July’s Scientific American carried a fascinating article “The science of economic bubbles and busts” that summarized current biological research into the economic irrationality of human behavior. At the risk of boring readers whose coverage extends to biological research literature as well as the Wall Street Journal, I thought it worth exploring its implications for how […]

Shares are trading on 35 times earnings. Banks in the last six months have lent more than the entire Gross Domestic Product for the period. Interest rates are below the inflation rate, while monetary growth is far above it. The seven largest bond transactions in the world in 2009 were domestic deals in this country.

China’s recent announcement that it would use its $2 trillion of foreign reserves to boost its companies overseas acquisitions tells us that its economic beliefs are neither those of Adam Smith, nor of Karl Marx, but of the 17th Century mercantilist Thomas Mun. It is becoming clear that in economics, unlike in “hard” sciences, old […]

The mammoth profits reported by Goldman Sachs and the investment banking end of JP Morgan Chase last week surprised markets and demonstrated once again the power of trading operations to earn spectacular returns, for their protagonists and even occasionally for investors. It was of course the theory of Jeff Skilling and the late lamented Enron […]

British Chancellor of the Exchequer Alistair Darling has proposed a new banking regulation regime under which very large “too big to fail” institutions should be compelled to carry more capital than smaller banks. At first sight, this looks sensible, but on further examination the change may go in the wrong direction, having the perverse effect […]

The Waxman-Markey “cap and trade” global warming bill passed by the House of Representatives on June 26 introduces what are essentially government price controls on energy, which currently represents about 9% of the US economy. The impending healthcare legislation, if passed in one of its more extreme forms, will extend government price controls over healthcare, […]

Robert Allen’s new book “The British industrial revolution in global perspective” is a major intellectual breakthrough. Allen, Oxford professor of economic history, has used long-term price data only now available though computer database technology to demonstrate definitively why the Industrial Revolution happened when and where it did. The causes? Imperialism, cheap coal and happy sheep. […]

One of the things that has protected us from a re-run of the Great Depression — until now — has been the unipolarity of the global economy, its domination by the United States. Since 1945, the United States has played a generally benign role in pushing for free trade and free capital movements, because it […]

Citigroup has been restructured with $50 billion of public money without significant reform to its operations, the hedge fund industry had its best month in nine years in May and Goldman Sachs is said to be considering giving up its banking license. The world’s monetary and fiscal authorities appear by their feckless policies to have […]

Productivity growth, the most mysterious of economic statistics, was announced Thursday for the first quarter of 2009 — revised upwards from 0.8% to 1.6%. After a quarter century of stellar growth from 1948 to 1973 productivity growth suddenly collapsed, and remained low for the next decade. Then after 1982 it recovered somewhat, accelerating further slightly […]