The Bear’s Lair

The Bear’s Lair: How steam engines entered the economy

Conventional wisdom has it that James Watt invented the steam engine, which became economically important in the 1780s, setting off the Industrial Revolution. All three of those beliefs are wrong. This column will lay out the true process, which was a 3-stage one over a century in duration, intensifying the Industrial Revolution but not directly […]

The Bear’s Lair: The Soaring Senility Market

Since the middle 1990s, investors and entrepreneurs have focused almost solely on the youth market, generating endless devices and amusements for youth. Many of these (smartphones, for example) older people can use only with difficulty, because of limited eyesight or coordination. This has been demographically foolish and has increasingly stymied economic growth. The real opportunity, […]

The Bear’s Lair: Fool, Britannia!

Prime Minister Liz Truss’s £150 billion subsidy to energy consumers is yet another economically foolish policy, of a type that have been regrettably predominant since Lord Liverpool left office in 1827. For a country where previously sound policies had produced the Industrial Revolution, Britain has developed a remarkable propensity to shoot itself in the foot […]

The Bear’s Lair: Time Preference in Reverse

Edward Chancellor’s admirable “The Price of Time” (Allen Lane, 2022) demonstrates clearly that interest rates are a matter of time preference; lenders charge interest because $1 today is worth more than $1 in say two years’ time. That is all very well, but at present, with markets heading downwards, interest rates heading upwards and interest […]

The Bear’s Lair: The Country-Club Country

President Biden’s lax immigration policy has one inescapable economic effect: it lowers the earnings of low-skill Americans. Conversely, the policy of the 1620s and 1630s that shipped convicts and the indigent to the American colonies as indentured servants had a remarkable positive effect in reversing the hundred-year decline in real English wages. The recent failure […]

The Bear’s Lair: The Incredible Shrinking U.S. Economy

U.S. non-farm labor productivity declined at a 4.6% annual rate in the second quarter of 2022, following a 7.4% decline in the first quarter. Although predictable from the expansive employment numbers and the declining GDP, this is shocking news, which the media have largely ignored. There also seems little likelihood of a near-term reversal. Like […]

The Bear’s Lair: Creating an Innovation Economy

The Financial Times this week had a lengthy piece “When the tech boom met reality” detailing how truly galactic levels of venture capital funding have produced little innovation and are now leading to truly galactic levels of losses. It is now clear that the “all point in one direction and throw money at it” approach […]

The Bear’s Lair: Decade of Economic Denial

The 0.9% decline in U.S. second quarter GDP Thursday brought an immediate denial from the Biden administration that the United States was in a recession, following similar denials that inflation was persistent and that high oil prices were due to restrictions on U.S. pumping. As this column has frequently forecast, the 2020s will be a […]

The Bear’s Lair: The investment banking down cycle

Goldman Sachs’ (NYSE:GS) second quarter income falling 47% with threats of job cuts is just the beginning of a major downtrend in investment banking, reversing the surge of 1982-2021. This should not be a surprise: it has happened three times before. The most recent occasion was after the 1968 stock bubble; that crash was short. […]