I feel dislocated from much contemporary macroeconomics because I think much of it is measurement without theory. There are not credible theoretical stories to unambiguously back up many modern macroeconomic claims. Reinhart and Rogoff two of the big name deficit-hawks in macroeconomics got a huge amount of macroeconomic data covering many countries – emerging and [...]
I attended the Risk Management and Climate Change think Tank meeting at the Australian Centre for Financial Studies in Melbourne yesterday. As background I prepared the following notes that are intended to provide a non-technical guide to some technical economics.
Abstract: The real options and insurance literatures alter the way planners think about evaluating infrastructure [...]
Suppose government is thinking of building a desalination plant to deal with future possible severe climate change. Despite the current sound water supply situation over the next 10 years or so this is a reasonable supposition. Suppose further that the expected future discounted benefits of such a project are B(t) and the expected construction and operational costs are [...]
For decades I have been arguing against the worthless fee-based advice of the activist investment industry and argued instead that Aussies without a lot of financial market expertise should, in the main, invest in close to no-load mutual funds such as Argo Investments, Australian Foundation Investment Company and Milton Corporation. Management fees are close to zero [...]
The extraordinary massacre on US equity markets continued Thursday with a 4% decline to levels not seen for 11 years. The Aussi market (above) declined 1.4% today. It is still inaccurate to call the current dip in the US the worst recession since the Great Depression – 1982 was worse – but the adjusted unemployment [...]
One of the core truths about every equity market is that eventually prices in it will decline. Indeed, paradoxically, the stronger the apparent basis for the market’s positive growth the more certain it is that the decline will be severe. Why? Investors are a greedy lot and cannot resist the temptation of an apparently easy [...]
When I started my blog one of the things I wanted to do was develop my interest in making money on the stockmarket into something I could post on. I envisaged initially maintaing a hypothetical portfolio online with some racy tips that would stir the interest of thousands of greedy punters in the blogosphere who [...]