Economics

By now, you are familiar with the carry trade, where one borrows in one's own currency in order to invest in higher yielding foreign assets, often times with significant leverage. The Japanese were famous for making this trade in…

This morning in an e-mail exchange with Marshall Auerback, I questioned why the U.S. Dollar was rising so precipitously. I do understand much of this has to do with a need to refinance dollar-denominated borrowing by international…

Inflation was unchanged from the previous month in September, bringing the annual rate of inflation down to 4.9%. While the inflation rate is still elevated, the drop in oil and commodity prices combined with lower consumer spending is…

Yesterday, I laid out some of my general thinking on the business cycle and the economy. Obviously, understanding the business cycle is important to economic forecasting and is, therefore, central to personal financial planning, general…

Now that policy makers worldwide have finally stepped in to stop the bleeding, we have had a relief rally of monumental proportions. Most global indices were deep into oversold territory, meaning that there was lots of pent-up demand for a…

You have probably heard people bandy about the term pro-cyclical as it has become a key concept for economists as we enter a downturn. The crux of pro-cyclicality is that some things rise with an upswing, but fall with downswings --…

Marshall Auerback here: I am somewhat simplistic about this, but if the issue is one of a drive for dollar liquidity, the Fed should be able to address that problem. Before the week ending September 17th, the Fed was not, in fact,…

Artificially low interest rates are what got us into this mess. Why should we think that they will help us get out? That's the question I ask myself and Marc Faber, otherwise known as Dr. Doom, answers that they won't.They certainly…

The Financial Times caught up with two great economic pundits in Jim Grant and Stephen Roach. Below are links to six video interviews by the FT with these two gentlemen (three each). They should be enlightening regarding the global credit…

Richard Fisher of the Dallas Fed shows that some of the Fed Presidents get it. He is now on record for saying that interest rate cuts won't solve America's credit crisis problems. In fact, interest rate cuts will make them much worse. If…