Archive for the ‘Economy’ Category
Tuesday, June 16th, 2009
OA has noted P Krugman's insistence that the Fed/Treasury use all the tools at their disposal to keep us from falling into another Depression. We've yet to see any thorough discussion, however, of the consequences of such action. He admits deficits are a "long-term" problem, that we need a plan ...
Posted in Economy, Fed, inflation | 4 Comments »
Saturday, June 13th, 2009
OA has long argued that the only real solution to the economic crisis is for America to get smaller. Our lifestyles need to be downsized, our debts paid off, our government shrunk. With that in mind, a must-read from the Telegraph---U.S. Cities May Have to be Bulldozed to Survive
The government ...
Posted in Economy | 7 Comments »
Thursday, June 11th, 2009
So much for de-leveraging.
The Fed published its latest Flow of Funds report today. One key takeaway: While total debt is growing more slowly, it is still growing. Since Q3 '08 households have cut their debt (slightly), but the federal government is borrowing so rapidly, overall debt continues to expand.
(Click chart ...
Posted in debt, Economy, Fed, housing, leverage, politics, taxpayer issues, treasury | 16 Comments »
Tuesday, June 2nd, 2009
The latest installment of the Financial Analysts Journal has a compelling article by Meir Statman, Professor of Finance at Santa Clara University. He's not much of a writer, but his recommendations are good ones. Among other things, he argues that leverage could be controlled by extending margin requirements to investments ...
Posted in Economy, leverage | 4 Comments »
Friday, May 29th, 2009
Back in February, amidst the neo-Keynesian rage to spend our way out of recession, I argued that stimulus wouldn't stimulate. Pointing to the graph of the 10-year Treasury vs. 30-year mortgage rates I said that the government wouldn't be able to flood the market with Treasurys without driving up interest ...
Posted in debt, deflation, depression, Economy, Fed, inflation, Interest Rates | 14 Comments »
Friday, May 15th, 2009
"...you're a damn fool."
Lots of colorful commentary from Howard Davidowitz, courtesy Tech Ticker.
Posted in Economy | 1 Comment »
Monday, May 4th, 2009
In a great and uncharacteristic show of responsibility, banks and other financial companies are reducing credit limits. The NY Post misinterprets this as bad news. They note that lower credit limits reduce spending power, which is bad for growth.* But they neglect the larger issue at stake, leverage, which is ...
Posted in banking, Economy, leverage | 9 Comments »
Sunday, April 26th, 2009
The Pew Research Center is out with an interesting report regarding Americans' changing attitudes towards their stuff. Dishwashers, microwaves, dryers, even A/C and TV Sets are decreasingly viewed as "necessities" according to Pew. New tech, however, is holding its own. iPods, Computers, high-speed internet, and "flat screen TVs" are up ...
Posted in Economy | 1 Comment »
Sunday, April 19th, 2009
Much of economic theory is flawed because its models assume people act rationally when of course they don't. And yet economists and central bankers continue to make predictions based on these flawed models because, well, they don't have better ones. Or the better ones that do exist yield inconvenient results ...
Posted in Economy | 7 Comments »
Friday, April 17th, 2009
WSJ:
General Motors Corp. still hopes to avoid a bankruptcy, but the option is becoming increasingly unavoidable as the company struggles to achieve key goals toward completing an out-of-court restructuring.
Fritz Henderson, GM's chief executive, said Friday that bankruptcy remains a "probable" outcome for the auto maker, which is subsisting on government ...
Posted in Economy, stocks | No Comments »
Thursday, April 16th, 2009
Reader Justin reminded me of the classic video below, which may be a good metaphor for world markets. Today's stability is highly unstable, not unlike the day the Tacoma bridge opened.
As capital careens from one destination to another it's possible to see this instability.
Take the market for Treasurys. A huge ...
Posted in Economy | 1 Comment »
Wednesday, April 15th, 2009
Merrill Lynch's soon-to-be-former chief economist David Rosenberg published an interesting note today regarding the market's weird fascination with second derivatives. The economy is still contracting, but not as steeply of late. Rosenberg makes the point that a shallower fall is not the same as recovery.
Trend in economy is still worse ...
Posted in Economy | 3 Comments »
Saturday, April 4th, 2009
A banker in Russia offers her view of the situation over there:
It's a mixed situation here. Over Q4 into early this year authorities devalued [the ruble], but did it gradually to allow companies and population to buy FX--foreign exchange. Corporate debt is over 400 bln USD--U.S. dollars--with I think just ...
