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 $64 billion of leveraged buyout financings have been withdrawn in the last month.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 […]

In the past week, a number of leveraged buyout transactions have fallen apart, whether temporarily or permanently one cannot yet say. The Alliance/Boots buyout in Britain, Cadbury Schweppes’ sale of its US drinks business and the Chrysler buyout in the US are just the best-known examples of multi-billion dollar transactions that can’t currently get completed. […]

Negative earnings surprises by Pfizer and Caterpillar at the end of last week may indicate a new reality: the income premium for bring a Westerner and having access to the centuries of Western intellectual property and business acumen may be sharply diminishing. We can all rejoice as poor and middle income countries are brought up […]

The market and media view about the mining giant Rio Tinto’s $44 billion bid for the Canadian aluminum company Alcan is that the buyer overpaid. It’s generally believed that commodity prices are close to the top of the cycle, so Alcan earnings can be expected to decline going forward. Certainly Alcoa, the other bidder for […]

“We’re going to become the first African tiger” said Ghana’s President John Kufuor when hearing that a British –U.S. consortium had struck oil. Is that realistic, or is Africa a permanent basket case? And if it is realistic, what would such a development mean for the rest of us?

The Doha round of trade talks collapsed again Thursday, with the Indian trade minister Kamal Nath walking out of the talks in protest against the failure of the United States and the EU to offer further concessions. While this failure only knocks a few more nails into the coffin of a deal already moribund, it’s […]

The apparent revival of the Cold War by Vladimir Putin causes those of us nostalgic for the unpleasant certainties of a bipolar world to ponder whether the Domino Theory should also be revived. Indeed it should, and the domino currently wobbling most vigorously, magnificent in its precariousness, is Ukraine. Ukraine gets limited press in the […]

The failure (at least temporarily) of President George W. Bush’s immigration bill Thursday evening had one overwhelmingly powerful cause: the American people don’t trust the Bush administration to enforce immigration laws, so the tough enforcement provisions in the new bill were nugatory. This atmosphere of distrust is partly generational but highly damaging, particularly in the […]

In a week when US Gross Domestic Product was revised disown to a level slower than the growth in population while inflation continued strong, it must surely be clear that the collection of economic policies followed since 1995 by both parties and the Federal Reserve Board has failed. The Fed can neither cut rates nor […]