When even the strongly Europhile Economist (August 11th – 17th, pp 19-22) publishes a lengthy piece on how the euro might break up, the question must be worth addressing again. For one thing, we should think about how many pieces the euro Humpty Dumpty egg might form when it hits the ground, and what future […]

Democracy is fragile in recessions. In times of economic prosperity, good economic policies produce good results, so that eventually both major political parties become committed to their continuance, as with Bill Clinton in 1992 or Tony Blair in 1997. Only in resource economies, where good policies can become disjointed from good results, can the electorate […]

Elections are not a time for considered economic analysis, but then few times are. Opponents of the free market are able to point out obvious flaws in recent economic trends, but are met with mere cheerleading by free-marketers. The appearance of an Obamaist policy document “Prosperity for All” written by Yale professor Jacob Hacker and […]

The continual stream of bad news coming out of Europe is causing a withdrawal of investor confidence in the bonds of several European countries, very reminiscent of the draining confidence in housing-related bonds in 2007-08. Thus there seems to be an increasing likelihood of an extreme scenario, in which confidence disappears and insolvency events occur […]

Two reports released this week began to make clear the staggering costs to the U.S. economy of Fed chairman Ben Bernanke’s zero-interest-rate policies. The first, from Standard and Poor’s, outlined the yawning funding gulfs in U.S. private sector pension schemes. The second, from the New York Fed, shows the astronomical growth in student debt. Both […]

The bankruptcy of the broker Peregrine Financial this week, with $200 million in customer accounts gone walkies, adds to the Barclays LIBOR scandal in increasing the general public public’s horror of the financial services business. However as scandal succeeds scandal and loss succeeds loss, one common thread becomes apparent: the scandals and losses are almost […]

The Barclays LIBOR debacle, in which both chief executive Bob Diamond and chairman Marcus Agius ended by resigning, may be seen as something of a farce – to lose one top executive may be an accident, to lose two looks like carelessness. However Barclays’ trajectory over the last few decades, while unrewarding for shareholders, has […]

The Supreme Court’s upholding of the Obamacare legislation on Thursday does not settle the healthcare question because that legislation is largely unworkable. Equally, the pre-Obamacare U.S. healthcare system was unsatisfactory in a number of ways and becoming progressively more so. Under the assumption that either in 2013 or 2017 Congress and a new Administration will […]

Since 2008, economic policies throughout the rich world have boiled down to one word: stimulus. Interest rates in most countries have been held down well below the level of inflation, while spending programs have pushed national budgets far out of balance. As in Europe calls rise for further doses of “fiscal stimulus” in spite of […]

The $2 billion (or maybe $5 billion) loss by JP Morgan Chase went unnoticed for several months, because JP Morgan Chase was relying on the Value-at-Risk risk management metric, which as we pointed out in “Alchemists of Loss” is hopelessly flawed. However there is a cultural question here: large conservative banks thirty years ago would […]