Category Archives: Economic fundamentals

Auerback/Wray: Liberals need not fear Obama’s tax deal: Why a payroll tax holiday actually helps support tomorrow’s retirees

Yves here. As much as Auerback’s and Wray’s argument does describe the reality of government fiscal operations accurately, I see their political reading as wildly optimistic. Given that disproven ideas like “trickle down economics” still hold considerable sway, I think the concerns about how a payroll tax holiday will serve as a wedge to cut Social Security benefit are valid.

By Marshall Auerback, a portfolio strategist and hedge fund manager, and L. Randall Wray, Professor of Economics at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.

The commentary in the aftermath of President Obama’s announced tax deal with the GOP has been both predictable and, for the most part, misconceived….

Is It Verboten to Talk About the Securitization Buyers’ Strike?

There is a perfectly fine article up at the Wall Street Journal on the current, probably weakening, state of the housing market, save that it fails to discuss the elephant in the room, that of the continuing moribund conditions in the so-called private label securitization market.

Alexander Gloy: Funeral music for the Euro?

By Alexander Gloy, the founder and CIO of Lighthouse Investment Management

This week, EU leaders will try to agree on limited EU treaty changes at a summit (December 16-17). The aim is to establish a permanent rescue mechanism for countries in financial difficulties. On Monday and Tuesday (December 13-14) foreign affairs ministers will meet in Brussels to prepare draft conclusions. The BBC claims to have obtained a draft communiqué. We will analyze if a new European Stability Mechanism (ESM) has any chance to save the Euro.

Bill Black: No, Mr. President, you did not negotiate a winning tax deal

By Bill Black, Associate Professor of Economics and Law at the University of Missouri-Kansas City and a former senior financial regulator

This column analyses Obama’s claim that he got the better of the Republicans in the negotiations.

The administration (implicitly) argues that its claim of extraordinary negotiating success represents a miraculous accomplishment given the facts that the Republicans were holding all legislation hostage to their non-negotiable demand that the Bush tax cuts for the wealthiest of Americans be extended and the administration’s irrevocable decision that it could not call the Republican’s bluff because the economy would likely sink back into recession unless tax cuts for the middle class were immediately passed…..

The third problem is that no element of the claimed miracle is true….

Marshall Auerback: Don’t Get Angry – Get Some Real Change

President Obama can solve the economy’s problems and win back his base, but he has to get with the program first.

For once, let’s praise President Obama (marginally), not bury him. As Bo Cutter has already argued, in the aftermath of the elections, the president probably did the best he could do on taxes. Ideally, the issue shouldn’t have even been something to haggle over in the first place had the Democrats (including the president) dealt with it before the midterms.

That said, the president’s petulant rant directed at his base was pathetic and misconceived in the extreme. The “No Drama Obama” guise clearly does not extend to his now frustrated supporters. Obama still genuinely does not have a clue as to why he has lost the trust of so many progressives. Many would have been prepared to cut him some slack if he had given them anything over the past two years, rather than a perpetuation of Rubinomics — an economically regressive blend of crony capitalism and deficit reduction fetishism.

To deal with income inequality, you need something more radical. You need reforms such as caps on executive pay and probably a system that simplifies the tax structure (to avoid creative tax avoidance), along with a broad base and a few basic, low rates to ensure a modicum of compliance….

Wikileaks Disses Chinese GDP Stats

We’ve harrumphed more than occasionally on the dubious quality of Chinese official releases (see discussions on GDP, inflation, and other drive-by-data-shootings for a selection of past grumblings).

So we are delighted to see that Wikileaks is on this beat too. From a March 2007 cable on a discussion between Clark T. Randt and “Fifth Generation Star Li Kequiang”:

Marshall Auerback: What Happens if Germany Exits the Euro?

By Marshall Auerback, a portfolio strategist, hedge fund manager, and Roosevelt Institute Senior Fellow. Like marriage, membership in the euro zone is supposed to be a lifetime commitment, “for better or for worse”. But as we know, divorces do occur, even if the marriage was entered into with the best of intentions. And the recent […]

Barry Eichengreen: Ireland’s rescue package – Disaster for Ireland, bad omen for the Eurozone

By Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley; and formerly Senior Policy Advisor at the International Monetary Fund. Cross posted from VoxEU Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German […]

Credit Market Stress Intensifying: Corporate, High Yield Issuance Tanked in November

The US stock markets are harboring the fond notion that the sovereign-bank debt pile-up in Europe has no real implications across the pond, no doubt out of professional participants’ hope to retain solid gains thorugh year-end bonus setting. The debt markets are saying otherwise. Credit market risk aversion typically precedes a stock market correction, but […]

Marshall Auerback: Bankers Gone Wild in Ireland AND Germany

By Marshall Auerback, a hedge fund manager and portfolio strategist who writes for New Deal 2.0. Despite a blame-a-thon on Ireleand, Germans banks are really at the core of the eurozone catastrophe. Much ink has been spilled in the press over the Irish problem and the laxity of the country’s southern Mediterranean counterparts in contrast […]

Richard Alford: “Quantitative Easing Explained” And Its Critics

By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. The YouTube video “Quantitative Easing Explained” has surpassed 2.9 million views. The video is both entertaining and unremittingly critical […]

Jim Quinn: Lies Across America

Yves here. While Quinn has a deliberately (some might say overly) provocative style and I quibble with some of his supporting arguments, his overarching observation, that America is wedded to an economic model past its sell by date, and that model has damaging social and political consequences, is one I believe will resonate with many […]

More on the Damaging Implications of Corporate Cash-Hoarding

John Authers of the Financial Times provides an update on corporate cash-hoarding. In brief, it’s getting worse due to probably-warranted executive nervousness about business prospects. As Authers puts it: Corporate chieftains the world over have lots of cash, and want to hold on to it. It is a critical symptom of a new Age of […]