The risk that asset price bubbles pose for financial stability is still not clear. Drawing on 140 years of data, this column argues that leverage is the critical determinant of crisis damage. When fuelled by credit booms, asset price bubbles are associated with high financial crisis risk; upon collapse, they coincide with weaker growth and slower recoveries. Highly leveraged housing bubbles are the worst case of all.
Read more...Updating the bizarre story of Questus Global Capital Market, a New Brunswick-incorporated, GXG-listed, New-Zealand-FSP-brokered company of monstrously fraudulent aspect that had apparently ensnared a Malaysian billionaire, various US-based small businesses and retail investors, and a couple of princes from the royal families of Kuwait and Abu Dhabi.
Read more...European stock prices, financial contagion and the trade exposure to China. How the turmoil in China’s stock market is affecting European stock markets through Europe’s trade exposure to China
Read more...It is beginning to dawn on the top echelon that too much inequality is not good for them.
Read more...This post illustrates how dominant the neoliberal paradigm has become all over the world, and how it fails to acknowledge, much the less address, the well-known failings of markets, such as externalities.
Read more...Hudson clearly differentiates what is happening in the Chinese versus the US markets, with emphasis on the role of corporate buybacks here.
Read more...More Americans than ever don’t know what they’ll be earning next week. That’s why we need income insurance.
Read more...Bill Maher has a devastating short segment on the “post greed is good” world, as exemplified by the “sharing economy.” In a bit of synchronicity, a New York Times op ed by a former high-end restaurant captain covered similar themes.
Read more...How the Founding Fathers and successful advancing economies steered clear of manufacturer-destroying “free trade”.
Read more...As the QE prop is removed, it will become more difficult to ignore the fact that “employment” subsidies were often simply “employer” subsidies.
Read more...Complex systems are prone to catastrophic failure. Have we come to embrace policies and values that increase the odds of failure?
Read more...This post mines an issue we’ve discussed repeatedly, that the heavy dose of “reforms” imposed on Greece succeeded in lowering wage costs without providing the expected boost in exports.
Read more...Demonstrating why Menzie Chinn stated, “The ALEC economic outlook ranking is, in my assessment, a manifestation of faith based economics.”
Read more...A thorough discussion of the background and implications of the so-far modest devaluation of the RMB.
Read more...Yves here. This post is wonky but important. While Stiglitz has written regularly about inequality as problematic from an economic perspective, and has mentioned rent seeking as a contributor, to my knowledge, this is the first time he’s said that old theories need to be tossed and that rent seeking is one of the main factors now driving wealth and income inequality.
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