Stories by Daniel Gross

  • Davos Dispatches: Efficient-Markets Theory, Disproved!

    This afternoon, while walking into the Congress Center, the main hub of Davos, I noticed a piece of gray paper on the floor. It looked like it might be currency of some sort—certainly not a dollar, but perhaps Swiss francs or something else. I started to bend over to pick it up, but then I caught myself. This is the World Economic Forum. It is populated by hundreds of economists and by thousands of business people schooled in the tenets of economics. This is possibly the most rational, profit-maximizing concentration of human capital in the world. These are the actors who make up an efficient market. And of course adherents to the efficient market hypothesis famously don't believe in the concept of found money or found savings....
  • What's the Point of Bipartisanship With a Party That Doesn't Want to Govern?

    President Obama and congressional Democrats reached an agreement on Tuesday night to appoint a bipartisan commission. The Washington Post reports: "Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs—including Medicare, Medicaid, and Social Security—that threaten to drive the nation's debt to levels not seen since World War II."...
  • Future Senator Scott Brown Is Already a Congressional Republican: His Fiscal Policy Is Incoherent

    Political commentators will likely say that Republican Scott Brown's victory in the Massachusetts Senate race proves that the U.S. is still a center-right nation and that President Obama and the Democrats have to be more bipartisan. The question is: with whom?  Brown's victory also says something about the incoherence and contradictions of today's Republican Party when it comes to matters of economic and fiscal policy. The failure caucus—Republicans who want the country to suffer for their political gain—has just added another member. Since the recession and financial crisis started, Republicans have consistently voted against the stability and recovery efforts, dating back to the fall of 2008, when they still controlled the White House. John McCain broke off his campaign to blow up the first bailout bill. Once President Obama was elected, Washington Republicans went into opposition. Not a single Republican in the House voted for the stimulus bill, while only three...
  • New Numbers Show Fed Making Bank on the Bank Bailouts

    Since last fall, it's been apparent that the government is turning a profit on many of the insurance schemes, backstops, and other measures it put into place to aid the stricken financial system. In several instances, the Federal Reserve, the Treasury, and the FDIC collected billions in fees in exchange for guarantees on money-market funds, on commercial paper, on bank-issued debt, and on other bank assets that never had to be used. Meanwhile, the central component of the TARP, the program under which the government bought preferred shares in banks, has yielded returns. Banks have paid back their borrowings, banks that remain in the program pay dividends (interest), and the government received warrants as a sweetener.  ...
  • Globalization Slows Down

    In November, I met with an executive at one of the private-equity firms that has sprung up in Beijing. He talked up the firm's investments in energy software and mobile communications. But exporters? He wouldn't touch them.The fact that China's smart money is now looking inward and avoiding the sector that brought it so much growth in recent years highlights a new trend that is likely to continue and spread next year. For the past few decades, goods, services, and people have been whizzing around the world at ever-greater speeds and over ever-greater distances. The presumption was that this was the most efficient way to organize the globe's economic affairs. But a backlash has set in, motivated by economics, politics, and the shift of wealth from West to East. As a result, it seems we are now experiencing a round of deglobalization.In the months after September 2008, pretty much every metric that testified to the growing interconnectedness of the global economy fell off a cliff. The...