Yearly Archives: 2011

Journey into a Libertarian Future: Part VI – Certainty

By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.

Simulposted at The Distributist Review

This is the sixth and final installment of an interview series. For the previous parts, see Part 1, Part 2, Part 3, Part 4 and Part 5. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”

ANDREW: You’ve explained to me how in the libertarian society of the future, everyone will be free and their rights will not be violated. However, many people will be coerced in a noncoercive way, and a lot of people will be effectively slaves in a rights-respecting manner. Some people will be effectively killed in a rights-respecting manner. Why are you dedicating your life to making this society possible?

Read more...

Has the Global Business Cycle Ended?

By David Llewellyn-Smith, the founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. He is also the co-author of The Great Crash of 2008 with Ross Garnaut. Cross posted from MacroBusiness

So, global PMIs for November have passed. Where do they suggest that the global economy is heading?

Read more...

On the Austerity and Rule by Big Finance in Greece

This Real News Network interview nominally is about whether Greece should leave the Euro. But it is really about the struggle between the bondholders, who are crushing Greek democracy and society, versus the population. The interviewee Costas Lapavitsas makes an forceful case why defying the banks is the best route for Greek society, even thought the transition will also be difficult.

Read more...

NYT’s James Stewart Runs PR for Compromised SEC Chief Khuzami Against Judge Rakoff on Proposed $285 Million Citi CDO Settlement

Tom Adams, an attorney and former monoline executive, provided considerable input into this post.

There is nothing more useful to people in authority than when a writer with an established brand name does their propagandizing for them.

Harvard Law graduate and Pulitzer Prize winning author James B. Stewart penned a remarkable little piece in the New York Times over the weekend. Titled “Few Avenues for Justice in the Case Against Citi,” it contends that Judge Jed Rakoff’s ruling against a proposed $285 million SEC settlement with Citigroup over a $1 billion CDO (Class V Funding III) that delivered $700 million in losses to investors and $160 million in profits to Citi is misguided. Stewart argues, based on “some reporting,” that the SEC is unlikely to do better in the trial that Rakoff has forced on the agency by nixing the settlement.

We will look at the caliber of Stewart’s “reporting” in due course, since his article reads like dictation from the SEC’s head of enforcement Robert Khuzami (the SEC’s interests are aligned with Citi’s in wanting the settlement to go through). He either did not read or chose to ignore critical information in the underlying complaints, which the Rakoff ruling cites, and he also overlooked relevant cases.

Read more...

Journey into a Libertarian Future: Part V – Dark Realities

By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.

Simulposted at The Distributist Review

This is the fourth installment of a six-part interview. For the previous parts, see Part 1, Part 2, Part 3, and Part 4. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”

ANDREW: In the last interview, you told us how GLOs in the Middle Ages were noblemen, publicly recognized as being a cut above the ordinary person. Have the rich people and corporate leaders of today also risen to the top by being natural leaders?

Read more...

Richard Alford: The Lender of Last Resort, the Fed and the ECB

By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side.

In “Lombard Street” published in 1873, Bagehot specified the purpose of a Lender of Last Resort (LOLR) as forestalling bank panics in fractional reserve banking systems. Bagehot also provided criteria that define LOLRs, which remain relatively unchanged. In fact, the Bagehot criteria have become something of a mantra: Lend freely at penalty rates against good collateral to illiquid but solvent banks. Given Bagehot’s purpose and definition, has the crisis of 2008 provided a test of the Fed as an LOLR? If so how well did the Fed perform? What are the ECB’s responsibilities as the LOLR in Europe in 2011?

Read more...

Alan Grayson on GAO Report on the Fed

Yves here. There has been a lot of press, deservedly so, on the information that Bloomberg managed to pry out of the Fed on its emergency lending programs during the crisis. The Fed again is in crisis mode, again in a controversial and arguably compromised position in extending currency swaps to the ECB to provide dollar liquidity to European banks. They are having difficulty securing funding because US money market funds are no longer keen about parking money with them and US regulators have been discouraging banks from extending credit lines to them. As a consequence, another set of important revelations about Fed conduct, namely, the release of the results of a GAO review of crisis related Fed operations, is not getting the attention it warrants.

Read more...

David Apgar: Could Germany Be Right about the Euro?

By David Apgar, co-founder of GoalScreen, a web app still in trials that lets investors test alternative price drivers of specific securities (free though the end of the year at www.goalscreen.com. He has been a manager at the Corporate Executive Board, McKinsey, the Office of the Comptroller of the Currency, and Lehman, and writes at www.goalscreen.com/blog.

What if there are good reasons for the preternatural calm of German Chancellor Merkel’s inner circle as the English-language media (based, after all, in the investor capitals of London and New York) light their collective hair on fire about the euro’s imminent immolation? Surprisingly, you can make a decent argument that the euro zone is at no risk of breakup – unless someone secretly switches its purpose from facilitating European trade to providing investors an implicit guarantee against losses.

Read more...