Since 2008 there has been a huge tightening of bank regulation, attempting to prevent a repeat of the meltdown. Capital requirements have been greatly increased, although a number of the regulatory loopholes in the previous system have been left open. However not enough attention has been paid to the interaction between the new regulatory standards […]

One year ago, in a year-end column for 2012, I predicted that the easy money bubble would continue inflating through 2013, which should be a good year for asset prices, but that 2014 would be more problematic. Having been “right so far” with this prediction, I thought it worth re-examining, to determine whether the crash […]

The excitement over Bitcoin is intense, with the artificial currency soaring to over $1,200 last week, from less than a dollar two years ago. Observers have compared it to the 1999 dot-com mania; more historically-minded observers have compared it to the British South Sea Bubble of 1720. But there is an even closer analogy. Unlike […]

The crash of 2008 seemed to put an end to the inexorable advance of financial services’ share of the economy over the preceding quarter century. Yet in 2009-11 the financial sector rebounded, aided by ultra-low interest rates and a steep yield curve, locking in jumbo profits for even the doziest megabank. It seemed that a […]

Predictors – including this column – have been confounded by strange economic behavior in the five years since the 2008 downturn. For monetarists, whether Friedmanite or Austrian like myself, the strangest feature has been the failure of inflation to re-emerge, in spite of massive overstimulation of the money supply and prolonged negative real interest rates. […]

Senator Max Baucus (D.-MT) this week came up with a proposal that corporate cash balances held outside the United States should be subject to a one-off tax at 20%, expected to raise $400 billion on the $2 trillion of overseas cash, which the good Senator can throw around to favored constituencies. At the other extreme, […]

One hundred years ago in early August next year, investors suffered a very nasty shock indeed, when the London and New York stock markets closed for some five months and many international bonds previously thought to be high-grade proved worthless. It should be remembered: for the average investor, World War I, the cause of this […]

This week the hedge fund SAC was fined $1.8 billion, and will revert to running Steve Cohen’s family money only — still a big job, since he’s worth some $8-9 billion. This raises the question of which forms of investment will be exploded by the next market downturn, just as were subprime mortgages and complex […]

John Authers, writing in the Financial Times on October 28, suggests that societies succeed, not because of their resources but because of their knowledge, and the economic complexity to which it leads. MIT’s “Atlas of Economic Complexity” reinforces this thesis, producing visually very attractive graphics of such matters as a country’s exports, showing where its […]

Eugene Fama and Robert Shiller, who together with Lars Peter Hansen received economics Nobels last week, had differing views about bubbles. Fama thought they were rare and impossible to spot, whereas Shiller made his name spotting them. The difference in their approach may however simply reflect a difference in the monetary policies pursued during their […]