Today economic theory is used as the intellectual foundation for a political stratagem that says you do not know what you truly like, and in particular you do not know your economic self-interest, but luckily for you we are here to fix that. This is the common strand between QE and Obamacare.
Market mavens have increasingly turned their talk to a possible “melt-up” scenario in the stock market. The big fear entering 2014 is that another runaway freight train-type stock market, like the one preceding the 2008 crash, is gathering momentum.
Healthy and sustainable bull markets tend to lift all equity boats around the globe. As shown in the chart of the China ETF below (FXI), Chinese stocks struggled for the first six months of 2013. Last week’s major announcement from Chinese leaders helped FXI push to a new five month high.
With the latest inflation data of the euro area, fighting the risk of deflation is a new policy challenge for the ECB. While the interest rate cut has been a reasonable policy choice, policy options are unclear if the price decline becomes persistent.
While economics depends on man’s rational side, humanity nonetheless clings to the irrational. We want to have our cake and eat it. We want a free lunch, free health care, free schools, and free retirement. But nothing is free. Someone must pay. Economic science says so.
The story of the Venezuelan economy and its troubled currency, the bolivar, can be summed up with the following phrase: “From bad to worse”—over and over again. Yes, the ever deteriorating situation in Venezuela has taken yet another turn for the worse.