Banana Republic thinks there’s enough exuberance left out there to sell this “Startup Guy” look to millions of non-startup guys. That’s rather a lot of exuberance.
Read more...The Financial Times has an article on how corporate bond dealers are going to create a new trading hub to try to preserve their market position while “boosting liquidity” in the market. Narrowly speaking, there’s nothing wrong with the piece as a description of investor unhappiness and planned bank responses. But it curiously missed how Fed policy has helped generate conditions that are reducing corporate bond market liquidity.
Read more...Satyajit Das reviews Michael Lewis’ book Flash Boys. Das finds it to be deeply flawed,: deficient in its understanding of HFT and not very well written.
Read more...Why defining “liquidity trap” precisely matters in understanding crisis dynamics, and Keynes, and not Krugman, got it right.
Read more...Bubbles have become a major focus of discussion in today’s financial markets. But very few people actually define what they mean when describing this financial phenomenon.
Read more...The Obama administration and the mainstream media are now talking up an imminent recovery, perhaps even a modest boom. There is no reason why we should be optimistic now.
Read more...I highly recommend this short interview by John Authers of the Financial Times with Amar Bhidé, a professor at Tufts, in which he argues that a proper reading of Friedrich Hayek would lead to considerable skepticism about whether most of the changes in finance over the last three decades actually represent progress.
Read more...The Financial Times reported earlier this week (hat tip Scott) how banks are cutting the size of corporate bond trading desks and reducing the size of trading inventories, all as a result of big bad regulations. As a result, the banks would like us to know, investors might be hurt by a lack of liquidity! Horrors!
Read more...Stephanie Kelton does an important service in discussing a memo from the Fed chairman during the Roosevelt Administration, Marriner Eccles. I was reminded of Eccles’ a fine appreciation for how the real economy worked and how government actions affected business. This keen eye for the fundamentals is sorely absent among most macroeconomists and policy experts today.
Read more...Yves here. The post below from Paul Buchheit makes a persuasive layperson’s case for a financial transactions tax. There is an equally sound case to be made from a financial markets viewpoint.
Read more...So this week I got an education in the mentality of “official” Washington.
Last week I was asked by a DC-based publication to give a comment on Corker-Warner, the flavor-of-the-month proposal to abolish Fannie and Freddie and reform mortgage finance. I basically take the same position as Yves on this issue: all of these GSE 2.0 plans assume a private label MBS market the way the proverbial economist on a desert island assumes a can opener.
Read more...Yves here. Steve Keen sent this note along with his post:
The journalist David Hirst was both one of the few to warn of the crisis, and someone who became a good friend. He died last week, as a long term consequence of internal injuries sustained about ten years ago in the USA, when he tried to stop a woman being bashed.
His spouse asked me to see if I could get the attached published on NC, which was one of his favourite sites.
If you know David’s writing, you’ll understand what a loss this is. And if you missed his prescient and incisive commentary before and during the crisis, I hope you’ll sample his work below and get a sense of what a talent he was. Either way, I trust you’ll join me in sending condolences to David’s widow and his family, as well as to Steve.
Read more...Bloomberg flagged that productivity gains in the US are tepid, and that’s a sign of economic weakness:
Read more...Joseph Baines’s new article, “Food Price Inflation as Redistribution: Towards a New Analysis of Corporate Power in the World Food System” is a must read if you care to understand how major corporations exercise hidden influence on our daily lives.
Read more...One of my side projects is keeping tabs on devolution, which I first discussed in January in Devolution: Welcome to the World Where Things Don’t Work Well.
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