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.
- Bear Case
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.
June 30, 2014 posted by Martin Hutchinson
business productivity fell by 3.2% in the first quarter of 2014, according to
the Bureau of Labor Statistics' revised data. Most commentators have rather ignored
this number. You expect productivity figures to be bad when GDP drops
unexpectedly, as it did in the first quarter. After all, the last such bad
number was in the first quarter of 2008, the outset of the Great Recession, and
the one prior to that was in 1990, when that recession hit unexpectedly. Still,
in this expansion, output numbers have been much weaker than employment numbers
as productivity has stagnated. But then, in a period of such massive
malinvestment, to use the Austrian economists' term, that's what you'd expect.
June 23, 2014 posted by Martin Hutchinson
June 16, 2014 posted by Martin Hutchinson
June 9, 2014 posted by Martin Hutchinson
Good times tend to be relatively infertile of new economic ideas. Even radical economists, grinding their teeth at the apparent success of the market, don't want to be accused of killing the golden-egg-laying goose.
June 2, 2014 posted by Martin Hutchinson
Extreme policies produce extreme attitudes among investors. Now, the nearly six years of zero interest rate policies—accompanied by quantitative easing—that we have seen in most Western economies are producing such an extreme attitude in the world's bond markets.
May 26, 2014 posted by Martin Hutchinson
When I wrote two years ago that the eurozone resembled the Hindenburg approaching the docking mast at Lakehurst, New Jersey, Euroskeptics cheered and only those committed to the worst features of Europhilia suggested I had underestimated Europe's capacity for recovery.
May 19, 2014 posted by Prudent Bear
This column is being written before final Indian election results are available, let alone a government being selected. However, if exit polls are confirmed and Narenda Modi has won a majority that allows him to govern for five years, then he has potentially the most important job in the world.
May 12, 2014 posted by Martin Hutchinson
Nobel Prize-winning (1992) economist Gary Becker, who died last weekend, extended economic theory into areas such as racism, crime and family formation, in which it hadn't been thought relevant. Critics, whether of religious or other persuasions, complained that Becker's analysis dehumanized us by leaving out many other factors that were of equal or greater importance.
May 5, 2014 posted by Martin Hutchinson
It is becoming increasingly clear that size, in government and business, was a fetish of the early and middle 20th century, caused by the peculiar technological capabilities of that period. Humanity had gained access to enormous power sources, so production could be aggregated into enormous units, but we did not yet have the informational capabilities to manage those units in a sophisticated manner.
April 21, 2014 posted by Martin Hutchinson
Monetary economists around 2009-10 were sure of one thing: the Fed's unprecedented creation of "narrow money" in the form of bank reserves would show up fairly quickly in a burst of inflation. Clearly, they were wrong.
April 14, 2014 posted by Martin Hutchinson
The American Enterprise Institute has now joined much of the Federal Reserve, Christine Lagarde of the IMF and the commentariat in warning of the imminence of deflation and the dire consequences that would ensue from even a mild decline in prices.
- ▼ August (6)
- ► 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)