Two weeks ago, the stock market finally returned to its valuation levels of before the monetary bubble began in 1995, appropriately inflated for the rise in nominal Gross Domestic Product. The 4,000 on the Dow Jones index that was first reached within a week of Alan Greenspan’s February 23, 1995 Humphrey-Hawkins testimony loosening monetary policy […]

The financial services industry as we have known it since the early 1990s has effectively collapsed. Its flaws of over-optimistic risk management, aggressive rent extraction and excessive leverage have proved fatal, as was eventually inevitable. Since a modern economy cannot function without an adequate financial services sector it is not sufficient to push the remaining […]

There is a considerable argument between commentators at present as to whether, apart from a pretty painful recession, we are in for a bout of inflation or deflation. Both sides have apparently cogent arguments, and maintain their positions with considerable vigor. Robert Samuelson, having recently published a book “The Great Inflation” that suggested another burst […]

Investors have spent the last few weeks bemoaning the devastation to their portfolios caused by the stock market downturn, which if it does not produce recovery by year-end will have made 2008 the worst stock market year since 1937. Their misery would be compounded if they knew that next year, while it may avoid more […]

The number of economically damaging policy ideas imposed on the United States has greatly increased in the last few months. However from the statements of the Presidential candidates, the next few years may turn this storm of bad ideas into a blizzard. Those with an emotional attachment to the US economy should brace themselves for […]

Emerging market stock markets, bond markets and currencies have suffered much more than developed country markets during 2008, in spite of the original real estate bubble and credit disaster having been contained almost entirely in rich countries. That suggests that globalization, by which emerging markets gain capital and access to developed markets for their goods […]

Canada’s election result, in which the moderate conservative government of Stephen Harper gained substantially in strength, garnered surprisingly little comment south of the border. That’s a pity, because when you look at Canada’s economy it becomes clear that under Harper the place has been run by grown-ups. Inevitably in this political season the sad thought […]

How you view the stock market crash of the last week depends on your understanding of the last 13 years. If you thought the Dow Jones Industrial Index at 14,000 reflected real values, you doubtless think the crash is an appalling event, leading to a depression of 1930s dimensions. If like me you believed the […]

Since November 2000, this column has warned of a wide variety of economic and market disasters that have appeared impending. With almost 400 columns, a number have been plain flat-out wrong, as well as the innumerable ones that were more or less repetitive of previous effusions. Nevertheless, in the last few months, this column’s varying […]

Financial downturns are unpleasant, but they do not need to turn into the Great Depression, which historians now agree was the product primarily of a number of egregious policy mistakes. For almost 80 years, we have thus felt safe from a recurrence of the “Great Depression” phenomenon, primarily on the basis of “we have learned […]