Perspectives
Market Reaction to the UK’s Fiscal Event
September, 2022
UK financial markets have reacted extremely badly to the “fiscal event” launched by Kwasi Kwarteng, the new Chancellor of the Exchequer. Every British financial asset has slumped: equities, gilts, and the external value of the pound. House prices look vulnerable to a sharp rise in mortgage rates as the Bank of England debates how to […]
Trickle down or bottom-up economics? It’s the wrong question
September, 2022
Our new Prime Minister and Chancellor want to change things for the better. Their economic policy is naturally a little un-fleshed, but the skeleton of the programme is visible; it is a return to a Thatcherite or Reaganite past informed by Hayek, Friedman, Keith Joseph and Enoch Powell, the latter two described as “very great […]
The world has changed, most people just don’t see it
September, 2022
Since the financial crisis of 2008, the attention of too many investors in the West has become focussed on the expectation of persistently low and lower interest rates, and ever higher valuations for equities in companies imbued with a lot of future hope value. All other things being equal, technically, a lower interest rate (the […]
Whither Markets?
August, 2022
It is often said that “markets go up on an escalator and come down in a lift.” Unquestionably it has been a very poor first half for financial markets. Some of the reasons are clear and obvious; others reflect a more subtle but rapidly changing economic environment, particularly with respect to inflation and a reversal […]
Of Prosperity and Pachyderms
July, 2022
May we talk about the elephant in the room? In the course of British history, we have been invaded by the Romans, pillaged by the Vikings, and conquered by the French. Indeed, Norman French is still used during a Bill’s passage through Parliament and the Royal Assent, at least in part, is given in French. […]
Looking for a Steady State
July, 2022
During the credit crisis of 2008 and the subsequent Euro crisis of 2010, we heard a lot about, “kicking the can down the road.” It was a familiar trope in the financial press at the time; policymakers had no real idea how to solve the problems that had presented themselves, and like the Dutch child […]
Which is better, real, or nominal GDP?
July, 2022
A rise in nominal GDP makes you feel good, but only a rise in real GDP can make you wealthier. In a normal functioning economy prices change all the time. Some prices will rise but others will fall, leaving aggregate prices relatively unchanged. Fluctuating price is not inflation; it is only when prices in aggregate […]
Markets are doing what they do, we must keep our focus
July, 2022
A market is made of a buyer and a seller. If a seller hears that their main competitor has just gone out of business, you could not blame them if they put up the price of a good in their shop as their customers now have less choice in the short term. Since late February […]
The benefits and problems with QE
June, 2022
Much like the recent heatwave, Inflation has once again dominated the headlines as the latest inflation print in the UK breaks through recent records. Consequently, many pundits debate causes and offer solutions to central bank policy makers within developed economies. We feel it is important to remind readers of the origins of the inflationary surge […]
Inflation: A Japanese Perspective
June, 2022
Many years ago, the influential economist, Paul Krugman, published a paper where he identified the emergence of a “liquidity trap” in Japan, a phenomenon that, post the Keynesian interpretation of the Great Depression, many economists’ thoughts were confined to the past. The experience of Japan over the last twenty years or so not only exploded […]