Category Archives: Intervention

Saturn Devours His Children

by CantillonCH

A recent Wall St Journal article gave vent to a scare-story full of Underconsumptionist claptrap, carried under the catchy headline: “The Coronavirus Savings Glut”. Ironically, and only a day later, the paper ran a second piece entitled “How Coronavirus Upended a Trillion-Dollar Corporate Borrowing Binge and Kicked Off a Wave of Bankruptcies”.

Huh? Does the Journal think we have too many savings or too few? Who can say? The only thing that is clear is that editorial consistency comes a distant second to clickbait and column inches.

Meanwhile, politicians everywhere have been urging those they have at last let out of Lockdown to get out and ‘spend’ as a means of speeding the recovery. Nor have the various banks’ Talking Heads been slow to chime in with predictably supportive exhortations for their various home governments to adopt policies aimed at ‘driving demand’.

[A version of this article is also available as a PODCAST] Continue reading …

Whatever it doesn’t take

by CantillonCH

On March 15th, the Eurozone branch of the Throw-more-money-at-it lobby were making themselves heard, calling for the ECB to run the printing presses for a limited (author pulls down lower eyelid with index finger) period as a supplement to the to the €120 billion in extra security purchases already made to that point. [NB total ‘assistance’ to April 17th had reached to €275bln in RP, €148bln in securities, and €126bln in FX swaps for a total of €550bln in five short weeks].We responded:-

Continue reading …

What IS a ‘Market’?

by CantillonCH

In response to an FT article of January 23rd entitled, “The new kings of the bond market”, which suggested that banks had ceded their command over fixed income to exchange-traded funds and active portfolio traders, we responded with a riff on the sorry consequences of recent financial developments: a bromide which turned out to be singularly well-timed in view of the extraordinary upheavals suffered just a few, short weeks later:-

Continue reading …

How Essential is ‘Essential’?

by CantillonCH

In the drive to prevent (viral) death by means of mass (economic) suicide, our Overlords have begun to order the cessation of activities in all ‘non-essential’ businesses.

While one can sympathise with the sentiment, it is, sadly, yet another example of the ignorant doing harm by trying to do good, since it shows absolutely no understanding of the complexity of the modern economy or of the elevated degree of interdependency which exists within it.

Continue reading …

Turnaround Tuesday

by CantillonCH

After the excitement of the past few sessions, it was not entirely unexpected that what we old market stagers used to call, ‘Turnaround Tuesday’, would deliver its traditional mix of reflection, position rebalancing, and general counter-trend moves of either the stop-profit or the ‘Why do I always buy the top?’, buyers’ regret kind. [First Published June 4th] Continue reading …

Consuming Folly

by CantillonCH

As promised, in this episode of Cantillon Effects, I have considered in much more detail whether there is such a thing as a ‘Consumer’ in isolation? I ask if a person’s role as producer is not more important. I look at the part played by interest rates, capital, and entrepreneurs, as well as by the state. I argue that worship of that False God – the ‘Consumer’ – not only slows economic progress in general and encourages heavy-handed and often harmful policies of intervention but also that it leads directly to the wastefulness of Boom and Bust. [To listen instead to Part I and Part II of my podcast on this, please go to CantillonCH at SoundCloud, or search Apple Podcasts here and here and Spotify for ‘Cantillon Effects’] Continue reading …

The Man Who Would Be King

by CantillonCH

With his latest sophomoric outpourings, Ray Dalio confirms our impression that here we have a man who is undoubtedly a first-class money-maker but who has recently quit that lucrative last in order to display his second-rate intellect by peddling distinctly third-hand ideas. [To listen instead to my podcast on this, please go to CantillonCH at SoundCloud, or search Apple Podcasts and Spotify for ‘Cantillon Effects’] Continue reading …

Trade Wars: Those damn’d torpedoes are OURS!

by CantillonCH

For many an age, a principal element of Britain’s strategy in its frequent wars with its Continental rivals was that of the naval blockade.

Throughout the long years of increasing mastery of the High Seas, the nation’s fleet admirals, frigate captains and often forcibly-impressed jack tars were frequently to be found, hovering just beyond the enemy’s horizon in order to deny their French, Dutch, or Spanish adversaries any freedom of navigation, whether for commercial or military purposes. Thus they aimed to limit their foes’ operational reach and slowly to bleed their economies dry.

Indeed, the one great defeat suffered by the British in a quarter of a millennium of oceanic predominance was partly the result of the fleet’s rare inability to secure its grip on the coastline of the Crown’s rebellious subjects in the American colonies – a failure partly due to sheer logistical difficulties and partly to the confusion of purpose which the simultaneous defence of the then more highly-prized Caribbean sugar islands entailed. Continue reading …

Central Banking: It’s alive!!

by CantillonCH

In his recent posting on Linked In, entitled, ‘The death of macro-prudential’, Stuart Trow of the EBRD delivered a well-aimed broadside at the pitiable conduct of the Bank of England and elaborated on some of the malign consequences of its catalogue of errors. Without wishing to single him out unduly for criticism for a piece with whose broad outlines I concur,  I see it as a prime example of where even those who are not wholly in thrall to the cult of ‘Whatever it Takes’ often miss the critical features of that cult’s essential evil. Continue reading …

China: Turn of the Tide?

by CantillonCH

In an earlier Monitor, we alluded to a possible monetary reason for suspecting that the past year’s spectacular (and inflationary) bounce in Chinese revenues and earnings might have reached its high-water mark.

Here we take a more detailed look at the situation in the Middle Kingdom:-

17-08-21 China