China's Economic Growth

China has experienced an unprecedented period of economic growth. Never before has an economy grown so quickly over a sustained period of time. Admittedly, China was starting from a very low base after the policy disasters of Chairman Mao. But what about China's future economic growth? If the gowth in China or any of the BRIC economies slows then that spells trouble for the economies of the West.

Many commentators are turning bearish about China and the BRICs. The US Conference Board's prognosis for the BRICS is very bleak (click here). Matthew Yglesias sees political corruption as a reason to be bearish, but the great unexploited inland possibilities in China as a reason to be bullish. Niall Ferguson sees economic inequality and the demographic timebomb as reasons to be bearish about China. Daron Acemoglu and James Robinson are also bearish because China has not built inclusive and democratic institutions which will enable it to sustain its economic growth (click here). In the video below (about 20 mins in), Acemoglu discusses China and growth in authoritarian countries

The Economics of Global Warming

The Berkeley Earth Project , an independent study of global warming, has found that the earth has become a degree warmer over the past half century. However, the statistical uncertainty surrounding pre-1920 estimates makes it very hard to say much about long-term trends - click here for graph . This is one of my concerns with the global warming debate - we simply don't have trustworthy long-run data which looks at temperature changes over the last millennium (or two). My second concern with the global warming debate is that it is very hard to prove any sort of casual link between global warming and human activity. The scientists may be able to show correlation between global warming and our production of carbon dioxides etc., but correlation is not causation. My third concern with the debate is that those who are sceptical or agnostic are stereotyped as flat-earthers or intellectually-challenged crackpots. This only stifles debate and the progress of science itself.

Boom and Bust: A Global History of Financial Bubbles

Boom and Bust: A Global History of Financial Bubbles, co-authored with my colleague Will Quinn , is forthcoming in August. It is published by Cambridge University Press and is available for pre-order at Amazon , Barnes and Noble , Waterstones and Cambridge University Press .

The Failure of Herstatt Bank

As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of

Finance: Past, Present and Future

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