Submitted by Rolfe Winkler, publisher of OptionARMageddonBack 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 […]
Read more...Uncharacteristically for an economist, Wolfgang Munchau questions the conventional remedy for the debt millstone: use inflation to trash its value in real terms. Bondholders so often get shafted that it’s a predictable outcome. But is it wise? Munchau argues that regardless, the piper must be paid. If the powers that be succeed in creating meaningful […]
Read more...Reader Harry H tells us that, at least in Vermont, shovel-ready projects aren’t as ready to go as the very nature of the term would suggest. The Wall Street Journal described some reasons for delay back in March: It turns out, though, that shovel-readiness is in the eye of the beholder. Soon after his visit, […]
Read more...Big name economists continue their attacks on the Obama bank rescue programs. Yesterday Willem Buiter, one of Europe’s most highly respected macroeconomists, continued his salvos, contending that the funding was woefully inadequate to recapitalize or otherwise prop up financial firms. The longer the US delays winding up sick banks, the more time wasted and good […]
Read more...Readers may know we have oft pointed to the work of Carmen Reinhart and Kenneth Rogoff on financial crises. They have built a large database of past crises, and have compared the US to past crises countries. Their conclusion was that the US looked like a typical crisis country “only more so”, and in two […]
Read more...Barry Eichengreen, an expert on the Great Depression, and Kevin O’Rourke, take issue with the notion that the current downturn is less severe than the Great Depression. While the slump in the US is not as bad, that mis-states the global picture. Note that many economists expect the US to suffer less than the big […]
Read more...Submitted by Rolfe Winkler, publisher of OptionARMageddon. [Reader note: I thought it useful to add commentary around the FDIC data. Those that would prefer to skip straight to it, see the chart and read paragraphs 4-9]. Conventional wisdom says that financial companies are having trouble borrowing because credit markets are broken. This is dangerously wrong. […]
Read more...The George Santayana saying, “Those who cannot learn from history are doomed to repeat it,” is so oft repeated as to verge on cliche. Yet the US variant of this syndrome is to be aware of history, then rationalize how it does not apply to us. Japanese policy makers from the early days of the […]
Read more...Submitted by Rolfe Winkler, CFA, publisher of OptionARMageddon.com Policy-makers not only misunderstand the economic crisis, they continue to underestimate it. Consequently, solutions to date have not only failed to “fix” anything, they have made the problem worse. The problem isn’t falling asset prices, it’s not rising foreclosures, it’s too much debt. With an assist from […]
Read more...Ah, today the Financial Times reminds me of the way it was back in early 2007, when it was clearly heads and shoulders above any US paper. Wonder why I have fewer days like that, It isn’t improved reporting by the US media (although they are further down the curve). I suspect that the FT […]
Read more...I must confess to having read only a bit of economist Axel Leijonhufvud’s writings, but what I have seen, I have liked very much. Leijonhufvud’s current post at VoxEU does a very good job of looking at the economic mess the US is in and assesses policy options. It is a remarkably straightforward piece. Most […]
Read more...This blog was early to draw a comparison between the US financial crisis and emerging markets crises. As we wrote in March 2008: Although the Journal does not draw this comparison, the US is in very much the same boat as Thailand and Indonesia in 1997, during the emerging markets crisis. And although the US […]
Read more...The financial services industry is full cry in its demands for taxpayers to save its hide. From Bloomberg: Bill Gross, co-chief investment officer of Pacific Investment Management Co., said the U.S. may slump into a “mini depression” unless policy makers spend trillions of dollars to spur growth. “This economy needs support from the government, a […]
Read more...Before we get to the substance of this post, I feel compelled to address the responses I have increasingly been getting when I post on unemployment in China, particularly demonstrations by workers (who often show up to work, find the factory shuttered and themselves stiffed for their last paycheck) and the fact that many of […]
Read more...To be fair, Willem Buiter’s latest post strives for a bit of gallows humor via its title, “YES WE CAN!! have a global depression if we really continue to work at it…,” before getting down to serious business, namely, that the powers that be risk missing the opportunity to salvage the global economy. What makes […]
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