The Bear’s Lair: Mississippi Company Economics

We have seen today’s economics in action before. Not in the 1720 South Sea Bubble – that was a simple stock market frenzy, similar to that of 1999, with a debt conversion scheme buried in it, but no excessive leverage. However, the almost exactly contemporary Mississippi Company/ Banque Royale scheme, devised in Paris by the Scots financier John Law – that, truly, bears a hideous resemblance to today’s markets, sparked off by a very similar monetary policy. Its collapse and the denouement thereof is also instructive. Continue reading

The Bear’s Lair: Better invest in a horse

Britain intends to ban the purchase of internal combustion and diesel engine cars in 2040, hoping to make everyone switch to California, China and France all have similar schemes in place. These government decisions naturally provide yet another implicit subsidy to Tesla Motors (Nasdaq:TSLA) whose first quarter’s production of its latest “mass market” model totaled a magnificent 260 machines. For those of us needing reliable transportation for work or shopping, it may be time to invest in a horse. Continue reading

The Bear’s Lair: Konrad Adenauer would despise Merkel

Konrad Adenauer CDU Poster

Angela Merkel won most votes on September 24, but her certainty of leading the next government with only 33% of the vote, a fall of 8.6%, is a sad commentary on proportional representation voting systems. Calls last year for her to be appointed “the savior of Europe” or “the leader of the free world” now seem laughably premature. In reality, Merkel represents the worst of today’s globalist-leftist tradition, with all the economy- and society- destroying traits that infest it. Konrad Adenauer, Germany’s great post-war Chancellor and founder of the Christian Democrat party she leads, would despise her. Continue reading

The Bear’s Lair: Too much entrepreneurship?

I have been away this week, as my dear mother passed away and I have been in Britain for her funeral. Here, therefore is a classic column, from April 24, 2006, that has survived the test of time quite well, I think.

Entrepreneurship is popularly held to be the principal reason for the success of the U.S. economy, when contrasted with the failures of “Old Europe.” Yet if, as discussed here last week, U.S. productivity is increasing no faster than that in Europe, some seeds of doubt must be sown. Is there such a thing as too much entrepreneurship? Continue reading

The Bear’s Lair: China’s size may not make it dominant

For sheer Silicon Valley silliness, the FT article “China is leaving Donald Trump’s America behind” by Sequoia Capital boss Michael Moritz will take some beating. It is inaccurate and politically unbalanced about the United States, but even more so about China. It also misjudges China’s present position, its actual policies and its future prospects. China’s share of global GDP could double from what it is now, but without good management it would still be geopolitically puny. Continue reading

The Bear’s Lair: Cryptos are sounder than today’s currencies

Crypto-currencies are an entirely imaginary form of money, dreamed up by pimply nerds in basements. Or so it seemed. Yet examine the algorithms behind some of the better crypto-currencies, and look in contrast at the monetary policies that have devastated the last decade. You will recognize two things. First, fiat money is fiat money, whether or not it has a government stamp on it. And second, the best crypto-currencies, considered as a store of value, are much more solidly designed than the world’s major conventional currencies. The long-term implications of this for our economy are troubling, to say the least. Continue reading

The Bear’s Lair: Jackson Hole 2017 was a barmy ideas factory

The Federal Reserve Bank of Kansas City is a relatively solid, well-run institution and its President Esther George is among the most sensible members of the Federal Open Market Committee when she is permitted to attend it (her next triennial year of service is 2019). It is thus surprising and regrettable that its annual Jackson Hole conference has become a factory for bad ideas second only to the annual Davos Gabfest. This year it surpassed all barminess records, with the usual monetary madness of recent years joined by regulatory madness and fiscal madness. Surely the Kansas City Fed can find better things to do than sponsor this nonsense! Continue reading

The Bear’s Lair: The politicization of Big Business

The collapse of President Trump’s business advisory councils had little to do with Trump’s policies, or even his presentation. After all the business leaders had joined the councils after he became President, so knew what they were getting into. Traditionally, businesses have been careful to maintain a political neutrality, so their opposition to President Trump appears surprising. Yet in reality, 22 years of funny money have corrupted businesses as they have economic life in general, and in an age of crony capitalism, the media friendly activist left is where you can expect to find CEOs. Continue reading

The Bear’s Lair: Productive economies require participation

Many of Maynard Keynes’ dreams were destructive to civilization. The euthanasia of the rentier, which central bankers worldwide are still trying to achieve, has hopelessly corrupted the capital allocation process and brought productivity growth to a halt. But perhaps his most destructive vision was that of a universally leisured society, in which only a few worked and the great majority drew an income from the efforts of innumerable machines. It is a vision that has not gone away in Silicon Valley and it will end human civilization. Continue reading

The Bear’s Lair: Finally, an immigration proposal that makes sense

Ever since Senator Edward Kennedy’s 1965 immigration legislation, both Republican and Democrat efforts to reform immigration policy have been marked by sentimentality and bad faith with American workers. This column pointed this out in January 2004, when President George W. Bush’s proposed reform promised to immiserate further workers who had already gained nothing from the preceding 30 years. Now after two further failed attempts to make the problem worse in 2007 and 2013, we have a bill from Senators Cotton (R.-AR) and Purdue (R.-GA), the RAISE Bill, that could improve the position. It deserves our wholehearted support. Continue reading