Year: 2019

The Bear’s Lair: Solve funny money problems with a leverage tax

We seem doomed to another round of monetary “stimulus” from the Fed and the European Central Bank, at a time when real interest rates are already substantially negative. This has caused crazy leverage all over the global economy, with such madness as Boeing (NYSE:BA) in a highly cyclical business, operating entirely without stockholders’ equity. Very […]

The Bear’s Lair: EU structure leads to one-party dictatorship

Former prime ministers Tony Blair and John Major, of opposite British political parties, have united in wishing to nullify the 2016 referendum on leaving the European Union. This well illustrates the unpleasant tendency for politicians to find commonality and unity in thwarting the wishes of their electorates. Within individual countries, the strength of this tendency […]

The Bear’s Lair: Could Trump have stopped the Third Reich?

President Donald Trump has instituted an entirely new type of diplomacy with North Korean dictator Kim Jong-il, and it seems to have worked, at least in the short-term. By building a personal relationship with “bad guys” Trump has avoided the poisonous Bush-era chemistry whereby Western “Axis of Evil” insults drove them ever further into destructive […]

The Bear’s Lair: Business Roundtable amputates the Invisible Hand

The Business Roundtable last week produced a 400-page publication claiming that its members should no longer look first to profitability but should follow the interests of stakeholders as a whole, including employees and the environment. This is pabulum we are used to from the titans of Big Business, who are no longer truly capitalist in […]

The Bear’s Lair: Public charge principle could usefully operate globally

The Trump administration last week announced a substantial tightening of the “public charge” rules by which immigrants drawing welfare would be ineligible for permanent resident “green card” status. As Milton Friedman said: “It is just obvious you can’t have free immigration and a welfare state,” so this is good policy. However, it made me wonder: […]

The Bear’s Lair: Global Gosplans should be shut down

Kristalina Georgieva’s nomination as Managing Director of the International Monetary Fund is entirely appropriate. She is a Bulgarian communist by background, for 14 years until 1993 a Professor at the Karl Marx Higher Institute of Economics under that country’s communist government. The IMF itself and its sister institution the World Bank have since their foundation […]

The Bear’s Lair: The global tax regime becomes ancien

Modern “big data” systems are allowing tax authorities to gain full knowledge of sales transactions in their jurisdiction, thus pushing VAT tax collection rates close to 100% on small businessmen and the middle class in general. Meanwhile, Western income tax systems collect steadily less tax from large corporations and the very rich, who use loopholes […]

The Bear’s Lair: The impoverished 22nd Century

With the 21st Century almost a fifth over, the outlook for the 22nd is beginning to become clearer. The range of uncertainty is still very high, but based on current political, technological and demographic realities, we can start to make some predictions. Whereas at the turn of the 21st Century those predictions would have been […]

The Bear’s Lair: What Liverpool could teach today’s Fed

Robert Banks Jenkinson, Lord Liverpool, said it best, in a House of Lords speech of May 26, 1818: “The tendency of an inconvertible paper money is to create fictitious wealth, bubbles, which by their bursting, produce inconvenience.” His phrase “fictitious wealth”, or better “fictitious capital” has a similar (but not, as I shall explain, identical) […]

The Bear’s Lair: Behemoths should give up merchant banking

“The mood’s always depressed in Deutsche” said one of that bank’s Singapore traders (not being laid off that day) to the FT. That reflects my experience at Citigroup and is contrast to my experience at the genuine merchant bank Hill Samuel where we were pretty cheerful. Surely now, a quarter century after the demise of […]