By Robert Johnson, former chief economist of the Senate Banking Committee and Senior Economist of the Senate Budget Committee who writes at New Deal 2.0. Since the early 1980s, rises in the living standard of middle class United States citizens have not kept up with the gains in labor productivity. Wages in the middle class […]
Read more...By John Bougearel, author of Riding the Storm Out and Director of Financial and Equity Research for Structural Logic Policymakers managed to extinguish a financial panic in 2008-09 by March 2009. This rescue operation allowed the broad U.S. stock market as measured by the SP500 to rally nearly 70%. Extinguishing the panic was to be […]
Read more...By Bruce Krasting, a former foreign exchange and derivatives trader and hedge fund manager. Mohammad said, “One cannot foretell the future”. I think he was on to something. What looks predictable rarely happens. There are always surprises. I have been tripped up so many times. The following are not predictions of things that will happen. […]
Read more...By Washington’s Blog. As I have previously noted, credit default swaps are destabilizing for the economy. See this. And the models used to evaluate financial instruments – such as the Gaussian copula formula for CDOs – are inherently flawed. Now, Princeton University economists and computer scientists have demonstrated that financial derivatives are also inherently vulnerable […]
Read more...By George Washington of Washington’s Blog. As I have repeatedly noted, mainstream economists and financial advisors have been using faulty and unrealistic models for years. See this, this, this, this, this and this. And I have pointed out numerous times that economists and advisors have a financial incentive to use faulty models. For example, I […]
Read more...If the sky-high prices relative to income aren’t enough to convince you, consider this discussion from Patrick Chovanec (hat tip reader Michael) who contends that China’s latest effort to contain housing prices, the reinstitution of a property sales tax, is likely to be counterproductive: In China, however, “flipping” is not the problem. Some people may […]
Read more...By Bruce Krasting, a former foreign exchange and derivatives trader and hedge fund manager. On December 10th I raised the possibility of Greece breaking the connection with the Euro. On the likelihood of this black swan type of event happening I said, “This is not a high probability outcome.” A week later the possibility of […]
Read more...Two leading White House economic advisors – Larry Summers and Christina Romer – are giving very different views on the economy. As Fox news summarizes: “Everybody agrees that the recession is over,” said Larry Summers, director of the National Economic Council. “Of course not,” countered Council of Economic Advisers Chairwoman Christina Romer in a separate […]
Read more...Dear readers, I posted this story about 18 hours ago, but my server went down briefly, and this offering was a casualty. The reason I included it was that, according to Google News, it had been picked up only by a few overseas news outlets, like the Turkish Press and the Straits Times, and here […]
Read more...By Edward Harrison of Credit Writedowns I am not sure I buy Meredith Whitney’s assertion that the government is “out of bullets” in its quest to prop up the economy. It’s a matter of political will more than anything else. Nevertheless, I do agree with her basic premise in the CNBC video below that the […]
Read more...By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. In 1729, Jonathan Swift wrote an essay — “A Modest Proposal” — satirically suggesting that the impoverished Irish ease their economic troubles by selling children as food for rich gentlemen and ladies. In that spirit, we would like to assist […]
Read more...Reader Andrew sent a research report by Pivot Capital Management, which makes a compelling case that the capital spending bubble in China has reached its limits. This is important in a narrow sense, since capital investment is now the largest component of Chinese growth, and in its broader ramifications, since China is seen as a […]
Read more...By Edward Harrison This quote from President Obama comes via Brad DeLong: We’ve got a long- term structural deficit that is primarily being driven by health care costs, and our long-term entitlement programs. All right? So that’s the baseline. Now, if we can’t grow our economy, then it is going to be that much harder […]
Read more...This article originally appeared at Credit Writedowns. Note: Since this post was published, three more banks in Georgia have failed. Read details here. Recently, I have been writing a lot about regional banks and the capital problems they have been having. This is having a direct impact on lending capacity available to small and medium […]
Read more...By Edward Harrison of Credit Writedowns AmTrust Financial, a privately held regional bank holding company based in Cleveland, has just filed for bankruptcy. With well over $10 billion in assets, AmTrust Bank is fairly large. The circumstances surrounding its failure are unusual in that the Bank Holding Company (BHC) has filed for bankruptcy but the […]
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