malinvestment

There are conditions under which governments can create money—or debt—without fear of inflation or excessive debt burdens. There are other conditions under which debt or money creation can lead to inflation and balance sheet problems.

What if the Fed Model is wrong? Perhaps it's the change in the level of interest rates that matters, not the level. So irrespective of how high interest rates are, if the change, the delta, is large enough, it will produce an economic…

This is my third post on tail risk now. I think the continued and broadening market volatility we have seen across asset classes in the last few months is a sign of increased tail risk and i wanted to put some parameters around how to think…

A couple of weeks ago I told you about two properties in London that I was familiar with as background for my post on house price inflation in the UK. What was clear from those two examples and dozens of others I found is that rental yields…

The Chinese property bubble is bursting Chinese wage pressure is rising Chinese search for oil has increased geopolitical tensions

The Euro area composite PMI rose to 54.0 from 53.1, making it unlikely that the ECB will move against deflation in May The Chinese HSBC/Markit flash manufacturing PMI was up to 48.3 from 48.0. However, this still shows contracting…

No one has denied that China was overdue for a credit shakeout due to the Chinese government’s desire to stem excess credit growth as the economy rebalances. The question has always been about how much of a shakeout Chinese policy makers…

Sanctions because of the Crimean crisis have had less economic impact than private portfolio preference shifts. However, as Ukraine moves into the EU sphere, further actions against Ukraine could be more far-reaching. China has moved…

Marc Faber appeared on Bloomberg Television yesterday to discuss the Chinese economy. While Faber generally seems to be a long-term bull on China, he had some disquieting things to say about the extent of malinvestment in China due to the…

Here is the heart of the matter. It is not the motivation to make money that makes people efficient with resources. It is having a single clearly-defined purpose. When objectives are unclear, money is inevitably wasted.