Africa and the “resource curse”

Sub-Saharan Africa (SSA) is abundantly endowed with natural resources, whose value has increased in recent decades. But this has not led to increased benefits for the majority of the people. A recent IMF working paper sheds more light on the challenge of making Africa’s wealth work for most Africans. Ahead of the forthcoming annual CambridgeContinue Reading

Greece repays IMF using the IMF’s own “currency”

Greece this week repaid €750m to the International Monetary Fund (IMF) which it funded by drawing on its SDR account at the IMF. This legitimate but unusual move caught many commentators by surprise and drew attention to the little known SDR. * The SDR – Special Drawing Right – is something of a curiosity inContinue Reading

Still debating the causes of the world financial crisis

Major world historical events such as the financial crisis that swept much of the world in 2007-09 typically have multiple causes. In 2014 there was an outpouring of new books about the causes of the First World War which started a century before. Historians continue to disagree about why the nations of Europe went toContinue Reading

How can we tell if a bank is strong?

This week it was reported (*) that the European Commission was investigating some southern EU nations to see if they had unfairly and illegally allowed banks to count deferred tax assets towards their capital. What does this mean and what does it tell us about bank financial strength? We can assess bank strength by askingContinue Reading

Why forecasting exchange rates is near-impossible

As an economist, over the years I’ve been asked two things repeatedly by people who hold economics in touchingly high regard. One is, which way will house prices move? And the other is, what will happen to the value of the pound against the dollar (or euro or yen etc.). I’ll defer the first questionContinue Reading

Nice new cafe opens in Cambridge

Feeling guilty about the way that working on the first draft of my book about nuclear power in the UK is squeezing out blogging at present, here’s a quick one on a new cafe that recently opened and which brings something new to the crowded and mostly well provided Cambridge cafe society. I’m not talkingContinue Reading

Barriers to negotiating mutually beneficial outcomes: the example of Greece

The current stand off in talks to renegotiate the Greek debt bailout shows the difficulty of achieving an outcome that could be good for both sides. * Why lenders sometimes rationally forgive part of a loan There is plenty of excellent commentary on the Greek debt situation, arising from a newly elected Greek government whichContinue Reading

Letter from Mumbai

I recently visited Mumbai for the first time in over ten years. A lot had changed and India may be poised to take over from China as the fastest growing major economy. * Mumbai is the commercial, financial and film-making capital of India. I visited the city several times from 2003-2005 to set up aContinue Reading

Western capitalism is no longer working well for most people

Since the collapse of communism, capitalism in its various different flavours is the only realistic option for countries wanting high living standards. But the US/UK variant is failing to deliver mass prosperity, which threatens to undermine it and generate a potentially ugly backlash. * The US, Sweden and Japan are all capitalist societies, meaning thatContinue Reading

The oil price and short and long run supply

The biggest topic in the global economy remains the oil price. It’s notoriously difficult to forecast commodity prices but how can we make sense of what would push the price up or down? A basic demand and supply framework gets us quite a long way * A market consists of demand, supply and some mechanismContinue Reading

Why is it riskier to be a worker than a capitalist?

We take it for granted that capitalists hire workers rather than workers hiring capital, but why? The main reason is the difficulty of diversifying labour, which means that workers ideally require some form of insurance to offset their concentration of risk. But that is only imperfectly available through the market and this is an importantContinue Reading

Letter from Sanya

A group of us from Cambridge visited the resort of Sanya in China’s Hainan province, to take part in the annual Sanya Forum and launch our China Advisory Council * The Sanya Forum can be loosely thought of as a sort of Chinese Davos, though confusingly China has its own official summer Davos meeting. It’s aContinue Reading

The monster returns? The revival of the CDO

CDOs – collateralised debt obligations – were widely seen as the main villain of the financial crisis. CDO issuance peaked in 2007, collapsed in 2008 and is now gradually recovering. Should we be worried? * The latest Bank for International Settlements Quarterly Review has an article about the slow revival of CDOs. The CDO wasContinue Reading

And three more quotations on my birthday

“When I was five years old, my mother always told me that happiness was the key to life. When I went to school, they asked me what I wanted to be when I grew up. I wrote down ‘happy’. They told me I didn’t understand the assignment, and I told them they didn’t understand life.”Continue Reading

Interview in China Daily on the possible Chinese investment in new British nuclear plant

UK nuclear plant may be a game changer  China Daily is an English language newspaper, available in many hotels in China and published abroad. It’s often seen as a window (sometimes a rather opaque one) into Chinese government thinking, as it comments on policy, often in a fairly critical way. I was interviewed in BeijingContinue Reading