The turbulence in financial markets in the last couple of weeks has been ascribed by reporters to doubts about the long-term stability of the euro, and of southern European finances. This is over-optimistic. Whether or not the current market downdraft proves temporary, monetary and fiscal policies in the United States and worldwide have been excessively […]

The 750 billion euros ($950 billion) bailout for Greece and other wobbly eurozone economies was greeted by markets with less enthusiasm than expected this week. Politicians should be worried: we may be reaching the limits of their bailout capability. When that happens, it will be healthy, but the panic level will be intense.

The Greek crisis and the EU’s confused response to it have shown that Europe, or at least the Eurozone is deep into an existential struggle between three economic models: the free market liberalism of Margaret Thatcher (1979-90), the spendthrift socialism exemplified in its most extreme form by Greece’s 1980s prime minister Andreas Papandreou (1981-89, 1993-96) […]

From the economic point of view, the 2010 British General Election due on May 6 is one that no sane person would want to win. By far the country’s largest industry, financial services, is in deep trouble, facing concerted worldwide attack by enraged governments and citizenry. The budget deficit is at 12.8% of Gross Domestic […]

Banking lobbyists must be dizzy right now. In the United States they face regulation from Senator Dodd’s Banking Committee and a draconian proposal on derivatives from Senator Blanche Lincoln’s Agriculture Committee. In Britain, each of the three parties contesting the current election has different ideas on how to regulate banks – but they’re all agreed […]

Commentators, including the egregious Ben Bernanke are increasingly claiming that the US is in the process of a V-shaped recovery from the Great Recession. Certainly first quarter GDP, to be announced next week, is likely to show a substantial bounce, albeit not quite the inventory-driven 5.6% annualized growth of the fourth quarter. Yet commentators should […]

The extraordinary rise in commodity prices, at the beginning of a global cyclical upswing, is beginning to reorder the pecking order of the world economy. Together with the advances made by China and India in the last decade, it is producing an entirely new world order, which many will find uncomfortable. In it, commodities, derided […]

The announcement this week that Japanese and Chinese steel companies were moving to three month contracts with suppliers of iron ore, abandoning the previous annual price negotiations, is significant in a number of ways. All of them however add up to higher global inflation and lower overall economic welfare.

Japan announced this week that it was partially withdrawing its planned Post bank privatization, so that the government would retain a third of the bank’s shares. Meanwhile the latest Japanese budget shows a deficit of 10% of GDP, at a time when Japanese public debt exceeds 200% of GDP. Through two decades of economic malaise, […]

The news that four banks are being charged with fraud for their sales of derivatives to the City of Milan was no doubt met with derision in trading rooms across the globe. Yet the prosecutors have a point, as does a similar prosecution relating to Jefferson County, Alabama, or potentially one in relation to the […]