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Loans to a King do not always pay

Sovereign debt repayment is more about politics than economics.

How not to measure a business

I have always found it hard to interest people in measurement issues, but the way we record things in business and finance has a large effect on what people do.

To buy or not to buy?

The housing market is like other financial markets: price expectations create momentum that drives prices arising from normal affordability ratios. But they must eventually return to these norms through “mean reversion”, creating the endemic booms and busts of cycles.

A good economist knows the true value of the arts

Activities that are good in themselves are good for the economy, and activities that are bad in themselves are bad for the economy. The only intelligible meaning of “benefit to the economy” is the contribution – direct or indirect – the activity makes to the welfare of ordinary citizens.

When a bonus culture is just a poor joke

Teachers and doctors strongly resist the introduction of a bonus culture: not just because they resent measurement of performance and accountability for their activities – although they do, and with little justification – but because they oppose importing the culture of assembly lines.

Of cows, communities and credit default swaps

Insurance is partly a market in securities, partly a mechanism for collective action; a means by which risks are traded, but also a means by which risks are socialised.

Markets after the age of efficiency

Economics is not so much the queen of the social sciences but the servant, and needs to base itself on anthropology, psychology – and the sociology of ideologies.

First-class driving makes little economic sense

The benefit of road improvements is principally the reduced time and strain on private motorists, not the economic advantages to road transport operators: that lesson should influence the way we plan our road networks. Fast roads for light traffic are much cheaper to build than superhighways.

Dedicated follower? Or asset allocator?

Three simple rules – pay less, diversify more, and be contrarian – will serve almost everyone well who invests.

Is insurance worth paying for? Probably

Think probabilities and be detached. It’s hard advice to follow. That is why the financial services industry is better off than its customers.