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Too much finance

I like this piece by Robert Shiller on the excessive allocation of resources to finance. About 7.4% of all US output goes here and between 25-50% of graduates from top business schools pursue finance careers – much of it pure rent-seeking activity that adds nothing net to national output. The same trends are evident in […]

Beware of Greeks (& Irish) bearing bonds

This entertaining tract from Michael Lewis in Vanity Fair provides a fascinating glimpse of the stark extent of near collapse and bankruptcy – it may still happen – of the Greek economy. $250,000 US indebtedness per working person, Greek government estimates of a public sector deficit of 3.7% of GDP that turned out to be […]

Fa piao 发票

I am interested in the way China manages receipts for various types of transactions. A fa pio is a type of super-receipt that is given for many transactions (large durable items, taxi, car rental and interesting to me, for restaurant meals). It can act as a type of warranty and a contract and is also […]

House prices in Oz

This article in The Economist argues that house prices around the world are over-valued and that Oz wins the prize for the greatest overvaluation – on their model by 56.1%. Hardly surprising since, on their estimates, house prices in Oz have increased by 197% from 1997-2010. I have split loyalties on this one – I […]

Goldman Sachs operates a corrupt casino?

I had just finished reading this fascinating article on Goldman Sachs in Business Week “Don’t Blame Us” when news arrived that GS is, in fact, being prosecuted for securities fraud by the S.E.C. In 2009 GS made a profit of $13.9 billion. It amazed me that 78% of this came from trading – currencies, stocks, […]

The pig is too fat

The misallocation of resources into the disastrously inept US finance sector is chronicled in this Harvard Magazine article. Of 6500 selected Harvard graduates from 1969-1990 22% of those graduating in 1970 were in finance 15 years later. But 38% of those who graduated in 1990 were in finance 15 years later. Similar changes occurred for […]

Chinese debt worries

China is ‘worried about’ its $1trillion holding of US Treasury Bills.  The Chinese Prime Minister, Mr Wen, complains that the US has spent too much and saved too little – without mentioning that the consumption boom was funded in large part by Chinese lending.  Mr Wen can’t sell the debt – its price would collapse – […]

People who caused the global financial crisis

This Guardian survey sounded at first to me like a dumb idea but it is interesting. The wide range of people surveyed suggests the diverse origins of the current mess.

I’d foregotten all about Abby Cohen – the perpetual stock market ‘bull’. But, yes, she makes the list.

At the end of the […]

Buffett’s Snowball

I have just read the massive 900 page biography of Warren Buffett, by Alice Schroeder, The Snowball, Warren Buffett and the Business of Life. I was thinking of reviewing it but after as couple of drafts I gave up because my review seemed so narky and negative in what I gleaned as the character of […]

Madoff economies

Paul Krugman asks a basic question. While everyone is tutt-tutting about Bernard Madoff’s amazing fraud (how come the SEC never saw it even though it had been denounced as a Ponzi scheme in 1999? How come knowledgeable investors fell for it? etc etc etc) isn’t Madoff not really just a symptom of what is endemic […]

The end of free market fundamentalism not of the mixed economy (revised)

My earlier lengthy post under this title has been published in terser form over at Online Opinion.

George Soros: The crisis & what to do about it.

Always of interest to read Soros’ views – here.  Can also look at him at MIT discussing his new paradigm for financial markets – here.

Clearing the fog

This is a guest post by Rabee Tourky, Professor of Economics at the University of Queensland

In a previous post on this blog I began describing how to my mind the market failure associated with the financial crisis has to do with market incompleteness. That is, we found ourselves in a situation in which one […]

Can we save the world economy?

This panel discussion (George Soros, Nouriel Roubini, Jeffrey Sachs) moderated by CNN’s John Roberts on saving the global economy. You need to reserve some time – its about 90 minutes – but worthwhile.

Speculators & politicians

This Commentary article by John Gordon puts the current financial crisis in historical perspective – specifically relates it to the US banking crisis of 1836 – and identifies the main regulatory/political  failures.  A quality ‘conservative’ assessment.

Robert Shiller on bubbles

Robert Shiller – the ‘rational exhuberance’ man – sees speculative bubbles as an instance of ‘group-think’ (yes, that is well-known) where, among experts, few will stick their neck out to present a divergent view.  It seems that taxi drivers with basic powers of observation (their eyes open?) can outperform MIT-trained PhDs in economics.  Might I suggest:

Meta-Theorem […]

What’s happening?

Guest post by Professor Rabee Tourky, University of Queensland

These are interesting times for economists. I hardly know a serious economist whose attention in the past weeks has not been fixed on the changes in asset prices.

An emerging narrative is that for some years we have seen a bubble in US house prices, asset […]

Western European banks exposed to ’emerging markets’ bubble

Will Europe initiate a new wave of problems from the financial crisis? The focus is on the collapsing bubbles in emerging markets (and here) and their implications for what are mainly European lenders. London stocks crashed 5% again this morning as new dimensions of the current crisis became apparent.

This story, HT to commenter observa, is frightening.

“The financial crisis […]

Billy Connelly on ING?

Misdirected enthusiasm?

Thanks Bernd

Sell your house?

I noticed in today’s press that a large number of fairly expensive houses being put up for auction in my suburb yesterday and that all were passed in.  The story was much the same across Melbourne. A plausible guess is that either those with big mortgages are trying to ‘sell up’ in anticipation of a possible housing price […]