The process by which large numbers of people become convinced of things that are not true has always been an important feature of political and economic life. Believing in Santa Claus is part of the joy of Christmas - but fantasies about great returns on hedge funds or unprecedented commercial opportunities of the internet is a different story.
The only certainty, as Keynes put it, is that in the long run we are all dead. This week, John takes a look at the much debated rise in house prices in the context of previous speculative booms and busts.
The efficient market hypothesis is 90 per cent true, and you will lose money by ignoring it. However, judging by Warren Buffett’s fortunes, a few skilled searchers might find rewards in the remaining 10 per cent worth chasing.
Treating the value of share options as a cost makes a dramatic difference to the reported profits of many technology companies. And it points to a broader issue. In the knowledge economy, the distinction between employee remuneration and shareholder return is fundamentally changed
Can conventional economic theory be extended to understanding Christmas gifts? Maybe it can, but this would require a more subtle understanding of human behavour than the idea of rational economic man. This article shows that we do not simply value gifts in terms of the cost of the purchase.
Mutuality seems to be dying as Equitable and Bradford and Bingley relinquish it and the water regulator rejects Kelda's proposition. Perhaps not surprisingly - mutuals suffer from the problems of too little capital - or too much. Is there a possibility of a sustainable constitution for a mutual business?
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