Global Market Commentary, Analysis and Investments
There is no end of economists, analysts, and reporters filling the air with investment recommendations. Is the stock market oversold? Should we invest for inflation or deflation? And so on.
That is talk. American CEOs are voting with their feet. Since they aren’t investing in the United States, does it make sense for the individual stockholder or bondholder to do so?
[Read more...]Economists are trained to act scientifically, and the emphasis over the last 50 years has been to rely on regression analysis to establish proof for theories. In the 1970s and 1980s, it was difficult to find courses in economic history or business cycles, even at Ivy League institutions.
So while the qualitative side of the discipline has been wanting, the quantitative rigor is heavily reliant upon a technique that emphasizes linearity, the normal distribution, and parsing of data covering truncated stretches of time divided into equal units.
[Read more...]The Depression contemporary Irving Fisher, whom Milton Friedman referred to as “the greatest economist of the twentieth century,” proclaimed in September 1929 that “stock prices are not too high and Wall Street will not experience anything in the nature of the crash.”
He continued to be optimistic through 1930 and 1931, having invested his wife’s and sister-in-law’s fortunes in stocks. But by January 1932, with the evidence mounting that something greater was at work, he developed a thesis that overindebtedness, challenged by a shock such as a stock market selloff, might set off a self-reinforcing deflationary spiral characterized by forced liquidation.
[Read more...]This news story should have come as a surprise, but it’s become easy to expect economists to change their minds after the facts contradict their earlier opinions. In that sense, few things seem as consistent as economists’ inconsistency.
After hearing them clamor so long for new stimulus and additional bailouts, we now hear they’ve changed their tune. The government-supplied “antidote” to the financial crisis was initially hailed as saving the nation, and perhaps the entire world, from depression. Now, a new survey of economists shows that they have actually decided, in looking back, that the whole stimulus basically wasn’t needed.
[Read more...]Falling far short of expectations, Britain’s economy didn’t strengthen much in the fourth quarter. So, for the whole year its GDP remained down 4.8 percent. It was the largest contraction the country has experienced since 1921.
According to the Times Online:
“Most economists had expected the country to turn the corner in the third quarter of the year, the three months to the end of September.
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An Addendum to the ‘Flations – Gold $5,000
Federal Reserve Chairman Ben S. Bernanke delivered a much-anticipated speech on Friday, August 27, 2010. There was no reason to think this talk would be more or less important than his other talks except for the degree of hysteria whipped up by the media in advance.
Bernanke was addressing an audience of fellow central bankers and their camp followers at an annual gathering in Jackson Hole, Wyoming. There have been memorable comments at these late summer getaways, such as, in 2005, when past-Federal Reserve Board Vice Chairman Alan Blinder claimed then-current-Federal Reserve Chairman Alan Greenspan might be the “greatest central banker who ever lived.”
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