Year: 2018

The Bear’s Lair: China’s coming Austrian collapse

“The coming collapse of China” has been predicted many times. Indeed, an excellent book of that title was a best-seller back in 2001. Yet the fictitiousness of Chinese economic statistics remains, and the over-leverage in the economy worsens. Like several other successful non-market economies, China has successfully sought rents from other countries through flaws in […]

The Bear’s Lair: Take the half-loaf Brexit, then come back

Teresa May’s Chequers Brexit proposal is a pathetic thing, which will doubtless be made more pathetic by Brussels before next March. Yet the crucial factor is momentum. Once even a Chequers-Brexit has taken place, Britain will be separated from the European Union, the “Remainers” will no longer have an option to offer and Britain will […]

The Bear’s Lair: The corporate governance model is broken

John Schnatter, founder of the solidly profitable Papa John’s (Nasdaq:PZZA) was forced out last week for using a naughty word, while Elon Musk remains CEO of the eternally loss-making Tesla (Nasdaq:TSLA) despite tweeting one. The last three decades have supposedly made massive improvements in corporate governance. Well, whatever that is, it doesn’t seem to work […]

The Bear’s Lair: Towards a better banking system

It is likely that the over-leverage of the last decade and the lack of true reform in the banking system will lead to another financial crisis, in which taxpayers will once again be strong-armed to bail out the banking system. To prevent this from happening yet again in ten years’ time, I propose a novel […]

The Bear’s Lair: Engineering must beat financial engineering

Michael J. Dell is said to be bringing Dell Computer back to the stock market, at a valuation several times that at which it went private. GE has been thrown out of the Dow Jones Industrial Index, after a sorry saga of share buybacks, financial manipulation and forced asset sales. Tesla is unable to meet […]

The Bear’s Lair: Time for Mexico to bring back Diaz

Porfirio Diaz, who had ruled Mexico with multiple re-elections almost continuously since 1876, was ousted from power in 1911. In 107 years, you would think Mexico would have found another equally competent ruler, but it hasn’t, and Andres Manuel Lopez Obrador seems very unlikely to break that track record of failure. Maybe it is time […]

The Bear’s Lair: The AI revival of Thomas Mun

Thomas Mun (1571-1641) wrote the mercantilist classic “England’s Treasure by Forraign Trade” arguing that the country should run a trade surplus and thereby build up “treasure.” It was derided by classical and Keynesian economists alike. However, almost 400 years after its writing, it may be coming back into fashion in the world of Artificial Intelligence, […]

The Bear’s Lair: Germany must stop beggaring its neighbors

German Chancellor Angela Merkel’s staff published a photo taken at the recent G7 summit that showed Merkel glowering at a defiant President Donald Trump, suggesting that Trump was isolated and alienating America’s allies. Yet when we examine actual behavior, it is Germany that is beggaring its neighbors and failing to live up to international obligations. […]

The Bear’s Lair: An honest world without hedge or PE funds?

Hedge funds and private equity funds have been the big winners in attracting money over the past 20 easy-money years. Yet more and more investors are choosing indexed portfolios, which take out the investment manager’s skill entirely. If you believe mutual funds can’t beat the market, why should you believe hedge funds and private equity […]