If as Albert Einstein observed insanity is “doing the same thing over and over again and expecting different results”, then the latest proposal for resolving the Euro-zone debt crisis requires psychiatric rather than financial assessment. The sketchy plan entails Greece restructuring its debt with writedowns around 50% and recapitalisation of the affected banks. The European … Read more
In his new book, Alistair Darling describes Gordon Brown’s political style as “appalling,” “volcanic,” and “brutal.” He should know. The two men sat together in the cabinet for years while Brown was chancellor. Darling then served as chancellor himself when Brown finally became prime minister. Now that Brown is out of office, it seems he … Read more
After decades of civil war, Colombia is one of the hottest investment destinations in Latin America. International investment bankers throng the corridors of hotels, trolling for the next M&A deal or IPO. Official Chinese delegations are a common sight at the arrival hall of El Dorado International Airport. Leagues of Asian businessmen, accompanied by interpreters, … Read more
What is ‘competitiveness’? It’s an important part of the euro area leaders’ negotiated terms in the July 21st Summit announcement by the European Heads of State. The first paragraph, #4, and #11 of the announcement all refer to this issue of ‘competitiveness’: We also reaffirm our determination to reinforce convergence, competitiveness and governance in the … Read more
Greece’s Finance Minister reportedly said that his nation cannot continue to service its debt and hinted that a fifty percent write-down is likely. Greece’s sovereign debt is 350 billion euros—so losses to holders would be 175 billion euros. That would just be the beginning, however. Nouriel Roubini has argued that the crisis will spread from … Read more
To an alien orbiting Earth in a flying saucer, natural gas flares would be one of the most visible signs of human life on earth. Notice I said “human life,” not “intelligent life.” Flaring is the practice of burning off the natural gas that is produced in association with oil rather than piping it to … Read more
Here is something that you may not think about often enough: Taking losses. Its something that every rookie trader must learn to do — and all of the TBTF banks refuse to do. Even sovereign nations seem unwilling to accept this simple fact of financial life. There will be losses. How you handle them determines … Read more
Some of the dominant policy issues of today – immigration, energy, the emergence of China – have their analogues in the great Industrial Revolution. The key government policies that laid the foundation for the Industrial Revolution in England include supporting the immigration of skilled workers, allowing for private ownership of farm land, weakening the unions … Read more
Fears have grown this week that we are on the verge of a new global financial crisis. What’s your view? In my view there is a high likelihood that there is going to be another global financial crisis. My data suggests that most advanced economies are already entering a recession. We’re not any more in … Read more
Below are excerpts from the testimony of Marriner Eccles to the Senate Committee on the Investigation of Economic Problems in 1933. It is an historic document – laying out the future terms of the Federal Deposit Insurance Corporation, the management of money supply nationally through open market operations, the Bretton Woods Accord on currency stability, … Read more