For decades after 1945, and especially after 1991, the United States was a role model for the world. Not only was its economy the world’s strongest and most prosperous, but its economic management, while falling short of true capitalism, represented an attainable model both for sluggish European nations and for fast-growing emerging markets. Its diplomats and consultants jetted around the world offering advice to poorer countries, in the solid knowledge that the advice was good and the recipient country would probably take most of it – I should know; I was such a consultant for the U.S. Treasury in Croatia in the mid-1990s. Continue reading →

Passively invested funds now account for 45% of all assets of U.S. stock-based funds, up from 25% a decade ago, according to Bank of America Merrill Lynch. Indexed funds also account for 25% of bond funds. Between them, three large investment managers, BlackRock, Vanguard and State Street, manage over $20 trillion of assets and they are all dedicated to the “woke” ESG (environment, social and governance) mantra. If these trends continue, how is such a capitalism supposed to work; indeed, will it be capitalism at all? Continue reading →

Monthly Payments will resume on $1.8 trillion of U.S. student debt beginning in October, after a 3-year payment holiday for the Covid-19 pandemic. Since President Biden had been talking of more widespread debt relief (last week nixed by the Supreme Court) this will come as a nasty shock to 27 million ex-students, some of whom have graduated since 2020 and hence have never known the burden of monthly debt payments. That may end the strange resilience the U.S. economy has shown so far this year. Come October, reality may dawn. Continue reading →

It is hard to find a defense of populism in conventional media. The steady slide away from solid property rights in Europe (including the United Kingdom) and the United States since 1990 has been generally applauded, and its opponents demonized. Yet an economy without property rights is being shown year by year to make citizens poorer in country after country, however warm and fuzzy it makes the intellectual left feel. With both major parties in most European jurisdictions committed to property rights destruction in one form or another, only a populist reorientation of politics can return government to its proper primary function: of protecting, not eroding the property of the people. Continue reading →

Even as a participant in the derivatives market, I found new derivatives wrinkles pretty boring, however lucrative they might be. Equally in software, the latest “social media” app, however irresistible to billions of dozy consumers, leaves me cold. Fortunately, help is at hand. With international tensions ever-increasing, research money is pouring again into the military-industrial complex. Soon we shall thrill at the release of the 2020s equivalent of those 1950s giants: the B52 bomber, the U-2 spy plane, the USS Nautilus nuclear submarine, the Lockheed Starfighter and the AR-15 rifle. If technology is to thrill us, it needs to go VROOM! Continue reading →

Communication and mutual understanding with both allies and opponents are key to a successful foreign policy. The skillful alliance formation and peacemaking of Klemens, Prince von Metternich and Robert, Viscount Castlereagh after the Napoleonic Wars led to a century of peace and rapidly increasing prosperity; the lack of it in 1914 and the late 1930s led to global catastrophes. In a world where one power is a clear hegemon as from roughly 1985 to 2015, communication may be less necessary, though understanding is always helpful. But today there is no hegemon, and foreign policy must be rethought to prevent economic and political apocalypse. Continue reading →

Apple (Nasdaq:AAPL) is bringing out yet another virtual reality headset, the “Vision Pro” to appear early next year, priced at $3,400. This follows the total failure of Meta’s (Nasdaq:META) Metaverse and similar virtual and augmented reality products launched by Alphabet (Nasdaq:GOOG), Microsoft (Nasdaq:MSFT) and others – I bought my son a $30 virtual reality headset in 1999! This is yet another indication that the biggest companies tend to follow one another like sheep and are not at all where innovation comes from. Since Bigness leads to Badness, I thus applaud the work of the Federal Trade Commission’s Lina Khan in attempting to slow the flow of corporate mergers, which generally subtract value. Continue reading →

The past two decades have been wonderful for the luxury goods business as demonstrated by the position at the top of the world’s billionaire Rich List of Bernard Arnault, chairman of LVMH Moët Hennessey Louis Vuitton. Cheap money has boosted asset prices ad infinitum and the top 1-2% of the world’s population with significant inflated-value assets have spent a lot of their winnings on high-priced rubbish. But interest rates are no longer near zero, and asset prices must inevitably fall. Surely that portends a slump in the luxury goods market, even as ordinary consumers continue to spend. Continue reading →

President Biden appears adamant that he will not yield one iota to the Republicans demanding spending cuts in return for increasing the debt limit. He also claims to believe that through the 14th Amendment he can issue debt unilaterally, without Congressional approval. By doing so, he would take the position of an absolute monarch, like James II, Louis XIV or Khufu. Lessons can be drawn as to how that might work in practice. Continue reading →