Eleven of the world’s largest investment banks have announced the creation of a clearing house, to open in September, for the $62.3 trillion credit derivatives market. Since it has been patently obvious for several years that such an innovation was essential for the stability of the market, the news is welcome, if a little belated. […]

The oil price rise of more than $50 per barrel since the Fed started cutting interest rates in September is beginning to get serious. Since the rise of oil import prices alone removes $170 billion from the US economy, more than 1% of Gross Domestic Product, it is both inflationary and highly recession-producing, especially since […]

As commentators have come to realize the depth of the economic mess in which the United States is now mired, an increasingly loud theme of their wailings is that the free market has failed, so that we need more government regulation and state control. One expects the Democratic Presidential candidates to take this view (though […]

First quarter labor productivity growth, published by the Bureau of Labor Statistics Wednesday, was unexpectedly positive, with non-farm labor productivity rising 2.2% over the previous quarter. Wall Street mostly rejoiced at this number (the stock market was down, but irrationality is the middle name of most short term trading moves.) However to the impartial observer […]

The first quarter Gross Domestic Product rise of 0.6% was greeted with considerable relief by most Wall Street commentators; they had expected the chaos in the housing market and the banking system to have pushed the US economy into recession. This was unreasonable; the huge monetary stimulus currently being hurled at the economy was always […]

CIBC World Markets analysts recently predicted that oil would sell for $200 a barrel in 2012, as oil supplies grow ever tighter relative to demand. That would imply a continued global boom for the next four years, which would bring inflation, perhaps validating CIBC’s prophesy as the dollar went the way of the 1923 Reichsmark. […]

The credit crisis took an ugly turn this week, when a number of countries banned rice exports, causing the price of the staple to soar above $1,000 per tonne, treble its level a year ago. Politically and economically, the world has moved decisively in the direction of protectionism and seems likely to continue further along […]

Fair value accounting, by which debt and equity securities on a company’s balance sheet are “marked to market” — written up or down to their market price — has been hyped by accountants and regulators as the epitome of modern financial reporting, enabling investors to gain a completely true picture of their investment’s financial position. […]

“The world is flat” declared New York Times columnist Thomas L. Friedman in 2005. His book was full of heart-warming anecdotes about noble Third World businessmen being brought together through the Internet; in terms of hard analytical truth it was something of a stretch even then. However, it is now certain that the world has […]

The Bear Stearns bailout and the associated calls for further Federal intervention in the mortgage market have highlighted once again an eternal economic truth: in an era of excessively cheap money, only the money is cheap. Everything else — assets, business ethics, economic stability, support for free markets – becomes either horrendously expensive or wholly […]