Economic Analysis

Thanksgiving amid the Threats

Thoughts from the Frontline

November 27, 2015

“Nobody in Europe will be abandoned. Nobody in Europe will be excluded. Europe only succeeds if we work together.”
– Angela Merkel, December 15, 2010

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough.”
– Mario Draghi, July 25, 2012

“We have to safeguard the spirit behind Schengen,” Mr Juncker told the European Parliament on Wednesday. “Yes, the Schengen system is partly comatose. But . . . a single currency does not exist if...

Be Careful Out There

Outside the Box

November 25, 2015

Michael Lewitt, author of The Credit Strategist, likes to get right to the point. Here’s the opening paragraph of this month’s TCS:

Commodity prices are plunging, the dollar is powering higher, the yield curve is flattening, ObamaCare is collapsing, global trade is plummeting and terrorism is spreading across the globe. The high yield credit markets are sending distress signals and 10-year swap spreads are negative. Energy companies are going out of business faster than you can say “frack” and...

The Economic Impact of Evil

Thoughts from the Frontline

November 22, 2015

“Political leaders still think things can be done through force, but that cannot solve terrorism. Backwardness is the breeding ground of terror, and that is what we have to fight.”

– Mikhail Gorbachev

“... Europe exemplifies a situation unfavorable to a common currency. It is composed of separate nations, speaking different languages, with different customs, and having citizens feeling far greater loyalty and attachment to their own country than to a common market or to the idea of Europe.”


Paris, Sharm el-Sheikh, and the Resurrection of Old Europe

Outside the Box

November 18, 2015

Soon after the Paris attacks, I picked up the phone to talk over the situation with my friend George Friedman. George is one of the truly world-class thought leaders on geopolitics. We had an animated 20-minute conversation. I didn’t particularly like what I heard.

George thinks we face big difficulties in dealing realistically with the ISIS threat. The more I read—and the more I listen to people like George who have worked these issues for decades—the more I think that we, as a culture, need...

The Gig Economy Is the New Normal

Thoughts from the Frontline

November 14, 2015

An already-confusing employment environment grew even more complicated this past week. Many readers responded to my “Crime in the Jobs Report” letter with their own stories. Some confirmed what I wrote, while others disputed it. Some of the stories I read from readers who are stuck far from where they want to be in this job market were very moving. I think everyone agrees the labor outlook is uncertain. I sense a lot of nervousness, even from those who have secure jobs that pay well. In today’s...

Inspiration from the World of Sports

Outside the Box

November 11, 2015

One of the most successful investors in the world is Howard Marks of Oaktree Capital Management. One of the things I look forward to every quarter is the letter he writes to his clients – it goes right to the top of my reading list. Not only is it always full of generally brilliant investment counsel, Howard is also a really great writer. He has an easy style that pulls you through his letter effortlessly.

I have never sent his letter to you as an Outside the Box, as the copies I get are...

Crime in the Jobs Report

Thoughts from the Frontline

November 7, 2015

“When more and more people are thrown out of work, unemployment results.”

– Calvin Coolidge, US president, 1923-29, in his role as Mr. Obvious

“Unemployment is of vital importance, particularly to the unemployed.”

– Edward Heath, UK prime minister, 1970-74

Easing the Night Away

Outside the Box

November 4, 2015

Monetary policy determining winners and losers is a deeply disturbing prospect. In this week’s Outside the Box, entitled “Easing the Night Away” (how many of you instantly recognized that as a ref to a 1997 tune by Chumbawamba?), my friend Sam Rines reminds us that monetary policy cannot solve every problem. And he explains why, after the global glut of quantitative easing, that truism has probably never been more true.

Sam works for Chilton Capital Management in Houston and writes for the...

Your Own Personal Inflation Rate

Thoughts from the Frontline

November 1, 2015

“Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.”

– Ronald Reagan

“To me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target.”

– Janet Yellen

The Financialization of the Economy

Outside the Box

October 28, 2015

Roger Bootle once wrote:

The whole of economic life is a mixture of creative and distributive activities. Some of what we ‘‘earn’’ derives from what is created out of nothing and adds to the total available for all to enjoy. But some of it merely takes what would otherwise be available to others and therefore comes at their expense.

Successful societies maximise the creative and minimise the distributive. Societies where everyone can achieve gains only at the expense of others are by...