11 Aug 2010

More People in the Financial Sector Using the A-word in Public

Financial Economics 4 Comments

Caitlin Long, of Morgan Stanley, was actually going back and forth with the FT editor at Mises University about this piece. (To be clear, Caitlin was at Mises U telling me about it. The editor of FT was not there.) An excerpt:

If Hayek were alive he would caution businesses to be alert for the formation of new bubbles, especially in long-term businesses in which losses may not yet be fully recognised and price signals may still be distorted. He would agree with the investment caution that businesses have exhibited in the face of artificially low interest rates, and advise corporate decision makers to be alert if a project appeared profitable solely based on interest rate assumptions.

Where might the costs of the current loose money show up over time? It is impossible to predict with certainty. But low interest rates for a longer period increase the likelihood that businesses will miscalculate. Early signs of an investment recovery are showing up in such long-term businesses as industrial and transportation equipment and machinery. We will soon find out whether this recovery is real or the beginning of another bubble.

Also, in retrospect I don’t think Caitlin said “Austrian” in the article. But she cites Hayek all over the place.

4 Responses to “More People in the Financial Sector Using the A-word in Public”

  1. AC says:
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    Hey Robert, off-topic but are you still planning to write a piece on the “Zeitgeist” money supply argument? I know you’re busy, but I’m curious to read it.

  2. mario rizzo says:
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    The frustrating thing is that either you or I could have written a much better version of this article. I have never been able to get anything published in the FT — whether on macro or on paternalism. I have tried many times.

    • bobmurphy says:
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      Hmm, I guess it’s better to have submitted and lost, than never to have submitted at all? (I don’t think the PR people at PRI have ever shopped something by me to FT. I’ve been shot down by the WSJ many times, for sure.)

      I’m surprised with your NYU credentials you were getting shut out. Maybe you need to start hanging out with Roubini and make some contacts.