Today Singapore and Japan, Tomorrow China
It has suddenly become fashionable to be concerned about China’s growth rate slowing down. This is not a matter of a short-run cyclical downturn, with normal service being resumed shortly as the economy roars ahead once more. It is a worry that there will be a permanent slowdown by the end of this decade. Instead […]
International Airlines Group: a ‘fantastic object’? The psychology of mergers and acquisitions
International Airlines Group (IAG), formed in January 2011 by a merger of British Airways and Iberia, is in the news. Operating losses at Iberia in the first nine months of the financial year are believed to be in excess of £200 million. Since the start of last year, IAG’s shares are down by nearly 40 […]
Policy makers have learned from the mistakes of the 1930s
Nobel Prize winner Paul Krugman will shortly be in town. With Lord Richard Layard, he will be calling for more public spending and borrowing. The two have issued a ‘Manifesto for Economic Sense’. But is it? The opening sentences make dramatic claims: ‘More than four years after the financial crisis began, the world’s major advanced […]
How to unpick the apparent paradox of falling GDP and rising unemployment
GDP estimates are eagerly awaited in the City, and dominate the media headlines. Huge significance is attached to arithmetically trivial differences, whether between market expectations and the announced figure, or to subsequent revisions to the data. But GDP is not something which can be put in a set of scales, say, and measured accurately. The […]
Why Can’t Debt Just be Inflated Away?
The debt problems which the UK and Europe currently face are essentially ones of political economy. Basically, there is a lot of debt around and the simple question is: who is going to pay for it? All the economic theory in the world does not get around this fundamental issue. Traditionally, bondholders paid. The real […]
Ignore the IMF: Economic forecasts have a history of being unreliable
So the IMF has slashed its growth forecasts for the UK economy. This august body has just pronounced that Britain’s economy will come to a virtual standstill. Growth in 2012 will be just 0.2pc, compared with the IMF’s April forecast of 0.8pc growth. It cut its 2013 growth forecast by the same margin to 1.4pc […]
Royal Bank of Scotland fiasco shows the power of networks
The last week or so has seen complete mayhem in the Royal Bank of Scotland and its subsidiaries. A computer glitch has caused their payments systems to collapse. Monies have not been processed, 17 million customers have been unable to access their accounts and pay their bills. The impact for RBS has been catastrophic. So, […]
