The Bear’s Lair: Merkel-Macron Axis lacks a majority

Following the G7 meeting last week, Angela Merkel declared that the EU would need to deepen, and should cease relying on the U.S. and Britain. Judging by his macho “handshake” of Donald Trump, a man 31 years older, Emmanuel Macron agrees. Their dream has two problems: it would lead Europe into poverty and it almost certainly doesn’t have a majority among EU member states. Continue reading

The Bear’s Lair: Information wants to enslave us

When James Thomson wrote “Britons never, never, never will be slaves”, the concluding chorus line of “Rule Britannia” in 1740 he did not envisage the Information Age. Today the accumulation of Big Data on every transaction, even every word uttered electronically, gives governments, notably that of Britain’s Theresa May, powers of enslavement they are likely to misuse. We should not blame governments; the fault is in information itself, and the solution relies on a world where modern information transmission and storage is no longer possible. Continue reading

The Bear’s Lair: Good policy favors the small property-owner

The Financial Times and the Economist have recently taken to issuing fatwas against the Trump Administration’s economic policy, indulging in repeated bouts of “Two Minutes Hate” against the man himself, combined with denunciations of “populism.” Yet “populism” is a term that covers a multitude of sins. In pandering to the prejudices of their journalists and readership, both publications have lost sight of the bedrock of sound economics: strengthening and furthering the interests of the small property-owner. Continue reading

The Bear’s Lair: Buffett rings the bell for the market

Warren Buffett this week announced he had more than doubled his stake in Apple (Nasdaq:AAPL) and apologized to investors for missing out on Amazon (Nasdaq:AMZN) and Alphabet/Google (Nasdaq:GOOG). Presumably, had he been around in July 1720 (he wasn’t quite) he would also have apologized to investors for missing out on the bonanza of the South Sea Bubble. Buffett’s belated rush into the tech sector is about as good a sell signal as you can get. Continue reading

The Bear’s Lair: Why wait 30 years for robot CEOs?

Jack Ma, Chief Executive Officer of the Chinese Internet giant Alibaba, opined last week that in 30 years even CEO jobs would be outsourced to robots. His observation caused qualms in the overstuffed hearts of the cognitive elite, who had thought themselves immune to such vulgarities as replacement through automation. My question is: given the abysmal quality of current corporate top management, what in the world would make us wait so long for that transition to occur? Continue reading

The Bear’s Lair: May playing Russian Roulette with Brexit

British Prime Minister Theresa May last week called an election for June 8, to get herself a larger majority and more time with which to negotiate a Brexit (British exit from the EU) deal. (This must be completed by March 2019 but may involve some interim arrangements.) Since her Conservatives are 20 points ahead of Labour in the opinion polls, the opportunity was too good to miss. If she gets a majority of 50-70 or more rather than her current 17, she will be able to ignore the eccentrics on both wings of her party, who want either no Brexit or a Brexit that cuts off all ties with the EU. However, further analysis of British voting patterns suggests she may have played an unsuccessful game of Russian Roulette. Continue reading

The Bear’s Lair: The most precious thing is patient cash

Hundreds of billions in private equity and hedge fund money has been raised, and is bursting to be deployed in the market. Companies like Apple (Nasdaq:AAPL) with multiple billions of liquidity feel the need to find a home for it – in Apple’s case, possibly buying Disney (NYSE:DIS). Yet interest rates are too low, the market is overvalued and misguided investment is everywhere. The truly wealthy man is he who has liquidity in today’s market – and the patience to hold off investing until prices have collapsed and bargains abound. Continue reading

The Bear’s Lair: How do we fix finance?

National Economic Council Director Gary Cohn, formerly President of Goldman Sachs, startled markets last week by suggesting that the United States should re-impose the Glass-Steagall division between commercial and investment banking. That is probably desirable on balance, but the U.S. and global financial system was already a mess when Glass-Steagall was removed in 1999. We should do more, beyond restoring Glass-Steagall, to restore finance to its proper state. Continue reading

The Bear’s Lair: Avoiding the fate of the horses

We are not horses. Yet the Luddite left is telling the story of how the horses lost their jobs after 1900 as a parable of what might happen to most humans as the robots take over. In a truly free market, in which government was small and with little power, this would be impossible; the world economy is set up to benefit humanity, not horses, so the market would adjust to robots as a useful new human tool. Yet we are far enough from a free market today, and government is powerful enough and stupid enough, that the equine nightmare cannot entirely be ruled out. We must thus take steps to avoid being sent to the glue factory. Continue reading

The Bear’s Lair: Don’t ask cronies to reform crony capitalism

Paul Ryan’s health care “reform” bill was defeated last week without even receiving a vote in the House of Representatives, in spite of the care he had taken to get input from the health insurance industry. That was the problem. In a crony capitalist system, where bad lobbyist-pushed laws and regulations have poured illicit profits into the pockets of oligopolists, the oligopolists are the last people to consult on how to reform those laws. The same dynamic is visible in monetary policy, in bank regulation and in corporate and individual tax. We are a long way from true free-market capitalism, and we won’t get there by consulting the current crony “capitalists.” Continue reading