Economic Analysis

Prepare for Turbulence

Thoughts from the Frontline

July 9, 2017

“The job of the central bank is to worry.”

– Alice Rivlin

“The central bank needs to be able to make policy without short-term political concerns.”

– Ben Bernanke

“… from the standpoint of the overall economy, my bottom line is we’re watching it closely but it appears to be contained.

– Ben Bernanke, repeatedly, in 2007

“Would I say there will never, ever be another financial crisis? You know, probably that would be going too far, but I do think we’re much safer, and I hope that it will...

Hostages to History at the G-20 Summit

Outside the Box

July 7, 2017

For this week’s Outside the Box, I again bring you the sterling work of George Friedman and his team at Geopolitical Futures. Today, George delivers a sobering analysis of the G-20 Summit now underway in Hamburg. Our leaders, he says, like to think of themselves as intrepid decision makers whose national interests are defined through their interactions with their global peers in venues like the G-20. But, he argues, history is marching on – and at a rather brisk pace these days, you may have...

The Wedge Goes Deeper

Thoughts from the Frontline

June 30, 2017

“Nearly all men can stand adversity, but if you want to test a man’s character, give him power.”

– Abraham Lincoln

“If more of us valued food and cheer and song above hoarded gold, it would be a merrier world.”

– J.R.R. Tolkien

Shale Oil: Another Layer of US Power

Outside the Box

June 28, 2017

George Friedman and I have been talking regularly about pressing geopolitical issues for at least 10 years – it is a shared obsession. George and Meredith and Shane and I regularly try to get together, and sometime in August we will make our annual pilgrimage, wherein we spend a long weekend with my getting history lessons and geopolitical insights – and I try to share a little economics. I know no one else with George’s breadth and depth of insight into today’s world.

Right at the root of...

Mad Hawk Disease Strikes Federal Reserve

Thoughts from the Frontline

June 25, 2017

“A serious writer may be a hawk or a buzzard or even a popinjay, but a solemn writer is always a bloody owl.”

– Ernest Hemingway

Secular Stagnation?

Outside the Box

June 21, 2017

In today’s Outside the Box my good friend Charles Gave shares an instructive “Tale of Two Countries.” Since 1981 in the UK and France, structural growth rates have diverged: The rate has fallen by two-thirds in France, while in the UK it has risen. Why? Well, to begin with, in the UK Margaret Thatcher was elected prime minister in 1979 and almost at once reduced the role of the bureaucracy in managing economic activity and dialed back government spending as a percentage of GDP. Meanwhile, in...

The Next Minsky Moment

Thoughts from the Frontline

June 17, 2017

“China’s economy has entered a state of new normal.”

– Premier Li Keqiang, 2015

“Success breeds a disregard of the possibility of failure.”

– Hyman Minsky

Where’s My Productivity, Dude?

Outside the Box

June 14, 2017

One of the true conundrums in the macroeconomic world is the continuing drop in total global productivity over the last few decades, in spite of the growing use of computers, robotics, and artificial intelligence. Theoretically, productivity should have gone up.

Professor and Nobel laureate Robert Gordon and others have speculated the GDP growth is going to decline to less than 1%, and they have all sorts of maps to back up their claim. I’ve taken issue with their reasoning, but they makes...

What, Me Worry?

Thoughts from the Frontline

June 11, 2017

“Forget the past. The future will give you plenty to worry about.”

– George Allen, Sr.

“I try not to worry about the future, so I take each day just one anxiety attack at a time.”

– Tom Wilson

Finding High-Quality Companies Today

Outside the Box

June 7, 2017

Last week in Outside the Box, Jim Mellon shared some good advice on picking stocks in the Age of the Index Fund. Jim said,

[C]ommitted investors should make a list of companies that they really like, know about, and want to own – at the right price. If the shares of those firms are too high, put in limits, possibly 20-30% below current levels, and wait. Don’t let cash burn a hole in your pocket – let the stocks come to you, and don’t chase.

Within a day of publishing Jim’s piece, my friend...