Why Paul Krugman Is Wrong
Nobel laureate and Princeton economics professor Paul Krugman has, for many months, been writing and rewriting basically the same article in The New York Times. The essence of Professor Krugman's argument is that austerity policies are misguided and are strangling the slow US economic recovery; what is needed is more Keynesian-style fiscal policy -- more government deficit spending on teachers, roads, bridges, and energy projects. With consumer demand sluggish and the housing market still not back to normal, Professor Krugman contends that more government stimulus is urgently required to sustain the recovery and spark renewed economic growth.Bernanke, Blower of Bubbles?
Bubbles can be bad for your financial health — and bad for the health of the economy, too. The dot-com bubble of the late 1990s left behind many vacant buildings and many more failed dreams. When the housing bubble of the next decade burst, the result was the greatest economic crisis since the 1930s — a crisis from which we have yet to emerge. The active passive investor
Many years ago an investor’s default investment strategy – in the absence of an advisor’s involvement – was to invest in GICs or Canada Savings Bonds. Today, the more affluent investor’s default strategy is – increasingly – indexing, inspired by the likes of John Bogle, Charles Ellis and William Sharpe. But I have often found that indexing advocates implement strategies that are quite a departure from the underlying theory they use to support their choices. Is Australia’s luck about to run out? - By Merryn Somerset Webb
Despite a decade-long resources boom, Australia has been running a current account deficit; it has one of the few credit and housing bubbles in the world still left to pop properly; and on top of that, a banking system that analysts refer to as “capital light”. It is all, GMO’s James Montier told me at the London Value Investor Conference this week, “an accident waiting to happen.” That’s something the Reserve Bank of Australia (RBA) is clearly aware of: when it cut rates last year it said publicly that the plan was to boost housing and business investment as mining investment peaked. ‘Real’ Reinforcement for Austrian Arguments
In a recent article, “The Hoover-Roosevelt Depression Revisited,” work by Cole and Ohanian was highlighted because it comes to conclusions similar to, and thus reinforces historical work previously done by Austrians or fellow travelers (especially Murray Rothbard, Robert Higgs, and Richard Vedder and Lowell Gallaway), which explained the length of the Hoover-Roosevelt Depression.Inflation beating strategies
The Bank of England held interest rates at a record low of 0.5% for the fiftieth consecutive month this week and with little sign of a rise on the way any time soon savers are continuing to feel the bite writes Philip Scott.What Use Are Economists?
When the stakes are high, it is no surprise that battling political opponents use whatever support they can garner from economists and other researchers. That is what happened when conservative American politicians and European Union officials latched on to the work of two Harvard professors – Carmen Reinhart and Kenneth Rogoff – to justify their support of fiscal austerity.RIL adopts new business transformation project
To ready itself for the future, Reliance Industries Limited (RIL) has introduced a new business transformation project — Smart Transformation at Reliance (STAR).Deutsche Bank: "We Fully Understand Why The Authorities Wouldn't Want Free Markets To Operate Today"
Our opinion is that the BoJ is the latest runner with this demand baton which may in turn actually force others into the race (ECB in the future?), or encourage others to carry on QE for longer (the Fed?) thus reinforcing this artificial demand for fixed income. While such technicals remain in place it’s hard for defaults to rise significantly in the foreseeable future even with what is weak growth, average fundamentals, credit deterioration and a rise in more risky deals.Forget Software, Hardware Is Next Big Tech Trend
Software companies are so last decade. Hardware startups are on the rise and are getting serious attention from venture capitalists looking to place bets.Phantom democracy
The dance of Indian democracy is a virtuoso performance, the functioning of its institutions a monumental catastrophe. This irony is so palpable. Karnataka just witnessed a wonderful election. Participation was high, the contest was keen, the tone moderate. A thoroughly incompetent, corrupt and faction-driven government was thrown out of power.Is Abenomics Going to Put Japan Back on the Map?
In a special Outside the Box today, Keith Fitz-Gerald, Chief Investment Strategist for Money Morning, dissects \"Abenomics,\" the radical, not to say outlandish, fiscal moves that the newly installed government of Japan is making. And Keith has a ringside seat: he spends much of each year in Japan.The Truth about Economic Forecasting
Astrologers, palmists, and crystal-ball gazers are scorned while professional economists are heralded for their scientific achievements. Yet the academics are no less mystical in trying to predict the direction of interest rates, economic growth, and the stock market.The Debt We Shouldn’t Pay
At the heart of the argument about how to revive a depressed economy is the question of debt. When political leaders and economists debate the subject, they refer mostly to public debt. To conservatives, the economy’s capacity for recovery is impaired by too much government borrowing. These escalating obligations, they claim, will be passed along to our children and grandchildren, leaving America a poorer country.Europe’s National Wild Cards
Europe’s needs and Europeans’ desires are at odds. At a time when strong, coordinated action is needed to stave off financial collapse in the European Union, the popular support that drove European integration over the last six decades is waning.The True Measure of Investment Success
We all want to become wealthier over time. The guaranteed method for doing this is hugely unpopular. It requires deferred gratification.A Publishing Atrocity
This is the fiftieth anniversary of one of the most scurrilous incidents in academic publishing. The victim was Ludwig von Mises. The perpetrator was Yale University Press.George Soros Argues: Issuing Eurobonds Could End European Debt Crisis
George Soros argues that issuing Eurobonds could end the European debt crisis by mutualizing the debts of euro area member states. Such states have become indebted in a currency they cannot control, the euro, and financial markets have penalized heavily indebted Euro Zone members by pricing their bonds as issues overextended in a foreign currency. Having Eurobonds will level the playing field as the danger of default and high premiums will be mitigated.Morgan Stanley vs. Mosler – Is it Different this Time?
I found these two comments pretty interesting. The first is from Morgan Stanley’s Gerard Minack who says that the sustainability of the bull market makes sense since the last few recession scares didn’t materialize and now investors are conditioned to believe that any economic weakness and subsequent market weakness will be brief.The Case against Deflation
In the main this is the view of neoclassical economists, Keynesians and monetarists, who generally foresee a 1930s-style slump unless the economy is stimulated out of it.