In the past six months the US government, partly through the agency of the Fed and JP Morgan Chase, has rescued no less than four major financial institutions, Bear Stearns, Fannie Mae, Freddie Mac and AIG, at a probable cost to the taxpayer of over $300 billion. A fifth, Lehman Brothers, was allowed to go […]

The investment bank Lehman Brothers spent last week teetering towards the sort of bankruptcy which like that of Bear Stearns, Fannie Mae and Freddie Mac, may require a “bailout” by the long-suffering US taxpayer. All four of these institutions shared a common feature: they had far too much leverage, i.e. they had borrowed far too […]

The resignation of Japanese prime minister Yasuo Fukuda on the grounds that his “fiscal stimulus” of $18 billion was inadequate throws into sharp relief a troubling reality: That most economically counterproductive of activities, the Keynesian boost in government spending, is making a horrid comeback. Like some eldritch creature from a 1950s Saturday morning horror serial, […]

The Case-Shiller Index of US house prices announced this week, down 17% in the top 10 markets, was greeted with rapture by the stock market, because its rate of decline had slowed somewhat compared to the previous month. Reams of analysis were written about how house prices were nearing the bottom, which was taken to […]

The echoes of the 1930s in the current situation are not confined to foreign policy. Economically also, the parallels between the 1929-32 downturn and the current difficulties are becoming alarmingly apparent. It must be remembered: the Great Depression became such, as distinct from a garden-variety downturn, though egregious policy errors by decision-makers in a number […]

The often repeated refrain “we don’t want to be in another Cold War” is nonsense – we are in one. And Vladimir Putin is a much more dangerous opponent than dozy old Leonid Brezhnev. However the latest demonstration of this truth in Georgia is only a week old, so it’s worth reviewing its implications on […]

A committee led by Gerald Corrigan, former vice chairman of the Federal Reserve Bank of New York, produced a report this week that promises to revolutionize finance. It proposes to place severe limits on derivatives, bringing them under the ambit of regulators and protecting retail investors from their more egregious products. His report met with […]

The Gross Domestic Product and employment figures released Thursday and Friday appeared at first sight to show a US economy that had returned to a measure of stability. However when examined more closely they painted a much darker picture, of an economy in which a sharp decline in retail spending is likely to cause substantial […]

Global inflation is back, and it is shuffling the kaleidoscope of world economic development. Some countries that had appeared to be thriving are coping poorly with inflation while others, including at least one chronic inflation recidivist, are showing a level of monetary maturity worthy of the Fed’s 1980s Chairman Paul Volcker and far ahead of […]

The Producer and Consumer Price Indexes announced last week were significant in that they sounded the death-knell of Bernankeism. No longer will it be possible to inflate the money supply by pretending that inflation in the real economy is not a problem; other means will have to be found to perpetuate the shell-game.