Lord William Rees-Mogg is the former editor of The Times and is a member of the British House of Lords. He has been credited with accurately forecasting glasnost, the fall of the Berlin Wall and the 1987 market crash. His often controversial insights can be found in the UK edition of Capital & Crisis and Strategic Investment in the US.
For about 10 years Simon Jenkins and I were both writing columns for the London Times. Simon is still writing a column for The Sunday Times, but has shifted his weekly column to The Guardian. However, he has written something in The Sunday Times that has provoked a very interesting reply from a reader, a copy of which has been sent to me.
Over the past few days we’ve seen some pretty scary stuff. The prevailing emotion in the markets seems to be uncertainty and fear. Stocks have gone down, the dollar has followed. We’ve also seen oil tick up with gold shooting like a rocket. Who could have seen any of this coming?
In the last year, the euro has decisively outperformed the dollar and the pound. Some commentators have argued that this means that the euro is the currency of the future, and that the dollar has been relegated to second place. However, there are problems about this argument, says Lord William Rees-Mogg in Whiskey and Gunpowder.
There are two way of studying economics: mathematical and historical analysis.
If you study economics from a mathematical view, the credit crisis must have come as something of a shock, says Lord Rees-Mogg.
But if you’re an economic historian, recent events won’t surprise you at all. Historical economists don’t see timing as any more predictable for economic shocks than for earthquakes. But they recognize a cycle of debt when they see on. And they know that the liquidation of debt has a deflationary effect…
The outlook for the US economy isn’t pretty.
As we reported earlier this morning, economists surveyed by Bloomberg estimate US growth will slow to 0.5 percent from October to December.
The US economy is not yet officially a recession. But most commentators are treating it as such, including Lord William Rees-Mogg, former editor of The Times and regular contributor to The Daily Reckoning UK. Lord Rees-Mogg says there won’t be a recovery until the first half of 2009…
Sometimes economics works like a domino effect. When one area of the economy goes bad, many others will follow. So many areas of our economy are related, and many are related closely. From the way population effects food supply, to how the price of oil can change almost anything.
On the whole, I have a better record of forecasting American elections than British. Distance makes one see the developments more clearly.
There seems to be two important consensuses coming from the world’s pre-eminent economic minds. One is that the inflationary policies of the Federal Reserve are setting the economy down a dark path. The other is that the guys in charge of the Federal Reserve are the only ones who don’t realize this.
The Fed once again cut interest rates on Wednesday, this time by a quarter of a percentage point. So what does this mean for the U.S. economy as well as the central banks in Europe?