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Written by Eben Esterhuizen
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Tuesday, 11 December 2007 |
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Why all the fuss about the dangers of a U.S. recession? Some academics point out that recessions are an important part of the business cycle because they help squeeze out economic excesses. When the Fed unexpectedly cut interest rates by 50bps in August, the organization made it clear that it was going to do everything in its power to prevent a recession. But doesn't this create a much wider form of moral hazard? If the Fed signals that it will always aim to prevent recessions, future investors may take on unnecessary risks and undermine the stability of markets. I'd argue that this moral hazard may already be embedded in China's notorious asset bubble. |
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Last Updated ( Sunday, 16 December 2007 )
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Written by Eben Esterhuizen
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Wednesday, 05 December 2007 |
Photo:Grooble, Creative Commons, Flickr
If you are predicting an Armageddon-style collapse of the once glorious U.S. dollar, it may be time for a reality check. The most recent Economist points out:The dollar's place as a reserve currency always seems to be questioned when it falls. Weakness in 1977-79, 1985-88 and 1993-95 was each time met with predictions that governments were about to switch their reserves into another currency.
If the dollar has survived previous onslaughts, why are we so quick to dismiss the currency this time around? |
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Last Updated ( Wednesday, 30 July 2008 )
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Written by Eben Esterhuizen
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Wednesday, 28 November 2007 |
Photo:Manuel Van De Weijer, Creative Commons, Flickr
After a brutally volatile year in financial markets, U.S. stocks are now back to levels from the start of the year. Wall Street's dreary performance in 2007 will inevitably lead to a lot of soul searching among investors, and a lot of questions remain unanswered. Now that the bears have enjoyed Thanksgiving, will the bulls come back with a vengeance and celebrate Christmas? To answer this, we need to ask another question: Will the credit crisis spill over into the broader economy and crush the consumer? |
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Last Updated ( Sunday, 09 December 2007 )
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Written by Eben Esterhuizen
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Wednesday, 14 November 2007 |
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On Friday afternoon, May 17, 2002, a butcher named Edwin Lopez was alone in his downtown Los Angeles butchery. He was about to close shop for the weekend when he accidentally locked himself in a walk in freezer. He spent hours yelling and banging on the door, but to no avail. There was no way to open the freezer from the inside, and he quickly realized that he would freeze to death. He had a clipboard, some paper and a pen, and started writing messages to his loved ones as he surrendered to his fate. His letters ended with a final passage: “I can’t write anymore, my fingers are frozen stiff. Tell my darling wife I love her.” |
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Last Updated ( Monday, 26 November 2007 )
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Written by Eben Esterhuizen
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Sunday, 11 November 2007 |
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A picture, even if it is as aesthetically pleasing as this piece of garbled mish mash, says a thousand words. In a previous article I suggested that coordinated central bank intervention to save the U.S. dollar from its slippery slide could be an effective tool to knock down lofty oil prices. Lower oil prices would hurt Iran where it matters most and halt their nuclear ambitions. But let’s take this idea a step further - in the same way a strong U.S. dollar could prevent a confrontation with Iran, does a strong U.S. dollar improve stability in the Middle East? |
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Last Updated ( Sunday, 18 November 2007 )
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