The financial crisis in the United States and worldwide entered a new phase this week, as Fannie Mae and Freddie Mac, the two huge US home loan institutions, began what appears to be a similar “death spiral” to what which claimed Bear Stearns four months ago. Fannie and Freddie are unique institutions, and will almost […]

British observers have in the last year indulged in a considerable amount of schadenfreude about the US subprime crisis, the excessively expansionary monetary policy of Fed Chairman Ben Bernanke and the substantial recession that appears impending. They should be less eager to gloat; the recession into which Britain is heading is likely to be considerably […]

Both the Economist and the Washington Post have recently denounced the poor state of US infrastructure; it is obviously becoming fashionable to do so. However, much of their criticism is ill-founded. Infrastructure failures are inevitable because infrastructure decisions have become politicized and suffer from the results of that politicization. Infrastructure investment has thus become a […]

Ever since the late 1990s, bears like myself have been forecasting a major economic downturn in the United States, but wavering in doubt as to whether it would be more like the 1930s, with price deflation and really deep economic decline, or the 1970s, with unpleasant inflation but shallower economic decline. The urge to forecast […]

GE’s announcement a week ago that it would accept offers for its appliances business marked the death-knell of yet another US manufacturing business, one among so many in US manufacturing’s long and seemingly unstoppable downtrend since 1980. That decline may seem an inevitable historical trend, and Wall Street’s analysts would claim that the US economy […]

We now know who the two major candidates for President will be in November and one thing has become abundantly clear: we are in a new policy era. The free-market economic policy consensus that appeared so firmly established in the 1990s has broken down, and participants in both the US and global economies will have […]

Eleven of the world’s largest investment banks have announced the creation of a clearing house, to open in September, for the $62.3 trillion credit derivatives market. Since it has been patently obvious for several years that such an innovation was essential for the stability of the market, the news is welcome, if a little belated. […]

The oil price rise of more than $50 per barrel since the Fed started cutting interest rates in September is beginning to get serious. Since the rise of oil import prices alone removes $170 billion from the US economy, more than 1% of Gross Domestic Product, it is both inflationary and highly recession-producing, especially since […]

As commentators have come to realize the depth of the economic mess in which the United States is now mired, an increasingly loud theme of their wailings is that the free market has failed, so that we need more government regulation and state control. One expects the Democratic Presidential candidates to take this view (though […]

First quarter labor productivity growth, published by the Bureau of Labor Statistics Wednesday, was unexpectedly positive, with non-farm labor productivity rising 2.2% over the previous quarter. Wall Street mostly rejoiced at this number (the stock market was down, but irrationality is the middle name of most short term trading moves.) However to the impartial observer […]