Financial Markets

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Fascinating theory. Is it plausible?

Financial Markets


I was speaking to a banker this past weekend who put the blame on the subprime problem squarely on the campaign against "red lining" and the Community Reinvestment Act enforcement, which forced banks to give super risky loans to people without...

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Credit crunch + Market Rout = Central bank intervention

Booms and BustsFinancial MarketsCapital and Interest TheoryInterventionism


The turmoil in financial markets is eliciting the usual response from the central bankers, all up there in their Hueys, 'Die Walkuere' blasting out of their beat boxes. But the fixation on the 'sub-prime' angle and on the Fed's role in isolation only tells part of the story. While...

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The Housing Bubble and the Credit Crunch

Booms and BustsFinancial MarketsInterventionism


The turmoil in the credit markets now emanating from the collapse of the housing bubble can be understood in the light of the theory of the business cycle developed by Ludwig von Mises and F.A. Hayek. These authors showed that credit expansion distorts the pattern of spending and capital...

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Are Stock Markets a Swindle?

Financial MarketsMoney and BanksMoney and BankingPolitical Theory


Aside from the error identified by Shostak this morning, another error concerning financial markets is that they are systematically irrational - the very opposite error of the EMH.


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Size of Sovereign Wealth Funds

Financial Markets


I have written before for the blog about the emerging "sovereign wealth funds" (see: 1 2 3...

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Australia & The Inverted Yield Curve

Booms and BustsFinancial Markets


One myth upheld even by many people who has a basically sound outlook on monetary issues is the view that an inverted yield curve (where short term interest rates are higher than long term interest rates) will cause a recession. It is a well known fact that the yield curve tends to invert just...

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China: The New Global Hedge Fund

Financial MarketsGlobal Economy


I have been covering the story of the sovereign governments' ongoing ventures into capital markets with their accumulated currency reserves (see: 1 2...

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Is the Stock Market Rising?

Financial MarketsPrices


I rather like this chart from the New York Times showing the value of the S&P 500 Index in the dollar, three foreign currencies, gold, houses, oil and corn....

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Clinton talks return on investment

Financial MarketsCapital and Interest Theory


"If you add up all the benefits, it's really astonishing," the New York senator and former first lady said, citing one study that says for every dollar invested in pre-kindergarten, there is at least a seven fold return. -- Hillary Clinton as...

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The sham of "socially responsible investing"

Financial MarketsCapital and Interest TheoryMoney and Banking


The sham of socially responsible investing (SRI) is exposed in a recent New York Times column by Joe Nocera. This incisive article concludes that SRI "oversimplifies the world, and in so doing distorts reality."


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