Debt levels have grown, but not nearly as much as chains of interconnected borrowers and lenders. Poor capital allocation has encouraged companies and individuals to step in where banks don’t. Longer chains could magnify the effects of a default and turn confidence to chaos.
The Russian president fears real democracy in Ukraine as much as at home. And he’s afraid of a disruption of trade and financial ties if Kiev turns towards the EU. If the U.S. and Europe want Putin to back down, they have to convince him that he’s wrong on both counts.
Felix Martin says that money isn’t a commodity, but a system of credits. This insight allows his book to rewrite monetary history in an eye-opening way. It also suggests that the way economists approach finance and recessions is hopelessly wrong.
The Tesla CEO reckons he can kick off a virtuous circle by doubling world lithium-ion battery production. Musk expects that to slash costs by more than 30 pct and add a turbo boost to Tesla’s sales. It may also leave electric pylons looking as outdated as telephone poles.
A new IMF study finds inequality makes economies smaller. Efforts to redistribute income may make growth higher and more sustainable. That looks right. But the challenges are huge. Governments must be honest and get the policies right. The study’s lessons could be misapplied.
Diane Coyle’s new book discusses the many weaknesses of GDP, the standard measure of economic success. Why do policymakers still rely on it? Her answer is that the alternatives are no better. That’s fair, but her analysis leads to a more aggressive, and compelling, conclusion.
An independent Scotland would find it difficult to adopt either the pound or the euro, after snubs from London and Brussels. A brand new currency would be logical, but risky. Whatever the option, assuming their share of UK debt will leave the Scots with little wiggle room.
The industry’s annual U.S. confab is chock-a-block with whiz-bang products like Bluetooth-enabled toothbrushes and funnel-cake corn dogs. But it’s just empty calories if it doesn’t lead to robust top lines. Cost-cutting alone can’t justify today’s expensive share-price multiples.
For an industry wrestling with the end of a once-in-a-lifetime demand surge, big miners aren’t faring badly. Prices are still high, and results at Rio Tinto and BHP Billiton show austerity working. Supply trends favor lower ore prices, but diggers may reap big profits for a while yet.
The $1.8 trillion sector is the enfant terrible of Chinese finance. The inherent mismatch between long-term loans and shorter-dated investments means trust products depend on confidence to survive. Yet widespread failures are less of a risk than reckless bailouts.