President Trump’s firing of the Bureau of Labor Statistics chief Erika McEntarfer attracted much criticism, as government statistical agencies are claimed to be impartial. Such claims of impartiality should always be regarded with deep suspicion, as they generally conceal a noxious political agenda. When you look at the BLS’s statistical methods, its agenda becomes apparent. Ever since the Boskin Commission report of 1996, the BLS has reported consumer prices using “hedonic pricing,” a highly opaque methodology that biases reported inflation sharply downwards. That falsification inflates reported growth and living standards, thereby giving us a falsely optimistic view of economic reality. Ms. McEntarfer may be blameless individually, but the BLS and its sister agency the Bureau of Economic Analysis have for decades needed to be taken apart and rebuilt using sound economic principles. Continue reading
The Bear’s Lair: Welcome to the Old World Order!
President Donald Trump’s tariff agreements with the EU, Japan and other countries have changed the economics of world trade; they have also revolutionized global politics. Far from the “New World Order” trumpeted by such Marxist-globalists as Klaus Schwab, late of the World Economic Forum, we are now returning to a much healthier late-19th century existence, of multiple major powers competing, with few central organizations and the occasional political/economic genius of an Otto von Bismarck (1815-98). This Old World Order promises to increase human happiness a great deal more than Schwab’s failed Great Reset. Continue reading
The Bear’s Lair: Japan Must Avoid Germany’s Error
In Japan’s recent Upper House elections, the ruling LDP-Komeito coalition under Shigeru Ishiba lost its majority (barely) but a more striking result was the success of the populist-right Sanseito party, which won 14 new seats in the Upper House. Like its German cousin AfD, Sanseito proposes a sensible mix of policies including strong opposition to foreign immigration and Chinese tourism. Ishiba must not repeat Chancellor Friedrich Merz’s gross error of allying with the Socialists to keep out AfD; the opposite alternative, embracing Sanseito, will produce better policy and much better long-term results for Japan. Continue reading
The Bear’s Lair: As Bankers Replace Nerds, Crypto gets Scammier
When Satoshi Nakamoto created Bitcoin in 2008, it was not a scam but a very ingenious, potentially useful new invention, largely because of the “blockchain” by which transactions could be recorded in permanent form. When I spent six months in late 2017 recommending crypto-currencies for an investment service (very successfully, being fortunate indeed in my timing), the market was largely dominated by retail investors throughout the world and it was still possible to separate scams from cryptocurrencies that were legitimately used to launch new digital products. Alas, since that time financial institutions have entered the market, recently with the encouragement of President Donald Trump and his administration. As we cynics might have expected, as governments and institutional investors have entered the market, its scam percentage has got far worse. Continue reading
The Bear’s Lair: After Deglobalization, De-financialization
Wall Street trading titan Jane Street was last week banned from trading in India, having made a $5.2 billion profit from options trading apparently mostly at the expense of Indian retail investors, according to a Financial Times report. Jane Street, a trading house with $20.5 billion of net trading revenues in 2024, is an extreme example of the “financialization” that has overtaken the global economy since the 1980s. Just as globalization produced pathologies and is now being reversed, so too has financialization; it needs to be put back in its box. Continue reading
The Bear’s Lair: Is the West ditching cheap labor?
De Dion Quadricycle, 1898 — same price as the 1914 Model T!
Recent U.S. employment figures have seen a rise in the native-born workforce, a decline in the immigrant workforce and a rise in real wages. Some companies seem to have noticed – Home Depot’s $5.5 billion acquisition of the building supply contractor GMS indicates a move towards the contractor market, whose distribution pattern is less labor-intensive than the retail home improvement market. Electorates all over Europe are coming to notice that “globalized” economic policies have reduced their job opportunities and reversed their wage gains of previous decades, while well-connected corporations seek ever more immigration to lower labor costs still further, dumping the resulting social costs and maladies on taxpayers. Ditching the cheap labor impulse is a revolution that bodes well for the world, rich and poor. Continue reading
The Bear’s Lair: Mines Should Be Easy, Mergers Hard
I am currently a modest shareholder in Northern Dynasty Minerals Ltd. (NYSE:NAK) a company sitting on a huge copper/gold deposit on the south coast of Alaska that has been stymied from developing it for half a decade through Federal environmental holdups – an incredible waste of resources. Yet mergers that agglomerate businesses into ever larger and less accountable bureaucracies normally go through in a few months with little opposition. The Biden administration’s Lina Khan, who as Federal Trade Commission chair attempted to change this, was reviled by Wall Street and has now been replaced. This differential needs to be reversed. New investments in mining and elsewhere should be expedited as they add new wealth, whereas mergers, which normally subtract value, should be blocked except in special cases. Continue reading
The Bear’s Lair: The Hidden Costs of War
As Israel starts a war with Iran, and the U.S. considers how deeply involved it wants to get, one lesson from history is abundantly clear. Wars cost hugely in direct physical devastation, yes, but they also have a huge hidden economic cost, in distorting the market and encouraging policymakers to seize further power and narrow the economic space in which the market can operate. War is nearly always unattractive because of its direct costs, but wise policymakers will realize that its indirect economic costs may be orders of magnitude greater and hence decide against it on every occasion in which they can do so. Continue reading
The Bear’s Lair: The 1880s Should Be Our Model
When you look at the arc of global industrial progress and the emergence of new technology, one decade stands out: the 1880s. That decade saw the arrival of electric light and power, which revolutionized everyone’s lives. It also saw the automobile, the safety bicycle, the first process for large-scale aluminum production, the Hollerith tabulating machine, the arrival in common use of the telephone and the phonograph, the linotype, the first moving pictures, the first skyscrapers and the discovery of radio waves by Heinrich Hertz. Vaclav Smil in “Creating the Twentieth Century” (© Oxford University Press, 2005) argued that the apogee of technological advance came from 1867 to 1914; the 1880s formed the very pinnacle of that crest. So, what were they doing right in that decade, and how can we get closer to replicating it? Continue reading
The Bear’s Lair: Kill, Don’t Sell Fannie and Freddie!
President Trump has proposed to privatize the two housing finance agencies Fannie Mae and Freddie Mac, now in public ownership after their collapse in 2008. While the fisc might benefit in the short term from such a deal, the risk to taxpayers of a second collapse and bailout is high, for risk correlation reasons I will explain. The Fannie/Freddie structure is a relic of the dozy socialist New Deal; it is unnecessary and imposes excessive hidden risks on taxpayers, who would always be forced to bail them out in a crisis, as in 2008. Much better to kill them off and allow home mortgage finance to be provided by the market, as it should be. Continue reading