It's "OK" Until Minsky Comes Calling!

There is a strange story in today's Business Daily to the effect that "experts back Treasury's plan to pay debt using Eurobond funds". It's strange in two respects. One, it attributes the views to one expert while giving the impression that some kind of polling amongst economists and other experts was the basis of such assertion.

But two, it seems to suggest that economists are now happy with a Ponzi scheme, for that is what it really is. There is something that in our school is called the "Minsky moment" - named after a great economist by the name Hyman Minsky. This is when there a sudden collapse of asset prices after a long period of growth, sparked by debt or currency pressures. Are we courting it?

No expert worth his or her name will call for an unqualified Ponzi programme. Kicking the can down the road will catch up with us.

Financial Illiteracy

Some reporter thinks that the Central Bank of Kenya (and by extension all central banks) is in competition with commercial banks in the profit maximization agenda? Seriously?

This is not some mean joke, but a true story as told by The Standard. Talk of financial illiteracy  disguised as business journalism.

Economic Outlook - Tagging Along with Clever People

There are moments when you find yourself having an interesting conversation.  Last week's engagement - Jan Mikkelsen of the IMF (very cautious), Razia Khan of Standard Chartered Bank (very eloquent), and David Luusa of Standard Chartered Bank (never missing a moment to sell) and yours truly (well, not sure what will be the right description) - was superbly moderated by Aly-Khan Satchu.