For free market enthusiasts, the Obama administration’s $500,000 remuneration limit for banks receiving public bailouts is less obnoxious than it seems at first. Most obviously, it provides a useful incentive against further recourse to taxpayer funds – even the near-deadbeat Citigroup is not to be subjected to it until it asks for yet more money. […]

Until the House Republican revolt this week, there has been a worldwide consensus that the way to get out of a deep recession is through fiscal “stimulus” – gigantic gobs of public spending that explode the budget deficit but provide jobs to those without them. It’s a theory first publicized by Maynard Keynes, but it […]

Those who have visited Michigan recently or the Mahoning Valley of Ohio in the 1980s can recognize the symptoms of a rust belt. A hitherto prosperous industry, paying high wages to its employees, has been overtaken by market changes and is forced into harsh downsizing or even bankruptcy. As a result, the lives of many […]

As the $1.19 trillion forecast 2009 US budget deficit combines with the forthcoming $825 billion (and counting) stimulus package, observers seem convinced that for some mystical reason US Treasuries are a “safe haven” – endlessly attractive to Asian and Middle Eastern central banks and therefore able to yield considerably less than the expected rate of […]

According to the Congressional Budget Office the US budget deficit for the year to September 2009 will be $1.19 trillion, 8.3% of Gross Domestic Product, the largest in history. To this monster President-elect Barack Obama wishes to add a two-year stimulus of $800 billion or so. Broad money supply is rising by 20% per annum […]

With an unpopular war, a deepish recession, an irresistibly growing public sector, excessively rapid money supply growth that may spark off inflation, a dangerously large payments deficit and a workforce excruciatingly vulnerable to international competition, the United States is today in a similar position to that of 1970-71. The current objective must surely be to […]

In 2008 we have seen a Bear year of close to record-breaking proportions. The current record holder is 1931, when the Standard and Poors 500 Index was down 41.9%; a bad day this week could easily take it below the 853 at which its 2008 drop would equal that record. The market has by far […]

Perhaps the most sobering thing we have learned during 2008, or rather since the subprime crisis broke in the middle of 2007, is the benefit of transparency in business dealings. Time after time, when a fiasco has occurred, it has been due to a lack of transparency in a transaction or series of transactions. Subprime […]

Remember the Great Depression of 1921? Or of 1947? Or of 1981? Each of those years began with many of the same problems evident today, or that were evident in 1929-30. Yet they did not produce more than garden-variety recessions, which were soon over. It is instructive to examine why.

In spite of Friday’s alarming rise of 533,000 in unemployment, when you look at the near-term future, there still seems little chance that the current unpleasantness will turn into a re-run of the Great Depression, or anything like it. Gross Domestic Product may decline by more than the 3-4% declines seen in 1974 and 1981-82, […]