Ah, Brexit! What is there left to say that not already been said, most of it either out of folly or falsehood? As regards the overall political backdrop to this lightning bolt of mass discontent, the only thing that is clear is that there is no clarity—neither within Britain nor without. If, as the Good Book tells us, a house divided against itself cannot stand—hard hats on, people! Continue reading
‘Dear True Sinews, what are your thoughts on Brexit? Roger Bootle wrote a piece in the Telegraph yesterday suggesting that just because everyone is saying one thing, it doesn’t necessarily follow they are right Currently, I sit firmly on the fence getting splinters! Neither side is convincing me either way.’
So wrote a friend the other day. What follows is my answer to his question.
Riddle me this, if you will. ‘Europe’ as a concept has perhaps never stood in lower regard, whether in the eyes of its own citizens or of those of us thankfully still beyond its reach. Yet the euro is strengthening – with options showing levels of bullishness not seen since the 2008/9 Crisis – and the likes of Italy and Spain can both borrow for 30 years at much the same rate as can the USA. Ye Gods! It truly must be the Promised Land.
But, forget the fantasy world of central bank-distorted financial markets for a moment and look around at the world beyond the Bloomberg screens.
That the artificial interest rates in evidence in our hugely distorted capital and money markets can be made negative in nominal as well as in real terms is, alas, the curse of the modern age. Though entirely at odds with natural order – as we have repeatedly tried to make plain – they are also a curse that we are unlikely to have lifted any time soon, especially not in a Europe where there is no effective restraint to be had upon the exercise of his awful powers by the likes of a fanatic like Draghi.
In the wake of the so-called ‘Panama Papers’ furore, the push-button issue of the One Percent being found able – OH! THE HORROR! – to shield some of its wealth from the taxman, regardless of the jurisdiction in which its members have chosen to set up shop, has predictably called forth bad economics, dubious legal opinion, and strident political point-scoring in almost equal measure. Continue reading
Please read on for a little light Christmas cheer, with apologies to the spirit of Henry Wadsworth Longfellow.
We are in danger of being blinded by semiotics and so losing sight of substance. We are so convinced that the medium IS the message that we have forgotten to seek for the meaning it is supposed to convey. We have given in to the quack doctors and their unscientific theories of humours in the body economic. We are now so anxious to keep the patient’s temperature minutely regulated that we have neglected to do anything about the malarial parasite which had earlier given him a fever and now has him shivering through a chill.
Perhaps the first great lesson of economics, as emphasized by Henry Hazlitt, is that there is no free lunch. The second, courtesy of Frederic Bastiat, is that if it sometimes appears that there is one, it means that we simply have not looked deeply enough into the consequences of our attempt to enjoy it. The third, the joint insight of several generations of Austrians, is that the attempt to buy one for ourselves by resort to monetary manipulation is eventually doomed to fail. A cynic might say that the fourth and final lesson is that no-one ever wishes to abide by the strictures inherent in the first three rules. Continue reading
One of the overarching characteristics of asset markets is that its participants are prone to harbour the eternal Doublethink whereby the consensus usually revolves around a sempiternal bullishness with regard to equity prices and an equally unshakable millenarian gloom regarding the wider prospects for the human race.
With regard to the latter, it should be recalled that, only a few short years ago, the media were overly solicitous of the morbid declamations of both Hubbert’s Peak Malthusians and their lesser brethren who saw naught in prospect but depleted mineral seams and planetary-scale dustbowls. All of this ilk were much given to tortured Old Testament visions of an imminent, resource-exhausted Dystopia were we not instantly to repent of our unrighteousness and sin and to follow their always anti-economic and frequently anti-scientific prescriptions for society instead.