Canada’s election result, in which the moderate conservative government of Stephen Harper gained substantially in strength, garnered surprisingly little comment south of the border. That’s a pity, because when you look at Canada’s economy it becomes clear that under Harper the place has been run by grown-ups. Inevitably in this political season the sad thought […]

How you view the stock market crash of the last week depends on your understanding of the last 13 years. If you thought the Dow Jones Industrial Index at 14,000 reflected real values, you doubtless think the crash is an appalling event, leading to a depression of 1930s dimensions. If like me you believed the […]

Since November 2000, this column has warned of a wide variety of economic and market disasters that have appeared impending. With almost 400 columns, a number have been plain flat-out wrong, as well as the innumerable ones that were more or less repetitive of previous effusions. Nevertheless, in the last few months, this column’s varying […]

Financial downturns are unpleasant, but they do not need to turn into the Great Depression, which historians now agree was the product primarily of a number of egregious policy mistakes. For almost 80 years, we have thus felt safe from a recurrence of the “Great Depression” phenomenon, primarily on the basis of “we have learned […]

In the past six months the US government, partly through the agency of the Fed and JP Morgan Chase, has rescued no less than four major financial institutions, Bear Stearns, Fannie Mae, Freddie Mac and AIG, at a probable cost to the taxpayer of over $300 billion. A fifth, Lehman Brothers, was allowed to go […]

The investment bank Lehman Brothers spent last week teetering towards the sort of bankruptcy which like that of Bear Stearns, Fannie Mae and Freddie Mac, may require a “bailout” by the long-suffering US taxpayer. All four of these institutions shared a common feature: they had far too much leverage, i.e. they had borrowed far too […]

The resignation of Japanese prime minister Yasuo Fukuda on the grounds that his “fiscal stimulus” of $18 billion was inadequate throws into sharp relief a troubling reality: That most economically counterproductive of activities, the Keynesian boost in government spending, is making a horrid comeback. Like some eldritch creature from a 1950s Saturday morning horror serial, […]

The Case-Shiller Index of US house prices announced this week, down 17% in the top 10 markets, was greeted with rapture by the stock market, because its rate of decline had slowed somewhat compared to the previous month. Reams of analysis were written about how house prices were nearing the bottom, which was taken to […]

The echoes of the 1930s in the current situation are not confined to foreign policy. Economically also, the parallels between the 1929-32 downturn and the current difficulties are becoming alarmingly apparent. It must be remembered: the Great Depression became such, as distinct from a garden-variety downturn, though egregious policy errors by decision-makers in a number […]

The often repeated refrain “we don’t want to be in another Cold War” is nonsense – we are in one. And Vladimir Putin is a much more dangerous opponent than dozy old Leonid Brezhnev. However the latest demonstration of this truth in Georgia is only a week old, so it’s worth reviewing its implications on […]