The Bear’s Lair: Back to 1666!

Samuel Pepys kept his money in gold bars and buried it in the back garden when the Great Fire of London threatened his house in 1666. It is generally supposed that the advent of modern banking, by allowing consumers to keep their money in a safe place without charges, has greatly increased the efficiency and reduced the costs of the economy. Yet a combination of “funny money” monetary policies and the aggressive marketing and pricing strategies of the major banks bring this central function of banking into increasing question. Pepys’ gold bars look increasingly attractive, and not just as an inflation hedge. Continue reading

The Bear’s Lair: Quit backsliding on Brexit!

Almost three months have passed since the brave British voters voted for an exit from the European Union, yet Britain is no closer to actually exiting. Civil servants have been hired, but no firm timetable has been set for delivering an “Article 50” notice to the EU. Now Britain’s major foreign investors are demanding that Britain execute a “soft” EU exit, changing very little. With the permanent bureaucracy almost uniformly having voted “Remain” the chances of British voters getting stiffed are rising. Economically as well as politically, that would be a great pity. Continue reading

The Bear’s Lair: Proxima B could give us a fresh start

The news last week that our closest star, Proxima Centauri, has a planet Proxima B orbiting it that could possibly support life is immensely encouraging. As I have written frequently, our current economic and political arrangements are so bad that eventual collapse seems inevitable. However, like the Pilgrim Fathers, we may have the opportunity to sail away to the edge of the known universe, far enough from the home governments that the bad guys can’t touch us. There we can set up a Shining City on a Hill without socialism, Keynesianism or the Fed. This time, we’d better make it work! Continue reading

The Bear’s Lair: The Sovietization of the global economy

It was revealed this week that Citigroup’s proprietary trading team is being wound down after the Volcker Rule had excessively restricted it; its head Anna Raytcheva had spent her early years in communist Bulgaria. Moreover, her boss Mark Tsesarsky was brought up in communist Ukraine. That’s not a coincidence; it is highly significant that an upbringing in a centrally planned economy gives you a big boost in today’s capital markets. The ultra-Keynesians in the world’s central banks and governments have in the last decade distorted the world’s economy to such an extent that the old rules of capitalism no longer work at all, while the directives of a Gosplan provide better pointers to making money. Continue reading

The Bear’s Lair: A multipolar world may be safest and best

For a decade now, American foreign policy types have been bemoaning the loss of the “hegemony” that the country appeared to enjoy in the 1990s. They even regret the allegedly stable “bipolar world” of Manichean if “cold” struggle that preceded it. Instead we are now heading into a multi-polar planet. Foreign policy pessimists liken this to the pre-1914 “Diplomacy” board game, in which no one power can control the world, and so war is supposedly more likely. This is wrong: a unipolar world is unsustainable in the long run, and a bipolar world highly dangerous. Only in our mew multi-polar future may we be truly safe from cosmic annihilation by war. Continue reading

The Bear’s Lair: 1943 — a road not taken

As I am away this week, I am reprinting a “Classic” Bear’s Lair column, from August 9, 2002
This is an essay in alternate history, to suggest how, had random factors fallen differently, Britain’s history in the gloomy 1945-79 period could have been very different, and perhaps happier. It looks in particular at what might have happened had Thatcherism (without the leadership of Margaret Thatcher herself, then only 18) been adopted in 1943, in the darkest days of World War II. Continue reading

The Bear’s Lair: Glass-Steagall solves a problem caused by regulation

In the 1980s and 1990s I favored repeal of the Glass-Steagall Act that separated commercial banking from investment banking. Coming from a merchant banking background, where the distinction was ignored, it seemed a piece of FDR-era nastiness, that had decapitalized the investment banks and greatly worsened the Great Depression. However, the 2008 crash and subsequent developments have convinced me that I was wrong. Unless we are to throw out another Depression-era invention, deposit insurance, Glass-Steagall appears inevitable. The only question is how to put the legislation in without causing another ten-year depression. Continue reading