In This Issue...

March 28, 2008 - It All Comes Back to Mugabe

Mugabe.jpg Market-Racket started with an entry about the leader of Zimbabwe. Today, almost three years later, there is yet another episode evolving in the drama of Mugabe's quest to stay in office.

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July 03, 2007 - Nonrivals

knowledge.jpg David Warsh makes a great point in Knowledge and the Wealth of Nations:

"Managing the tension between... furthering the growth of knowledge while ensuring that its benefits are widely shared...is a responsibility of government every bit as important as monetary and fiscal policy."

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June 30, 2007 - Apple Breaks the Rules and Wins

iphone.jpg Women and children wait in line for hours to purchase a small appliance. Customers go hungry and sleep over night in the dirty streets until a darkened store turns on its lights. Even wealthy celebrities are forced to submit to the lack of supply of a desired good. Is this a portrait of a 1980s USSR?

No, it's the Apple store in SoHo.

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Recently...

Diversions

Silver seems to be running out. ApMex's site has been down for weeks, citing "overwhelming demand". Apparently the US Mint has even halted distribution for a while, and if you want to order silver American Eagles, you have to put your name on a list and wait for upcoming shipments.

The Federal Reserve released a statement on subprime mortgage lending this week. The new rules require that lenders only give out variable-rate mortgages if the borrower's financial standing shows that she can currently meet the payback requirements once the rates move higher. This means that if a mortgage is set up as 5% for the next two years, and then LIBOR plus 7% after that, the lender can only make the loan if the borrower could feasibly pay LIBOR + 7% now.

Bush said in a recent WSJ interview that tax cuts were the "main reason for our growing economy" in 2006. Can this be true? What is the current balance between domestic drivers (US fiscal and monetary policy) and foreign drivers (demand in China, Europe, Japan...)?

China and Africa signed 14 deals worth $1.9 billion during a summit of 48 African heads of state in Beijing last week. Some of Africa's debt to China will be cancelled, a rural telephone system will be built in Ghana, an aluminum factory will be built in Egypt, and a highway will be constructed in Nigeria. The successful meeting highlights the dependency of China on foreign resources to sustain its rapid growth.

The Fed left rates unchanged today (Aug. 29), the first halt since mid-2004. The only dissenting voter on the committee was the chief of the Richmond Federal Reserve bank, Mr. Jeffrey Lacker. Could this be a sign that the US is tilting more towards recession worries than inflation worries?

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