The Bear’s Lair: Bailing out Hillary’s America

Hillary Clinton is leading in the polls, but her election over Donald Trump is not yet certain. However, she is overwhelmingly favored by the pundit class, even the right-leaning of whom have developed an irrational distaste for Trump. It’s therefore worth looking at what the world will look like in 2024, after eight more years of current policies, themselves following 16 years of poor U.S. governance (or 28 years, depending on what you think of Bill Clinton.) By 2024, the U.S. will be in a deep hole – how will it be dug out? Continue reading

The Bear’s Lair: The years of fiscal profligacy

The IMF last week released figures showing that word debt had reached $152 trillion, a record 225% of world GDP. Even though governments’ borrowing costs are ultra-low, budget deficits in the U.S. Britain and Japan are running at extraordinarily high levels, yet all the chatter is about ways to increase them rather than rein them in. Actuarially, the prospects are for even worse deficits as more baby boomers retire and European birth rates shrink the population. Truly this is unsustainable, to be succeeded by a global crash or several decades of grinding austerity. By 2050, the current period will be known as the years of fiscal profligacy, and will be universally condemned. Continue reading

The Bear’s Lair: The holiday from history is over

Some weeks ago, I wrote suggesting that the multi-polar world we are now entering might well be more peaceful than the unipolar world of the 1990s. I still believe that to be the case in the long run, but the problem is that we will need highly capable policymakers in the West to signal to other players both our acceptance of their status and our unwillingness to reward their aggressive behavior. That transition looks increasingly difficult, and its difficulty is part of the poisoned inheritance of the next President. Truly the post-Wall “holiday from history” is well and truly over. Continue reading

The Bear’s Lair: Japan reaching the end of the road

The Bank of Japan last week capped the yield on Japan Government Bonds at zero, thus allowing it to increase bond purchases beyond the current enormous amount if yields rise. Prime minister Shinzo Abe has begged Britain to minimize the effect of its “Brexit” from the European Union, and has begged the U.S. Congress to ratify the Trans-Pacific Partnership treaty. When you look at the statistics of Japan’s economy, one thing becomes abundantly clear: Japan is now very near the point at which the whole house of cards collapses. This Gotterdammerung of Keynesianism will be fun to watch – until it affects the rest of the world. Continue reading

The Bear’s Lair: Distant gleam of freedom

Donald Trump’s tax plan, revealed at the Economic Club of New York on September 15, does not add up, as most Presidential candidates’ tax plans don’t. Still, it did contain one provision that is fiscally insignificant but economically enormous: by capping all tax deductions at $100,000 for single filers, $200,000 for married couples, without exceptions, it went a long way to eliminate the charitable tax deduction scam. Removing that, and thereby shrinking the nonprofit sector, would be a gigantic blow for economic freedom second only to abolishing the Fed. Continue reading

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