China on Course Catching Japanese Disease

Hugh Askew wrote me a message with a request to write something sensible to the story published in the Financial Time from yesterday. “China is heading for a Japan-style bubble”“If China continues to...

The Bigger the Bubble the Greater the Bust

It is becoming clearer by the day that the feds' efforts aren't really working. They can give money to their friends in the banking industry. They can give money to speculators who then make bets on the stock...

Fake Recovery through Cash for Clunkers

“US economic power is declining as a result of the financial crisis,” said the head of the World Bank Robert Zoellick. And continued saying: "One of the legacies of this crisis may be a recognition of changed...

Recovery a Hoax

Traveling through Europe the last couple of weeks brought a closer insight in the economic development underway.Meanwhile the US Dollar has fallen in an opposed direction compared with stocks, gold, and the rest of...

The Chinese Ponzi Bubble

Everyone knows that China is the economy of the future. But beware of a potential blow-up of the Chinese economy.Anyone who thinks China can save the world from recession needs to read former Morgan Stanley analyst...

The World has too much of everything

Despite the urging of governments, Americans and Europeans cannot be expected to take on more debt in order to continue consuming more stuff from China. Nor can the Chinese reasonably expect to work themselves out...

Recovery Wishful Thinking

Recovery is a Wishful Thinking that won't happen soon.Cash for clunkers and any other stimulus plans are stealing future business. People that bought now under the program would have bought next year of...

Stealing from the future

The economy is still sinking, but stocks are rising. Germany, France, Hong Kong and Japan are out of the woods their respective recessions have ended. Even so, everybody believes the worst is over and that stocks...

Consumer no Saviour of the Economy this Time

Since 1945, the world economy has been carried on the backs of American consumers. First, they spent money they earned during the war years. Then, they spent money they earned in the big boom of the '50s and '60s....

The Opening Stage of an Economic Depression

A complete pay-off of debt –deleveraging in economical terms- will take about twenty years to achieve, is explained in previous essays. It was not a very scientific estimate. US$2 trillion over the last 24...

Could Hyperinflation Happen?

Theoretically, yes. Hyperinflation is a scary thought. Technical definitions vary, but while it could be argued that mild inflation can be a sign of a growing economy, hyperinflation is certainly never a good...

Mister Market’s Moral Lesson

Markets are not mathematical, nor mechanical; they're moral. Their purpose is not to make people wealthy, but to make them wise. If they were mathematical they would make people richer by adding zeros. But it's not...

Global Bubbles Trigger Global Crash

"These are not layoffs...they're permanent job losses," is said "These people are not going back to work anytime soon."That is exactly the difference between a recession and a depression. In a recession people get...

Financial System led by Market or Economy?

A market economy is a system of allocating resources based only on the interaction of market resources such as supply and demand. A true market economy is free of governmental influence and other external...

Creative Destruction

Schumpeter framed the phrase “creative destruction” into the economic discussion around 1940 in one of his publications.Creative destruction is often shared with innovation when something new kills something...