By Alan Greenspan

The rise in global stock prices from early March to mid-June is arguably the primary cause of the surprising positive turn in the economic environment. The $12,000bn of newly created corporate equity value has added significantly to the capital buffer that supports the debt issued by financial and non-financial companies. Corporate debt, as a consequence, has been upgraded and yields have fallen. Previously capital-strapped companies have been able to raise considerable debt and equity in recent months. Market fears of bank insolvency, particularly, have been assuaged.

Continue reading "Inflation - the real threat to sustained recovery"

By Michael Pomerleano

Reforms typically take place when the urgency of now is evident in the midst of a crisis. That is when vested interests are weak, and policy makers and regulators are no longer complacent. Recently there is a sense that the financial crisis is abating,  that business is returning to normal and a false sense of stability in taking hold; but it does not imply that the crisis is almost over. The belief that the world has overcome the crisis is faulty for several reasons. Continue reading "Five financial reform policies for a crisis-wracked world - a scorecard"

This chart shows what the consensus of forecasts thinks of the green shoots argument.

Consensus forecasts for 2010

By Brendan Brown

Global equity markets are understandably not taking seriously the ominous pessimism from commentators dissatisfied with the notion of an economic recovery emerging from below.

Yes the S&P 500 may be down a few per cent in recent days but that is mainly a reflection of the US dollar’s mini-rebound (which means foreign earnings become worth less in US dollar terms) and some long overdue downward correction (very small so far) in commodity markets. Continue reading "Economic woes: this is not a tale of two depressions"

History lesson for economists in thrall to Keynes

Niall Ferguson

By Niall Ferguson

First published on ft.com: May 29 2009

On Wednesday last week, yields on 10-year US Treasuries – generally seen as the benchmark for long-term interest rates – rose above 3.73 per cent. Once upon a time that would have been considered rather low. But the financial crisis has changed all that: at the end of last year, the yield on the 10-year fell to 2.06 per cent. In other words, long-term rates have risen by 167 basis points in the space of five months. In relative terms, that represents an 81 per cent jump. Most commentators were unnerved by this development, coinciding as it did with warnings about the fiscal health of the US. For me, however, it was good news. For it settled a rather public argument between me and the Princeton economist Paul Krugman.

Continue reading History lesson for economists in thrall to Keynes. Comments can be left below.

Update: Gideon Rachman’s blog: Economists v historians, cat v kings