Posted in credit crunch, Economy, leverage | 2 Comments »
Friday, March 27th, 2009
We're not quite as healthy as we thought we were. Oops. (WSJ)
J.P. Morgan Chase Chief Executive James Dimon said...that March was a little tougher than the first two months of the year....Bank of America...CEO Kenneth Lewis also said that March had been a tougher month for his bank. ...
Posted in banking, Economy, FDIC, leverage, politics, taxpayer issues | 5 Comments »
Wednesday, March 25th, 2009
Like his counterpart on this side of the Atlantic, UK Prime Minister Gordon Brown has called for massive stimulus from all governments in order to jump start the world economy. The Governor of the Bank of England took the unusual step of criticizing the PM, insisting that Brown act with ...
Posted in debt, Economy, government spending | 8 Comments »
Monday, March 23rd, 2009
Tonight China escalated its criticism of U.S. fiscal and monetary policy. The governor of China's Central Bank, Zhou xiaochuan, called for a new reserve currency to replace the dollar. FT:
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled ...
Posted in Dollar, Economy | 8 Comments »
Monday, March 16th, 2009
The smaller of Seattle's two papers will publish its final print edition tomorrow. A skeleton crew of 20 "news gatherers" will remain to operate the online-only version of the paper, seattlepi.com.
It's a crying shame that the economics of news reporting aren't working anymore. If sunlight is the best disinfectant, ...
Posted in Economy, media | 6 Comments »
Sunday, March 15th, 2009
Hayman Capital has made some incredibly shrewd investments capitalizing on the implosion of the economy. Its Master Fund claims a 340% return since inception in 2006. Here is a pdf of their latest investor letter (hat tip AKS via Zero Hedge). It has lots of data/charts and addresses the ...
Posted in debt, Economy | 3 Comments »
Saturday, March 14th, 2009
Over the weekend, you may want to carve out 20 minutes for this video, an interview with former IMF Chief Economist Ken Rogoff. Rogoff is one of the foremost experts on financial crises. He says the "endgame...for most of our large banks" has to be an "accelerated bankruptcy" process.
It's been ...
Posted in banking, bankruptcy, Economy | 11 Comments »
Wednesday, March 11th, 2009
Thanks to Patrick for an absolute gem. Earlier this week, he linked to a fantastic newspaper article written in 1902. That article actually reprinted a paper written five years previously, entitled "Panics and Booms" by L.M. Holt. When Holt wrote the paper, the economy was at the tail end of ...
Posted in depression, Economy, leverage | 15 Comments »
Tuesday, March 10th, 2009
[Update: Sure enough, political consensus now appears to be in favor of MTM changes. More here]
No wonder financials soared yesterday; Bernanke suggested mark-to-market accounting needs adjusting. That would allow banks to avoid writing down toxic assets, artificially inflating their equity value.
CNN Money quoted Fed Chairman Bernanke saying he wouldn't support ...
Posted in accounting, banking, credit crunch, debt, Economy, Fed | 13 Comments »
Monday, March 9th, 2009
[Reader note: recently Yves Smith asked me to contribute to her blog Naked Capitalism. I hope to generate a post a week that will be simul-published on NC and OA. Regular OA readers may notice some repeated content in this post. My hope was to give NC readers a comprehensive ...
Posted in credit crunch, debt, Economy, Fed, government spending, housing, Interest Rates, politics, taxpayer issues | 19 Comments »
Friday, March 6th, 2009
Brad Setser wrote a fantastic report last September highlighting the strategic problem of borrowing. In it he argued that too much debt will constrain our policy options. That's a polite way of putting it. If there's a run on the dollar, many policy options won't simply be constrained. They'll be ...
Posted in bailout, debt, Dollar, Economy, international trade, politics | 2 Comments »
Thursday, March 5th, 2009
I will preface this post by emphasizing that it is NOT Barack Obama's fault that the market has fallen so much on his watch. The American economy was grossly over-leveraged before he was even elected to the Senate in 2004.
The stock market is the best measure of the economy's equity ...
Posted in Economy, stocks | 7 Comments »
Sunday, March 1st, 2009
Yesterday I used a GMAC ad to illustrate a point about publicly-funded deposit insurance---we should do away with it. It encourages depositors to shop for high interest rates rather than healthy banks; it forces onto the public the cost of risks taken by imprudent individuals; and it massively misdirects society's ...
Posted in banking, Economy, Fed, leverage, taxpayer issues | 14 Comments »
