Some economists are debating about China’s economic bubble: not about whether the bubble exists (they concur on that point), but WHEN and HOW it will burst. In your opinion, does this threat really exist? And what are the main risks for the international economy posed by the current situation of the Chinese economy? Alfredo […]
Risk-Free Rate: An Irrational Financial Practice
A key concept at the heart of financial theory is the “risk-free rate.” The idea is simple: the rate at which you would lend money to a very secure borrower, one with 0% probability of default. If you lend money to a riskier borrower (one with some probability of default) you would charge a “risk […]
Swiss Franc: It ain’t gonna happen
This colloquial phrase is used when something is considered impossible. That seems to be the case with the Swiss franc, which saw a major appreciation when the Swiss National Bank (SNB) announced it was floating its currency. It is an excellent example for one type of exchange rate. For obvious reasons, Switzerland is a major […]
Fracking Unmasked: the Real Effect on U.S. GDP
In past articles I have commented on the economic growth of the United States and the languishing European economy. Bottom line, in the United States measures have been taken since 2008, while Europe has mostly sat there twiddling its thumbs. Nevertheless, some experts remain skeptical, asking: Is the United States really growing because of its improved […]
The Economy Has Adjustment Mechanisms
We already knew that the economy tends to sort itself out. Not always, of course, since there are no fully automatic mechanisms, except in the field of physics. In human activities, the presence of human beings continues to be a source of irritation. Things would run so smoothly if we were all machines without our […]
