If something can’t go on forever, it won’t. That is the first law of practical economics. It may be hard to predict exactly how an unsustainable trend will end, however. And as the retail sector is finding out right now,…
Default swaps carry uncertain risks
It is dangerous when anyone plunges into business deals they don’t fully understand. Over the past 25 years, the securities industry has developed myriad new financial instruments intended to better manage risk. But it’s becoming clear that not everyone dealing…
Loan supply won’t create demand
You can lead a horse to water but you can’t make it drink. Keep that in mind when reading how much the Fed has driven down interest rates. In finance, you can increase the amount of money available for lending,…
Politicians see letters from economists as junk mail
The collective wisdom of economists is valuable. With it and $3.75 you can buy a gallon of unleaded gas nearly anywhere. Yes, that is a sour-grapes reaction to John McCain and Hilary Clinton’s scorn for a warning from economists that…