Recently in Economics Category

The Monfort Plan (Wiley Finance, April 2010) presents the new architecture of a redefined capitalism. This summary piece introduces the five year action plan and explains why a new architecture may be needed in today’s environment.

Today’s capitalism is based on a vintage architecture that dates back to the 1940s and the American effort to pull the world away from Nazi Germany and Soviet communism. It was then when the four institutions of this old architecture were designed: the World Bank, the International Monetary Fund, the United Nations and the GATT. The old architecture designed by the Bretton Woods elites served a purpose: it contributed to the economic resurgence of Western Europe and brought peace to a continent that had fought wars for centuries.

Subsequent to the design of the new architecture the Truman Administration proposed and implemented the Marshall Plan, the plan for the economic recovery of 17 countries in Western Europe. The plan enabled the vision of Jean Monnet to come up with a European Community of Coal and Steel, the parent of the European Union. These were times of courage and vision. The great changes of the 1940s and 1950s were precipitated by the devastation of the two World Wars and the economic collapse of the Great Depression. The environment set the basis for thirty years of phenomenal economic growth on both sides of the Atlantic.

The second half of the twentieth century had two flavours that modeled the world's geo-political pattern of both Hemispheres: the cold war and the emergence of neoclassical economics fathered by Milton Friedman and Alan Greenspan and implemented by Ronald Reagan and Margaret Thatcher. Neoclassical economics brought about an increasing mathematical sophistication where economic sub-fields such as financial economics prospered thanks to the work of gifted mathematicians such as Merton, Black or Scholes. Monodimensional utility functions prioritized profit maximization over other variables such as human dignity or environmental sustainability. Academia was captured in the allure of models. Our economic policy-makers were constrained by mathematical models that worked on paper.

In a speech on the outlook for the world economy, OECD Secretary-General Angel Gurría spoke about the impact of the financial crisis and OECD's work to produce a more inclusive globalisation.

The financial system is a conveyor belt through which the economy works. And if the financial system is partially blocked or paralysed, as it is now, then the economy cannot work normally.

Continue reading: The Global Economy and OECD

“From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it’s bubble time!” By now you have probably heard this quote by Jeremy Grantham in his letter to investors (which includes vice president Dick Cheney and a host of other high profilers) discussing a six week trip around the world and the pending bubble popping events to come (at least by his predictions). Grantham is not the only forecaster that has mentioned the overvalued prices of assets across the globe. Most recently (May 23rd), in one of Alan Greenspan’s consulting appearances he mentioned that Chinese markets were at unsustainable levels.

Martin Weiss, Ph.D. examines the global marketplace and the six giants leading the economy. In this issue of Money and Markets, Dr. Weiss discusses the high demand for natural resources due to the booming global economy.

Jupiter, Fla. (PRWEB) April 26, 2007 -- Martin Weiss, Ph.D. examines the global marketplace and the six giants leading the economy. In this issue of Money and Markets, Dr. Weiss discusses why China, India, Japan, Brazil, Australia and Canada continue to outperform the Dow.

The Issue Is Not China’s Stock Markets – It’s the Model

By Scott B. MacDonald

In late February 2007, the global stock market meltdown started in Shanghai. As The New York Times noted on March 4, 2007:

“Less than a week ago, it might have seemed preposterous to suggest that a 9% fall in the Shanghai stock exchange could jolt markets across the world, triggering declines in everything from European stocks to American corporate bonds.”

In the last 10 years three billion people have started to climb the first rungs of the Global economic ladder and are lifted out of poverty and ignorance. The shift of wealth is set to accelerate as the “sea change” of prosperity and economic growth swing from the developed world shift to the emerging economies. These people are working 60 hours a week, saving and investing, and going to school a recipe for success wherever you reside.

For 2,000 years, foreigners have seen China as the golden dream. Time after time, they have learned to their regret that it is a gilded illusion; and it is happening again.

During 2006, foreign investors tripled their investments in the Chinese equity markets. Even with that, foreign capital constitutes only 10% of the Shanghai (SSE) and Chenzhen (CSE) stock exchanges market value; and they have absorbed the $12 billion with scarcely a ripple.

An Interview with Wilbur L. Ross, Jr., Chairman and CEO, WL Ross & Co., LLC

With Keith W. Rabin, President, KWR International, Inc.

Wilbur Ross may be the best-known turnaround financier in the U.S., having been involved in the restructuring of over $200 billion in assets around the world. In 1998, Fortune Magazine called him "the King of Bankruptcy.”

Forbes and Jason Papier, Co-host of #1 Personal Finance Podcast, Discuss Flat Tax, Other Issues

SUNNYVALE, Calif.--(BUSINESS WIRE)--“Pro Money Talk” – the #1 rated personal finance podcast – today announces its latest episode, featuring Steve Forbes, CEO and editor-in-chief of Forbes. The episode is available for download via iTunes or at www.promoneytalk.com.

Everyone with some financial sense knows that the markets (S&P 500 specifically) have been continually hitting new highs or at least new multi-year highs respectively. The strange thing is that we have not seen many corrections in that period. In fact, the S&P 500 is on quite an impressive streak right now (see below). Typically, when the market makes a move higher, it tends to make several corrections on its way up, but that has not been the case this past year.