Derivatives: “You Cannot Hedge Debt Risk By Owning More Debt”
Us bumpkins out here in the unwashed masses (read: those of us who don’t hold PhD’s in economics and work for a central bank) might think that “Neither a borrower nor a lender be” are words to live by. But boy, lemme tell ya, them folks with them there high-falutin’ edumacations have got it all [...]
Richmond Fed Economist: Bloggers are Stupid and Should Shut Up
Hubris (also hybris; pronounced /hju:bris/) means extreme haughtiness or arrogance. Hubris often indicates being out of touch with reality and overestimating one’s own competence or capabilities, especially for people in positions of power. In this recent essay, Richmond Fed staff economist Kartik Athreya makes his case: “Economics is Hard. Don’t Let Bloggers Tell You Otherwise”. [...]
Deconstructing Krugman
Tomorrow! Tomorrow! I love ya Tomorrow! You’re always A day away! The Toronto G-20 summit was a colossal flop. The statement issued on their brand-new G-20 website includes ridiculous pablum like this: …advanced economies have committed to fiscal plans that will at least halve deficits by 2013… Hey, look! We’re gonna return to lower deficits [...]
Royal Bank of Scotland tells clients to prepare for “monster” money printing by the Federal Reserve
On June 2nd, 3rd and 4th, respectively, I reported a growing chorus of financial pundits were going on record and warning of a coming sovereign debt crisis. Most of you are aware of the G-20 meeting that is closing in Toronto tonight. The G-20 members are a self-appointed group of governments and various government agency, [...]
Orszag, “Guardian of Fiscal Conservatism”, quits over deficit
Orwell would be proud. Orszag exit reveals deficit policy split (Financial Times free subscription required) Peter Orszag, Barack Obama’s budget director, resigned this week partly in frustration over his lack of success in persuading the Obama administration to tackle the fiscal deficit more aggressively, according to sources inside and outside the White House. Mr Orszag, [...]
Hugh Hendry calls out George Soros, alludes to swelling populist anger in Germany
See video below. Investor Hugh Hendry understands George Soros: “The richest people on the planet become socialists”; “Socialism is when you build a moat around the castle.” Mr. Hendry is responding to a recent Bloomberg interview in which Soros decried German determination to cut their deficit spending (Imagine their arrogance!). Citing the “needs” of other [...]
Patrick Henry, Virginian
We are come hither to preserve the poor commonwealth of Virginia, if it can be possibly done: something must be done to preserve your liberty and mine. – Patrick Henry, 5 June 1788, arguing (correctly) against Virginia’s ratification of the proposed Constitution. We turn our attention for a foray into history. It’s been said that [...]
How “Public Servants” Balance Budgets, Distribute Loot
History doesn’t repeat, but it sure as heck rhymes. That’s why some of us are troubled by the parallels between our current fiscal situation and the response by various levels of government to the West’s most memorable brush with severe financial turbulence since the 1930′s. We have too much debt; by that, I mean personal [...]
Recovery? WHAT Recovery?!
(Data sources are US CBO and Federal Reserve) The chart above (click, then click again to enlarge) shows three data sets: 1) in red, the federal budget deficit; 2) in dark blue, US Gross Domestic Product (GDP), the supposed size of the US economy; 3) in highlighted light blue, shows what US GDP would be [...]
Financial Reform Bill: Bank Lobbyists too Big to Fail, but Fed Can Spy on YOU!
Far from being an effective measure that protects anyone but the banks, the Senate’s Financial Reform Bill is itself a testament to the power of money. Two thousand banking lobbyists descended on Washington to ensure that any effective restrictions on banks’ power and guaranteed profitability were stripped away. They succeeded. The bill does virtually nothing [...]
