The rapid rebound in the world’s stock markets following the Fed’s cut in its discount rate demonstrated again the central feature of the current market: investors have far too much confidence that all will turn out well, without major economic calamities or even market downturns. For their own wealth and that of the US and […]

According to (pervasive but possibly apocryphal) legend, Chinese prime minister Zhou Enlai, when asked in the 1970s what he thought of the French Revolution, responded “It’s too early to tell.” As for London’s Big Bang of 1986, it is also “too early to tell” whether it was beneficial. However if the current unpleasantness turns into […]

Federal Reserve Chairman Ben Bernanke first achieved fame with a November 2002 speech in which he repeated Milton Friedman’s assertion that the Fed could “drop money out of helicopters” if deflation or a credit crunch occurred. The Fed and the European Central Bank now appear to be doing this, having injected $300 billion into the […]

The German bank IKB has been the recipient of an $11 billion bailout. $64 billion of leveraged buyout financings have been withdrawn in the last month. Standard and Poors have talked of down-rating Bear Stearns, two of whose funds have collapsed. We are clearly in the beginning phase of a classic credit crunch, and it’s […]