The first quarter Gross Domestic Product rise of 0.6% was greeted with considerable relief by most Wall Street commentators; they had expected the chaos in the housing market and the banking system to have pushed the US economy into recession. This was unreasonable; the huge monetary stimulus currently being hurled at the economy was always […]

CIBC World Markets analysts recently predicted that oil would sell for $200 a barrel in 2012, as oil supplies grow ever tighter relative to demand. That would imply a continued global boom for the next four years, which would bring inflation, perhaps validating CIBC’s prophesy as the dollar went the way of the 1923 Reichsmark. […]

The credit crisis took an ugly turn this week, when a number of countries banned rice exports, causing the price of the staple to soar above $1,000 per tonne, treble its level a year ago. Politically and economically, the world has moved decisively in the direction of protectionism and seems likely to continue further along […]

Fair value accounting, by which debt and equity securities on a company’s balance sheet are “marked to market” — written up or down to their market price — has been hyped by accountants and regulators as the epitome of modern financial reporting, enabling investors to gain a completely true picture of their investment’s financial position. […]

“The world is flat” declared New York Times columnist Thomas L. Friedman in 2005. His book was full of heart-warming anecdotes about noble Third World businessmen being brought together through the Internet; in terms of hard analytical truth it was something of a stretch even then. However, it is now certain that the world has […]

The Bear Stearns bailout and the associated calls for further Federal intervention in the mortgage market have highlighted once again an eternal economic truth: in an era of excessively cheap money, only the money is cheap. Everything else — assets, business ethics, economic stability, support for free markets – becomes either horrendously expensive or wholly […]

The Bear Stearns bailout was not quite unprecedented; Continental Illinois Bank in 1984 and Citicorp in 1991 were both beneficiaries of Fed-orchestrated rescue operations. And notoriously, the hedge fund Long Term Capital Management was not allowed to fail in 1998. However since the mortgage crisis is by no means over, and further financial difficulties seem […]

On August 27, 2006 this column suggested that US house prices would fall by 15% nationwide, peak to trough. On March 11, 2007 this column suggested that the total bad debt loss from the mortgage crisis would be about $1 trillion. At a meeting at the American Enterprise Institute Wednesday, it became clear that in […]

We are frequently told that modern democracies are “soft” and unable to bear the stress of a major war, compared with our iron-hearted ancestors with less affluent lives. However contemplation of the likely relative effects of the possible war between Colombia and Venezuela makes one realize: a society that finds the costs of a major […]

The complex and ongoing collapse in the US securities markets, and the extraordinarily expensive demise of Northern Rock in Britain, signify gross failures of banking regulation on both sides of the Atlantic. As regulation has grown more complex, it has become notably less effective. In the post-financial-holocaust world that we will shortly enter, how should […]