Wrong About Japan
“What most likely happened was pedal misapplication.” So concluded an official of the National Highway Traffic Safety Administration, the US body which has just published its report on the spate of accidents involving Toyota cars.
When China Hits a Bric Wall
Who has survived the global credit crisis in the best shape? As Chou En Lai said about the impact of the French Revolution, it’s still too early to judge. The snap verdict that China is the big winner and the US and rest of the old G7 are big losers is already looking questionable.
Hubble, Bubble, Emerging Trouble
Emerging markets used to be known as markets you couldn’t emerge from in an emergency. History is littered with examples of financial disasters in young fast-growing countries, from the Argentinian default of the 1890s to the Asian crisis of the mid-1990s.
China Gets Japan Wrong
By orchestrating a massive appreciation of the yen in the mid 1980s, the US condemned Japan to decades of stagnation and ended the challenge to its own economic hegemony. Effectively Japan was forced to commit financial hara-kiri.
Yen has edge over gold in battle for supremacy
There are not many financial assets that are priced higher today than before the Lehman shock in September 2008. Two that have done investors proud are the yen and gold bullion.
How Not To Invest In Emerging Markets
Imagine you are starring in the financial equivalent of the “Life On Mars” TV show. You wake up one morning to find you have time-travelled back to the early nineteen nineties. The Berlin Wall has just fallen. The triumph of capitalism is unleashing a tsunami of globalization as billions of people join the market economy as workers and consumers.
A Hedge Fund Manager Hits Back
John Veals is the villainous hedge fund manager in Sebastian Faulks’ best-selling credit-crunch novel “A Day In December.” He is a man with no friends, no culture, no interest in anything other than making money. His nefarious machinations lead to the failure of a major British bank, enabling him to make huge profits from his short positions. Other characters in the novel include Gabriel Northwood, a virtuous lawyer, and Roger Malpasse, a retired banker of the old school.
Why Di-Worsify Into Commodities?
Di-worsification is what you do when you invest in mediocre assets for a mediocre reason – for example, because a statistical model has told you they reduce risk. Thanks to the boom in commodities over the past decade, they have become a favoured choice for di-worsifying institutions everywhere. The profusion of ETFs, funds, indices, and brokerage coverage has made them unprecedentedly easy to access for individuals too. However the long-term performance of commodities is pathetic, and there is little reason to believe that “this time is different.”
Japan’s Mythical Debt Crisis
How did the people who sighted the first black swan respond to the shock? After the collapse of the assumption that all swans were white, did they then conclude that swans could be any colour – red, green, or blue?
China rushes towards a Japan-style bubble
Emerging markets, it seems, have had a good crisis. In contrast to the debt-ridden G7 economies, they have quickly resumed their growth trajectory. No surprise, then, that US emerging market mutual funds are experiencing record inflows. The stellar performance of the Brics markets – Brazil, Russia, Indian and China – is due to continue into the distant future.