Are Corporate Balance Sheets In Good Shape?

There have been large changes in the way in which corporate balance sheets and profit and loss accounts are complied. Whereas 20 or 30 years ago, profits or losses generally reflected the difference between the original book cost of an item and the proceeds from its sale, today asset prices are designed to represent their […]

Rational zestlessness

“The cure for boredom is curiosity. There is no cure for curiosity.” – Dorothy Parker (attrib.) In addition to lending his name to market data tracking the downfall of US real estate, Yale economist Robert Shiller is justly famous for his biography of the stock market bubble, ‘Irrational Exuberance’(Princeton University Press, 2000). Subsequent price action […]

How big a contribution could oil speculation be making?

A key reason why oil prices have been going up is that Asia and the oil producing countries are consuming more while global oil production has stagnated. That means Europe and America had to consume less, and a very high price proved necessary to accomplish that. I do believe that speculation has been another factor […]

Italy’s Economy On The Ropes (Again)

“Italy’s per-capita GDP growth was 5.4% in the 1950s, 5.1% in the 1960s, 3.1% in the 1970s, 2.2% in the 1980s and 1.4% in the 1990s. A rough-and-ready extrapolation of this decade-long continued slowdown would lead to expect no more than 0.5% in the 2000s.” Altogether, the long-run data suggest that the bad performance of […]

The Greenspan Gamble

The most notable thing about Treasury Secretary Hank Paulson’s proposed plan for restructuring financial regulation is the expansion of the Federal Reserve into a sort of “Super Fed.” This new Fed would have oversight of all financial markets and firms, including investment banks. It would be responsible for financial market stability and would be expected […]

Markets worry about another interest rate hike in China

Ouch! Just as the stock markets seemed to be gaining some short-term confidence, the knock-out combination of bad markets in the rest of the world and more fears of domestic interest-rate hikes (especially the latter) slammed China’s stock market rally today. Yesterday’s sudden drop in bond prices had, I think, the biggest impact on sentiment […]

Food and Oil Price Shocks and Latin America and the Caribbean

News about rising international food and oil prices are often treated as good omen for the region’s corresponding exporters. However, this is only a partial and benign take on the issue. First of all, there are the domestic inflationary shocks posed by those price hikes. Secondly, the net impact of higher food and oil prices […]

The ECB is heading for its most risky move yet

Next Thursday, the ECB will most likely increase its interest rate by 25 basis points to 4.25 percent. Its president Jean-Claude Trichet has all but pre-announced this move and other members of the governing council have been busy underlining the message over the past weeks. This move could prove to be the most risky move […]

The ECB – All Talk, No Walk?

A good relationship need not, at each and every moment in time, be characterized by passion and desire. In fact the relationships which best endure the relentless erosion of time are often those where mutual respect and acceptance of difference form the cornerstones. Although I am, I have to admit, by no means an expert […]

The U.S. National Debt Level: Is The Sky Really Falling?

The Sky is Falling! Or is it? I believe one of the most misunderstood areas of the U.S. economy today is the disdain shown by the average American citizen over the current level of the United States’ national debt which now totals $9.4T. Yes, currently the U.S. Government owes a collective $9.4T to American households, […]

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