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Chosen extracts Discomfort index = unemployement rate + inflation rate 1971. Nixon announces wage and price controls to cure inflation 1975. Ford deregulation as advised by the Chicago School (Milton Friedman and al) " Deregulation greatly increased the economy's flexibility and resilience " 1979. Fed Chairman Volcker decides to clamp down on the amount of money available in the economy in order to reduce inflation. This caused economic misery - severe recession - but after 3 years, inflation was fully in check 1990. GDP replaces GNP as standard measure of aggregate output. 1991. Fall of the USSR . Chaos -> End of price control -> Hyperinflation -> Massive privatization -> Oligarch rule "Forced to make the shift overnight, the soviets achieved not a free-market system but a black-market one." Dutch disease . In 1970, natural gas was discovered in the Netherlands. Foreign demand for gas exports drove the price of the currency up, making all other e

Warren Buffet has bet 1 million dollars that over the next 10 years, the S&P500 index will beat a selection of carefully selected Hedge Funds. His argument is that huge Hedge Funds fees ( 1.5% management fees + 20% performance fees + 1% management fee for the fund) will eat up any potential gain. Hedge Funds focus on absolute returns and low volatility so they tend to do better when the markets go down. As a result, it's likely that the result of this bet will depend on how the markets and the economy overall does. Who do you think will win? Join the survey

Trade Idea Now is a good time to start investing in India. Fears of inflation and global recession have taken the Indian index down. It is now trading at 4,500 down from 6350 in early January (30% loss). Although the Indian economy is forecasted to slow down, it will still do reasonbly well: JPMorgan predicts a GDP growth of 7% in 08-09 compared to 8.7% in 07-08. The inflation risk comes from surging commodity and food prices. I don't believe that commodity prices surge will last forever: it has the caracteristics of a bubble (just remember that a few years back oil was trading at $17, has now reached $135 and an oil company executive recently predicted $250). And by raising rates, the Federal Reserve of India has shown that it is ready to fight inflation. NIFTY now trades at 15.7 times the 12M forward earnings. That is a discount from the S&P500 who has to face a US recession. Incredible, isn't it? Lyxor offers an easy product to bet on the rise of the Nifty index: the Ly

A recent study showed that UK companies paid much more taxes that French or German companies. Tax paid on value-added: - 6% Germany - 8% France and Germany - 12% United Kingdom

Send to a Friend Print Article View as PDF Permissions/Reprints Thoughts from the Frontline Weekly Newsletter In this issue: The Problem with the Euro The Euro at Par with the Dollar The Euro at Par with the Dollar About five years ago, I said that the euro, which was trading at about $.88 at the time would rise to $1.50 and then fall back to $1 over the course of a decade or more. It would be one huge round trip. By the way, giving credit where credit is due, that opinion was crystallized over a long dinner with bond expert Lord Alex Bridport and several companions in Geneva. The logic was compelling then and it still is now. We are halfway through that decade long trip and it remains to be seen if we get back to parity. I think we will. Why would the euro fall? Because the currency is still an experiment in cooperation. At some point, one or more of the weaker European countries is going to need more monetary stimulation than the majority of the countries in the union, for a var