Stephen King: Roosevelt's lesson... a decisive act to break the psychology of depression

What should you do if your banking system doesn't work? Some will doubtless celebrate, arguing that banks are the source of all monetary evil. Others will panic, worrying about the onset of another Great Depression. Policymakers, though, should do neither of these things. They need, instead, to find a way to make the financial system function again.

Stephen King: 'Capitalism can be incredibly unstable and state intervention is back, big time'

Phew! That was some week. Lehman Brothers, the American investment bank which opened for business back in the 1840s, has gone. Merrill Lynch has been swallowed up by Bank of America. Manchester United's shirts and AIG are owned by the US government. Lloyds TSB has taken over HBOS. And, on Wednesday and Thursday, it looked like we were on the verge of another Great Depression, with shares in all manner of companies in freefall, and banks the world over on the point of capitulation.

Stephen King: As Madonna and the banks know, when trust is lost it's time to say your prayers

What do a Madonna concert and a banking crisis have in common? Not much, you might think. But, as I sat through an excruciating performance of "Borderline" in Wembley Stadium on Thursday night, I realised that Madonna and mammon go together rather well. The common link is trust (or its loss).

Stephen King: Interest rate cuts won't cause another bubble, but they could relieve the pain

Those who oppose interest rate cuts seem to base their arguments on one of three ideas. First, rate cuts won't work. Second, rate cuts will simply reignite earlier housing or stock market bubbles. Third, borrowers simply don't deserve rate cuts. Some people seem to believe in all three of these ideas, an approach which, to my mind, is nonsensical.

Stephen King: Zimbabwe and Jamaica run away with the economically adjusted Olympics

As we preen ourselves over our Olympic achievements, it's worth pausing to consider Britain's amazing haul of gold medals in the light of the broader economic context. Relative to our nation's population and wealth, how have we done in comparison to others?

Stephen King: A miserable time looms for America as the boomers become pensioners

Heaven knows, America's miserable now. With US unemployment up to 5.7 per cent in July, and with US inflation in June running at 5.0 per cent, life is no longer quite as comfortable as it used to be. Combining these two measures generates the so-called "misery index", a gauge of the overall degree of economic distress resulting from an unfortunate combination of rising joblessness and higher inflation. According to this calculation, Americans have every right to be feeling miserable: the index has reached its highest level since the early 1990s, when another George Bush presided over an economy which, like now, was on its knees.

Stephen King: Time for a spoonful of Reaganomics to help the inflation medicine go down

Last week, we learned that retail sales in the UK fell 3.9 per cent in June and that Tim Besley, a member of the Bank of England's Monetary Policy Committee, voted at the last committee meeting for an interest rate increase. This combination is rather intriguing.

Stephen King: Public funds needed to resolve financial crisis – and taxpayer will pick up the bill

One swallow doth not a summer make. Two summers of financial crisis, though, are enough to make the most robust of policymakers swallow hard. Last year, the spike in money market rates, the banks' loss of confidence in one another, the collapse of securitisation and, eventually, the nasty accident now known as Northern Rock were, collectively, fairly indigestible. Many investors hoped, though, that policymakers had enough firepower to deal with these problems. Interest rate cuts, they opined, would be enough to do the trick.

Stephen King: What would the fashionable investor do now when desperate for returns?

Faced with an unfortunate rise in inflation and financial markets with a bad case of indigestion, what does the wise investor do? The old-fashioned, 1970s-style, wise investor would probably sell his entire government bond portfolio and, instead, buy so-called "real" assets which are directly linked to the performance of the economy. Thumbs up, then, for property, commodities and equities.

Stephen King: It's time for the central banks to take a lesson in emerging market economics

Despite all the talk of globalisation, mutual economic dependency and trade linkages, policymakers spend too much time focusing on the domestic minutiae and not enough on the really big international stories which determine our economic destinies. I know this because, like anyone else, I can log on to central bank websites and get a flavour of policymakers' concerns. The Federal Reserve and the Bank of England publish minutes of their regular policy pow-wows. Their discussions too often suggest the non-G7 world simply doesn't exist.

Stephen King: What if the Bank has lost its magic?

Mervyn King, Governor of the Bank of England, told the House of Commons Treasury Select Committee last Thursday that "a change in the prices of food and energy relative to other prices can't by itself produce sustained inflation unless we allow other prices and wages to rise at a faster rate".

Stephen King: What if the Bank has lost its magic?

Mervyn King, Governor of the Bank of England, told the House of Commons Treasury Select Committee last Thursday that "a change in the prices of food and energy relative to other prices can't by itself produce sustained inflation unless we allow other prices and wages to rise at a faster rate".

Stephen King: Pay restraint? Punk economics

Are we heading back to the 1970s? It all depends. As with The Hitchhiker's Guide to the Galaxy (a relic of the 1970s), the answer cannot be understood without, first of all, understanding the meaning of the question.

Stephen King: We must be cruel to be kind to save the world from a longer-term headache

There is, I think, an answer to the world economy's growing problem with inflation. It does, however, require acts of bravery on behalf of the developed world's policymakers and acts of maturity on behalf of policymakers in the emerging world. The solution is fraught with risks but at least it would be a coherent response to a crisis which has been associated with inaction and lame excuses.

Stephen King: The mounting dangers of central banks' high-wire act

A few months ago, economic life was both complicated and, yet, so simple. The US housing market was collapsing. The UK housing market seemed to be heading the same way. Banks on either side of the Atlantic were seeing profits haemorrhaging and capital disappearing. The cloying smell of recession was in the air. For central banks, then, the answer was really rather easy. Cut interest rates and hope that, in time, housing would stabilise, banks would recover and recession would be avoided.

News
Lord Heseltine has been indelibly associated with the revival of Liverpool for four decades
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As developers get set to bid in the UK’s biggest sale of onshore gas licences, the commercial benefits of drilling remain far from clear
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There may be trouble ahead … David Levy has very rarely been wrong in his forecasts
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A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
The retailer is on its knees, thanks to a German war veteran who turned the family grocers into the Aldi chain, writes Tony Paterson
News
It was Paul Fisher’s job to oversee and implement quantitative easing
Paul Fisher has left the Bank of England’s Monetary Policy Committee after five years. He tells Ben Chu what Threadneedle Street got right and why the Bank behaved properly over forex
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
Warren Buffett and Bill Gates are big fans of an out of print 1960s business book. Seth Stevenson explores why
News
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Analysis: Some feel that Philip Clarke didn't get enough of a chance to prove himself
Voices
Mr Osborne, who is on a two-day trip to India with Foreign Secretary William Hague, said the two countries would see greater investment in each other’s economies and more job creation.
The young have been hurt the most by recession. They don't vote Tory and can't buy a house, so who cares?, writes David Blanchflower
News
One of the lines on the Metro do Porto network crosses the Dom Luis bridge
An interest rate swap arrangement has ended up costing a Portuguese state-owned transport company a fortune. So did it really understand the pages and pages of algebra in the contract, asks Jim Armitage
News
Is the new bank likely to be of much use? The emerging countries have done pretty well without it, says Hamish McRae
Life and Style
The value of Ruby Roman grapes has rocketed since they were first put on the market in 2008, finds Beckie Smith
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