The Bear’s Lair: Breaking Through the Debt Ceiling

President Biden appears adamant that he will not yield one iota to the Republicans demanding spending cuts in return for increasing the debt limit. He also claims to believe that through the 14th Amendment he can issue debt unilaterally, without Congressional approval. By doing so, he would take the position of an absolute monarch, like James II, Louis XIV or Khufu. Lessons can be drawn as to how that might work in practice. Continue reading

The Bear’s Lair: The Productivity Death Wish

Nonfarm labor productivity in the United States dropped at an annual rate of 2.7% in the first quarter of 2023, which followed a fall of 1.6% for 2022 as a whole. This does not appear to be a temporary phenomenon, or rather it appears coincident with the hyper-regulating Biden administration. Since productivity growth is key to rising living standards – without it, you cannot have them – this decline, which appears likely to continue, has the direst possible implications for the United States, and for human civilization as a whole. Continue reading

The Bear’s Lair: An agenda for a Tucker Carlson presidency

The TV pundit Tucker Carlson, fired by Fox, is now seeking a new gig, but appears to be hampered by non-compete clauses in his agreement with Fox, which extends to December 2024. As the columnist Frank Miele of RealClearPolitics has suggested, one way around this would be for Carlson to run for President, which would give him a “bully pulpit” until November 2024, with the major networks forced to cover him. Miele sees this as a way round Carlson’s Fox problem. I would go further and suggest that Carlson, if he ran, would have a sporting chance of winning. This column outlines why this is so, and what he should do if he won. Continue reading

The Bear’s Lair: How to regulate banks

Chorus of Peers from Iolanthe

First Republic board meeting

The collapses of Silicon Valley Bank, Signature Bank and First Republic Bank, all within six weeks, are a drastic failure of both bank regulation and Fed monetary policy. This column has written incessantly about the idiocies of Fed monetary policy and its GOSPLAN approach to interest rate setting; I would now like to focus on bank regulation and make some suggestions about how it might be improved. Continue reading

The Bear’s Lair: Coronations have positive economic effects

The coronation of King Charles III next Saturday is planned to be on a smaller scale than that of his mother Queen Elizabeth II in 1953. That is appropriate; Elizabeth’s coronation may have taken place in a relatively poor country still living under the effects of postwar rationing, but it was graced with an immensely glamorous young Queen and Winston Churchill as prime minister. This week’s ceremony will inevitably be lacking in both respects, even though “Squishy Rishi” Sunak has two more degrees than Sir Winston. It will also fall short of the 8,000 guests in 1953, including representatives of 129 countries and a U.S. delegation headed by George C. Marshall, whose Marshall Plan trumped any achievements of President Joe Biden, boycotter of the current festivities. Nevertheless, even this modest celebration will have a positive effect on Britain and its economy, showing again that constitutional monarchy beats an elected President. Continue reading

The Bear’s Lair: How to Produce Trillionaires

Bernard Arnault, Chairman and CEO of Louis Vuitton is currently the world’s richest man, worth around $239 billion; he is notable in coming neither from the United States nor from the tech sector. His wealth is a product of globalization, which has produced demand for Western fashion brands among a substantial fraction of 8 billion people. Globalization is just one of the forces artificially inflating the wealth of the richest at the expense of the rest of us; I will herein examine the history of extreme wealth and the factors inflating it and forecast the conditions that will produce the world’s first trillionaires. Continue reading

The Bear’s Lair: Towards an un-Dollarized World

Saudi Arabia recently signed a contract with China to sell oil with payment in yuan (China’s currency, sometimes known as renminbi, for inscrutable Chinese reasons). Argentina and Brazil are proposing to use a common currency, the sur, for trade between them. India and Russia are undertaking trade in rupees and rubles. This is a gathering trend, that may eventually result in deposing the dollar as the leading international currency. It is thus worth thinking about what a de-dollarized world might look like, and where the costs and benefits would fall. Continue reading

The Bear’s Lair: Nasty, Brutish and Long

Thomas Hobbes in his 1651 “Leviathan” described life in a state of nature as “nasty, brutish and short.” Fortunately, shortly after Leviathan was published, the Tory architects of the English Restoration Settlement brought several protections into the British and later American Constitutions that revolutionized our fates: they were property rights, Habeas Corpus and the First Amendment protections for free speech. Alas, in the 21st Century those protections of ordinary people are being removed, allowing government to oppress them in a way impossible in the preceding 350 years. This time however, our fate will be worse, for modern medical advances will make our lives not only nasty and brutish, but achingly, unbearably long. Continue reading

The Bear’s Lair: Feds sold SVB assets to the Clampetts

The Federal Deposit Insurance Corporation (FDIC) this week announced the winner of its auction for the loans and deposits of the failed Silicon Valley Bank: First Citizens BancShares (Nasdaq:FCNCA), a North Carolina outfit with no obvious synergy with SVB’s customer base or tech know-how. Given First Citizens’ capital base of only $14.1 billion ($9.7 billion of which is stockholders’ equity) compared to the $72 billion of SVB loans it took on, there must be some chance of a cascade of bank failures. For those who think this unduly pessimistic, I have a tale to tell you – from 1973. Continue reading

The Bear’s Lair: British Tories revert to bad habits

Since the time of Sir Robert Peel (Prime Minister 1834-35, 1841-46) the British Conservative party has been notorious for its inability to conserve anything worthwhile, let alone to restore anything that its opponents had dismantled. For a few years in the 1980s, it appeared that Margaret Thatcher, while imperfect on several issues, had reversed this tendency, and was making Britain a country in which a free market conservative might reasonably want to live. Alas, her ouster in 1990 led to a rapid reversal of many of her policies, and the recent Conservative governments since 2010 have followed the traditions of the Quisling 1945-75 period rather than those of Thatcher herself. Continue reading