Central banks have balance sheets like other banks and in theory their liabilities can exceed their assets, meaning they are insolvent. But they can always create new money so they can settle their debts. So can they really go bust? … Continued
Pretty much all financial crises involve too much debt. The global financial crisis was triggered by excessive lending for US property purchase. The slow recovery from the crisis is probably because of too much debt. China’s successful plan to insulate … Continued
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 … Continued
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 … Continued
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 … Continued
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 … Continued
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 … Continued
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 … Continued
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 … Continued
I recently visited Mumbai for the first time in over 10 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 … Continued
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 … Continued
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 … Continued
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 … Continued
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 … Continued
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 … Continued