- Bear Case
September 22, 2014 posted by Martin Hutchinson
September 15, 2014 posted by Martin Hutchinson
The bicentenary of the Congress of Vienna, organized to settle the questions outstanding from the 22-year Napoleonic Wars, is a slightly uncertain date. The Congress itself opened officially on October 1, 1814, and the Final Act was signed on June 9, 1815. But on the other hand, the British Foreign Secretary Robert, Lord Castlereagh, arrived in Vienna on September 13, 1814, and the official bicentenary conference (in Vienna, naturally) opens September 17. So this seems as good a week as any to celebrate the conference that (because the 1919 Treaty of Versailles was a failure and there was no peace conference after World War II) was effectively the foundation of the global system we inhabit today. It established a number of principles of international governance, some of which we have kept and others that we would do well to re-apply."
September 8, 2014 posted by Martin Hutchinson
No less than six sovereign borrowers are now paying negative nominal interest rates on their 2-year borrowing in euros. In other words, they are making money by going into debt. In real terms, medium-term U.S. TIPS and British index-linked gilts have had negative interest rates for several years. Contrary to the views of the happy Keynesians around us, this is very dangerous indeed. If negative interest rates were to persist, the world's stock of capital would eventually disappear. Without capital, we'd be back up the trees.
September 1, 2014 posted by Martin Hutchinson
"We wanted flying cars, and they gave us 140 characters," said venture capitalist Peter Thiel in 2011. He put his finger on a central dilemma of the New Economy: its innovations can make money (usually through redirecting advertising sales), but they add little or nothing to the overall stock of human knowledge or long-term happiness. Professor Robert Gordon postulated last year that we may have come to the end of the era of perpetual growth. His theory looked foolishly pessimistic, but as the current sluggish expansion limps on, it begins to look more plausible.
August 25, 2014 posted by Martin Hutchinson
The NASDAQ Composite Stock Index this week broke out to 14-year highs, reaching levels not seen since March 2000. It came within 10% of its all-time closing peak of 5,048.62 on March 10 of that year (by the end of that month it was already below current levels.) At that time I thought, along with many commentators, that absent major inflation we would not see that NASDAQ level again in our lifetimes, unlike the Dow Jones and S&P 500 indices. It is thus worth pondering why the index had reached such nosebleed levels again, and what about today's environment might justify higher valuations than in 2000.
August 18, 2014 posted by Martin Hutchinson
Ever since the fall of Communism and the rise of the Internet, future growth has appeared to lie in emerging markets. Modern communications have made it much easier for multinationals to run international supply chains that take advantage of their abundant resources and cheap labor, while emerging markets people have become far more connected to the world economy, to their great advantage. Yet just as globalization itself has begun to reverse, as I discussed last week, so the era of emerging markets emergence may be coming to a close—at least for the next decade or so.
August 11, 2014 posted by Martin Hutchinson
August 4, 2014 posted by Martin Hutchinson
As an instinctive opponent of Scottish independence but
supporter of Britain leaving the EU, I have to face an epistemological reality:
the two positions are at first sight inconsistent with each other. As a
rational man, I find that disquieting, so I thought I'd look at the economic
effects of both moves and determine whether, economically at least, my
instincts were right or whether ethnic sentimentality had overwhelmed me.
July 28, 2014 posted by Martin Hutchinson
July 21, 2014 posted by Martin Hutchinson
A fascinating new book, "Archduke Franz Ferdinand Lives!: A World
Without World War I," by Richard Ned Lebow (Palgrave Macmillan, 2014)
looks at history's likely trajectory if the Sarajevo assassin Gavrilo Princip
had missed. He concludes that, while much would be changed, we would at best be
only modestly better off. However, Lebow is not an economist and he misses two
enormous economic factors that would almost certainly be different in a world
without World War I. His "worst-world" scenario might have derailed
us, but absent that, 2014 without World War I would probably enjoy much greater
prosperity than today's real world.
July 14, 2014 posted by Martin Hutchinson
The New York
Attorney General's lawsuit against Barclays' dark pool is yet another example
of banks' increasing resemblance to asbestos manufacturers. But it also
reflects an uncomfortable truth: Whether through "fast trading,"
through the new area of "crypto-currencies" or through the increasing
frailty of bank and corporate security systems, technology is transforming
previously well-understood markets into insider-dominated scams. The
implications for the future of a free economy are dire indeed.
July 7, 2014 posted by Martin Hutchinson
bank BNP Paribas is about to be fined $9-$10 billion for doing business with
Iran, a country with which the U.S. is finding common ground in Iraq. Since
2008, the U.S. and the trial bar have obtained fines and settlements from
global banks totaling $88 billion (as of early June.) Now medium-sized U.S.
banks such as Sun Trust are being zapped with fines—$968 million to settle
claims over its mortgage practices.
- ▼ September (7)
- ► July (8)
- ► June (8)
- ► May (9)
- ► April (8)
- ► March (10)
- ► February (8)
- ► December (9)
- ► November (9)
- ► October (10)
- ► September (10)
- ► August (10)
- ► July (11)
- ► June (11)
- ► May (11)
- ► April (11)
- ► March (12)
- ► February (12)
- ► December (11)
- ► November (10)
- ► October (11)
- ► August (11)
- ► July (9)
- ► June (10)
- ► May (12)
- ► April (11)
- ► March (9)
- ► February (9)