviously, because they tell you what is going to happen – the only thing we know for sure is that what is foretold will definitely not take place – but because of what the clues they give about market sentiment. However bullied, charmed or cajoled into making predictions, most professional forecasters in my experience know full well that the value of their forecasts is at nugatory at best.

Sixty years of division of the Korean peninsula has created two states with very different standards of living in one country. The Korean example is pathological. The division of Germany resulted in two states, both functional in economic terms, but one far richer. The less noticed comparison between the modern economic histories of Finland and Estonia had the same outcome.

Equity markets have started 2012 in finer fettle than for most of the second half of 2011, with global equities, as represented by the MSCI All Countries World Index (gross, sterling return) up 4.7% so far this month, with risk aversion falling, as measured by the Chicago Board Options Exchange’s Volatility Index (VIX) from 23.4 at the end of last year to 20.9 at the end of last week. The developed markets (MSCI World Index) are up 4.5%, led by the United States being up 6.7%, offsetting a weak start from France, Germany and Italy.

The Financial Times is debating capitalism, but what it is really debating is the future of the market economy. Karl Marx never used the word capitalism. But after the publication of Das Kapital, the term came to describe the system of business organisation which had made the industrial revolution possible. By the mid-19th century that system was central to the economic landscape. Werner Siemens in Germany, Andrew Carnegie and John D. Rockefeller in the US, and in Britain Richard Arkwright’s successors. As individuals or with a small group of active partners, they built and owned both the factories and plants in which the new working class was employed, and the machinery inside them.

One of my New Year resolutions – and sadly the first to be broken – was not to write any more negative articles about hedge funds. Some of the poor chumps in the industry seem to be sensitive to anything remotely critical of their activities. My measured comments in this space last August prompted the industry’s official lobbyist, the Alternative Investment Management Association, to complain that I was peddling “hoary old myths” about the hedge fund business.