naked capitalism

Anonymous says:

Is this the omen of a new 2012 Olympic sport-
Synchronized Drinking?

Richard Kline says:

“Pardons for sale. Rove’s the contact. Eight figure ante. Pass it on.”

River says:

‘Inflation Punctures Deflation Fears’…

The article is mistitled and actually reports that many economists see deflation as great a threat as inflation. One problem pointed out in the article is that ‘banks hording money, refusing to lend, is adding to the possibility of deflation’ (paraphrased)…

Another point of view in the article is…

‘Still, there is a larger risk that inflation could fall to 1 per cent or less in some economies within two years.

This could itself create problems, since central banks would lose the ability to run negative interest rates to fuel recovery or ward off a fresh shock.

But if credit markets are as dysfunctional a year from now as they are today, and inflation a lot lower, deflation would cease being a theoretical danger and would become a real threat.’

If CBs want to run negative real interest rates it indicates that they are not seeking increased savings and are trying to perpetuate a model that has failed. Mr Market will have the final say.

Matt Dubuque says:

In terms of the Guha article on deflation, I think the following Mishkin quote may be from a while back and therefore somewhat “stale”.

Here is the quote at issue from the article:

““If inflation expectations were to decline sharply that would greatly increase the risk of deflation,” says Frederic Mishkin, a professor at Columbia University.

“But expectations were stable on the way up – when inflation was rising – and there is every reason to believe they will be stable on the way down.”

Two of the most widely used and reliable indicators of inflation expectations are the University of Michigan consumer survey and TIPS prices.

The most recent Michigan survey showed a collapse in inflation expectations, a truly shocking figure.

Also TIPS prices are showing DRAMATICALLY lowered expectations.

And I know Mishkin follows these two indicators closely, as do I.

That’s why I think it may be a dated quotation.

Matt

Don says:

” Nov. 2 (Bloomberg) — Robert J. Aumann, the Israeli economist who won the 2005 Nobel Prize in economics, said the steps taken by Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson to save financial markets “weren’t smart.”

“The intervention by the regulators to save the U.S. economy will lead to further bankruptcies of banks and insurance companies,” Aumann said at a rabbinical conference in Jerusalem yesterday. “They are only encouraging institutions to take more uncalculated risks.”

I’m not qualified, but here goes:

1) Moral hazard has to be enforced from the start, otherwise there’s a cascading effect from letting the first few get passes. Actions have effects as do words.
2) Acting for your own benefit and not the firm’s or customer’s is a breach of fiduciary responsibility.
3) The situation’s of the U.S. and Israel are not the same.

Don the libertarian Democrat

The Alchemist says:

vote everyone out who voted for the bailout. The complete guide is available at http:/www.dealraider.com

john bougearel says:

Matt,

I am looking for the release of those lending plans, please send link to johnbougearel@gmail.com

thanks in advance