Author Archives: Yves Smith
Ending the Era of Stupid
I’m giving to Yves Smith and Naked Capitalism. You should too. And you should dig deep. What we are doing, together, is nothing less than composing a symphony of what will be an intellectual revolution. What are we revolting against? The Age of Stupid.
Read more...The New Normal of Monetary Policy
Yves here. This post describes the “new normal” of the role bank reserves play in hitting short-term policy rate targets in the US. The author ends on a cheery note about how the abnormal-looking situation we have, in particular super-low interest rates, could persist for a very long time. The author contends that the way one reacts to these new procedures and their results will reflect your monetary aesthetics, as in your beliefs about the way central bank balance sheets and reserves should look. However, given the way that negative short-term real interest rates are stoking financial speculation at the expense of real economy investment (a trend that was already well underway even before the crisis containment program turbo-charged it), one can hardly see a continuation of the new normal of low growth and redistribution to top earners as a positive development.
Read more...Americans Work Too Long and at Strange Times
Is inequality the reason Americans have such weird work habits?
Read more...Launching Our 2014 Fundraiser!
Welcome to our 2014 fundraiser, the fourth in our eight-year history. Your donations are an important vote of confidence in our work. They tell us that you value Naked Capitalism as a place where we work together to expose the power dynamics that are radically reshaping our economy and society. And on a practical level, your contributions are critical to helping us steadily improve our content and your site experience.
We ask you to join us once again.
Read more...Fed Whistleblower Carmen Segarra, Snowden, and the Closing of the Journalistic Mind
The financial press has been awash with coverage of This American Life’s broadcast of key section of 46 hours of tapes made in secret by former New York Fed bank examiner Carmen Segarra. The broadcast and related reporting at ProPublica show how utterly craven the central bank was when it came to matters Goldman.
Now you might say, isn’t this media firestorm a great thing? It’s roused Elizabeth Warren and Sherrod Brown to demand hearing. The Fed has been toadying up to Wall Street for years. Shouldn’t we be pleased that the problem is finally being taken seriously?
Actually, no.
Read more...Contra Jared Bernstein: Stagnation, Spending, and The Velocity of Wealth
Yves here. While this argument about marginal propensity to consume may seem a bit abstruse, it’s at the core of whether, in economic terms, it is productive to have people other than the rich have decent levels of income. Or to state the thesis in a more technocratically-acceptable manner, whether lowering income inequality helps growth. The debate hinges on whether people with lower incomes actually are spending more than people with higher incomes. As obviously as the answer might seem (how can rich people have lots of financial assets if they aren’t spending everything they earn?), as this post by Steve Roth shows, Jared Bernstein appears to have muffed the analysis.
Read more...Links 9/27/14
Iceland: Bankers Convicted, Unemployment Down
Iceland demonstrates that prosecuting banksters does not hurt, and likely aids in real economy recovery from a financial crisis. But since when has the US been run as if making the real economy work was of paramount concern?
Read more...Philip Pilkington: Is Economics a Science? Dogmatic Economics Vs. Reflective Economics
You can’t talk about whether economics is a science without getting clear on what you mean by “science”.
Read more...Don Quijones: “Slimlandia,” The Land of Mexican Oligarchs
Yves here. As Don Quijones explains, “In many ways, Mexico is the poster child of neoliberalism.” So take this as a cautionary tale of what rule by our modern oligarchs will look like.
Read more...Links 9/26/14
The Tenacity of Free Market Fundamentalism
This is an important and wide ranging conversation about the history of economic ideas and how it played out in political discourse, specifically, how free market fundamentalism, an idea that appeared to be dead in the 1940s, survived and became dominant.
Read more...Bill Black: The New York Times Claims Opposing EU Austerity Leads to Anti-Semitism
Yves here. This post is more important than it might seem. I find it is taking more and more effort to navigate through the hall of mirrors of propagandizing, particularly in the geopolitical realm. Thus it is critical to read news on two levels: its content, and how it is presented, as in how it is framed, what experts are cited, what issues are buried or omitted. Living with all Pravda, all the time, is intellectually taxing, at least if you care to understand what is really going on.
Read more...Battling to Curb “Vulture Funds”
Yves here. Martin Khor focuses on the alarm created by the ruling against Argentina that allowed a Paul Singer’s NML, a vulture fund with a small position in Argentina’s bonds, to vitiate a hard-fought bond restructuring. The particularly ugly part that don’t get the attention warranted is that it is widely believed that Singer took a much larger position in credit default swaps, meaning he was seeking to create and betting on an Argentine default. And another ugly wrinkle is the role of private law in these processes. ISDA, a private organization, determines what is an event of default for credit default swaps.
Singer was on the committee that voted whether Argentina was in default (recall it had made payment under the restructuring to the trustee, Bank of New York, but BONY was barred by the court from remitting payment to the bondholders). This gave him a direct say in an event in which he had a large economic interest. And that was no lucky accident.
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