Thoughts From the Frontline, December 2004

America’s Creativity Crisis

December 31, 2004

We start the year off with a little controversy. This week we take the long view of a problem created by current government policy as a result of the War on Terror that may not show up for 20 years, but if not corrected will have far-reaching consequences for the global balance of power and the US economy.

This week's letter will be a little shorter than usual, for a variety of reasons, not least of which is I am both taking a little time off and also doing a lot of research for next...

The Canary in the Coal Mine

December 17, 2004

English coal miners, starting around 1911, would put a canary in the coal mine to warn them of air quality problems. This practice of two canaries in each pit continued until 1986, at which times electronic sensors went into use. In the world of economics, there are also things which are the equivalent of a canary in a coal mine. This week we will look at yield curves in England. Can we look over the pond and see the future of the US economy?

But before we get into that, let's look at...

Greenspan: Be Careful What You Ask For

December 11, 2004

Be careful what you ask for, the ancient wisdom says, because you just might get it. The world markets are asking for a return to balance, where the US trade deficit shrinks, the US saves more and we balance our government budget. All laudable goals, and ones I would applaud. But the road to a balanced global market may not seem like a walk in an economic Lake Woebegone, where stock market returns are strong, stagflation does not darken the path and where all our portfolios have above average...

Don’t Confuse Me With the Facts

December 3, 2004

Why do we do the things we do? How can two people, or even large groups, look at the same set of facts and come to such widely different conclusions? Maybe even more important would be to ask why? Is there some bias involved? Does being a "professional" help you avoid these biases? We will examine these questions and more, and end with a few comments on the important and very strategic sleeper event you probably missed this week. It should be a fascinating letter.

Warning: some of the...