EconomicReason

“Deflation is set in stone” is what you read sometimes. The argument goes roughly like this: The fiscal and monetary injections amounting to a few trillion are no match for the dozens of trillions of wealth destroyed by the crisis. The underlying logic is that as long as government programs are dwarfed by wealth destruction, [...]

Alecto, Tisiphone and Magaera, the three Furies, are the goddesses of vengeance and guardians of law in Roman mythology. They are called Erinyes in Greek mythology. The Furies intervene not only when a crime is committed against the positive law of a given society, but also when it is against the natural law. For example, [...]

Another excellent analysis by Eric Kraus from Moscow: Too Early to Tell.

Last year brought an increase in moral hazard on a grand scale. One year ago, there was still reasonable doubt whether governments would intervene in order to save illiquid, but solvent systemically important banks, and how punitive the terms of a bailout might be for shareholders and management.
Today, there is no doubt any more that [...]

Another eloquent and scary analysis by Eric Kraus from Moscow: Things that Fall Apart.

Eric Kraus from Moscow: Havoc/Hope.

Equally also, our thrust has been founded on our unwavering belief that extraordinary circumstances must be confronted through extraordinary interventions…
As Monetary Authorities, we have been humbled and have taken heart in the realization that some leading Central Banks, including those in the USA and the UK, are now not just talking of, but also actually [...]

Dyed-in-the wool inflationists and equally convinced deflationists have been arguing for years about the consequences of the inevitable bust of the credit bubble – the former arguing that the only way out is the printing press, the latter pointing to the overwhelming deflationary impact of falling asset prices and falling aggregate demand.
One of the [...]

One cornerstone assumption underlying the viability of the Paulson Plan is that current market prices for subprime and Alt-A products differ by a significant margin from their “hold-to-maturity” value. Reasons for the persistent differences between market prices and a “fair” value are thought to be illiquidity and asymmetric information. If this were indeed true, then [...]

The correlation between gold and oil since the start of the commodity bull market around 2001 has been remarkable. However, from time to time, that correlation breaks down. There have been four breakdowns so far – first during a mini oil bubble which peaked on August 30, 2005, at $70/barrel, during the first gold bubble [...]