Mon 2010-08-23 11:11 EDT

Hussman Funds - Valuing Foreign Currencies: Currency is both a means of payment and a store of value. [2000-09-22]

John P. Hussman, Ph.D

Any currency is both a means of payment and a store of value. So when you try to determine what it's worth, you have to consider both what it can buy in terms of goods, and what it can earn if you hold it as an asset. An exchange rate is just the price of a currency...If you look at a currency as a means of exchange...you can get a reasonable idea of the "long term" tendency of the currency by tracking the movements of price indices in two countries. This is what traders refer to as the "Purchasing Power Parity" (PPP) value of the exchange rate...But PPP is only a tendency that holds loosely over the long term. Over the short term, there's another important factor: interest rates...anytime long term interest rates, after inflation (i.e. real interest rates) are expected to be higher in the foreign country than in the U.S., the foreign currency will be above PPP...

2000-09-22; currency; Hussman Funds; meaning; payment; store; valued; Valuing Foreign Currencies.

naked capitalism Tue 2009-12-22 11:53 EST

``Basel III -- the OK, the Unfinished and the Ugly''

Richard Smith, who works for the London consultancy Cubematch whichspecialises in risk, collateral and change management

The BIS analysis of the 2007-09 banking crisis floats my boat. Here is their headline list of causes: excessive on- and off-balance sheet leverage, diminutive and low quality capital bases, insufficient liquidity buffers at banks.

Basel III; naked capitalism; Ok; ugly; unfinished.

Mon 2009-12-21 18:24 EST

Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-2008

Moritz Schularick, Alan M. Taylor

The crisis of 2008-09 has focused attention on money and credit fluctuations, financial crises, and policy responses. In this paper we study the behavior of money, credit, and macroeconomic indicators over the long run based on a newly constructed historical dataset for 12 developed countries over the years 1870-2008, utilizing the data to study rare events associated with financial crisis episodes. We present new evidence that leverage in the financial sector has increased strongly in the second half of the twentieth century as shown by a decoupling of money and credit aggregates, and we also find a decline in safe assets on banks' balance sheets. We also show for the first time how monetary policy responses to financial crises have been more aggressive post-1945, but how despite these policies the output costs of crises have remained large. Importantly, we can also show that credit growth is a powerful predictor of financial crises...

1870-2008; Credit Booms Gone Bust; financial crises; leverage cycle; monetary policy.

naked capitalism Tue 2009-09-08 15:19 EDT

Links 9/8/09

DownSouth tellingly quotes Hannah Arendt and paraphrases Reinhold Niebuhr on economic growth and progress.

Links 9/8/09; naked capitalism.

Bruce Krasting Thu 2009-09-03 18:21 EDT

US Treasury on Agency MBS -- Don't Buy It!

Bruce Krasting

The office of Inspector General, Department of Treasury released a report on 8/6/09 on the failure of the National Bank of Commerce. NBC went toast on 1/16/2009. The principal source of its collapse was its investments in Fannie Mae Preferred Stock. They owned $98mm of that swill. When they wrote it off they had no tier-one equity left and had to be shuttered... This report is a kick in the head for everyone involved. Fannie and Freddie look bad. Who would want to own the GSE paper with this warning from Treasury? It makes Treasury look silly. They hold the Government Pref. issued by the Agencies. If they guy down the hall is saying don't buy the debt he is certainly saying don't buy the equity. The Fed looks the worst of the lot in light of this. They are in the process of buying $1.25 Trillion of Agency MBS. I wonder what the Treasury IG would have to say about that level of concentration.

Agency MBS; Bruce Krasting; buy; Treasury.

Sat 2009-06-13 00:00 EDT

naked capitalism: Links 6/13/09

DownSouth reads Richard Kline's ``our next twenty plus years. Argentina twenty times larger.''; ``American exceptionalism therefore will most likely not die an easy death, and the U.S. will not be spared that final humbling, and destructive, drubbing.''

Links 6/13/09; naked capitalism.

Thu 2009-04-30 00:00 EDT

naked capitalism: Links 4/17/09

Richard Kline comments on Janet Yellen's asset price bubble remarks

Links 4/17/09; naked capitalism.

Thu 2009-04-23 00:00 EDT

naked capitalism: Links 4/23/09

great Richard Kline rant downloaded richard-kline.wail-of-the-wealthiest-rant.txt

Links 4/23/09; naked capitalism.

Tue 2009-04-21 00:00 EDT

Financial Bailout: America's Own Kleptocracy

by Michael Hudson, 2008-09-20

America's; Financial Bailout; kleptocracy.

Fri 2009-01-16 00:00 EST

naked capitalism: Greg Mankiw Argues for Paying Harvard Workers Badly

2007-05-09

Greg Mankiw Argues; naked capitalism; Paying Harvard Workers Badly.

Tue 2008-09-23 00:00 EDT

Mish's Global Economic Trend Analysis: Real Interest Rates Are High

2008-09-03

high; Mish's Global Economic Trend Analysis; Real interesting rates.

Tue 2008-09-23 00:00 EDT

Mish's Global Economic Trend Analysis: Treasury Bull Alive And Kicking

2008-09-05

kick; Mish's Global Economic Trend Analysis; Treasury Bull Alive.

Tue 2008-09-02 00:00 EDT

Jesse's Café Américain: A Few Large Financial Firms Have Been Manipulating the Price of Commodities

Jesse's Café Américain: A Few Large Financial Firms Have Been Manipulating the Price of Commodities; 2008-09-21

Commodities; Jesse's Café Américain; large financial firms; manipulated; Price.

Tue 2008-09-02 00:00 EDT

The Institutional Risk Analyst: A Change in Bank Control: Interview With Ernest Patrikis

A Change in Bank Control: Interview With Ernest Patrikis, by Institutional Risk Analytics; 2008-07-09

bank control; change; Ernest Patrikis; Institutional Risk Analyst; interview.

Tue 2008-09-02 00:00 EDT

Debasement Of World Currency - Print Version

Debasement Of World Currency: it is inflation, but not as we know it, by Peter Warburton, 2001-04-09

Debasing; Print version; World currency.

Tue 2007-10-02 00:00 EDT

Minyanville -

Bank Earnings 101: Banks are generally leveraged 10:1; by Minyan Peter (2007-09-10)

Minyanville.

Tue 2007-09-25 00:00 EDT

Mike Morgan's Real Estate and Housing Industry Weekly Update for Portfolio Managers and Investors - September 23, 2007

Mike Morgan's Real Estate and Housing Industry Weekly Update for Portfolio Managers and Investors - 2007-09-23; "we're in deep doodoo." Robert Toll, Toll Brothers CEO

2007; Housing Industry Weekly Update; Investors; Mike Morgan's Real Estate; portfolio manager; September 23.

Sat 2007-09-15 00:00 EDT

Hussman Funds - Weekly Market Comment: September 3, 2007 - The Problem With Financials

2007-09-03; "I don't believe it's possible or useful to make short-term market forecasts"; "problems for financials are just beginning"

2007; Financial; Hussman Funds; problem; September 3; weekly market comments.

Tue 2007-08-28 00:00 EDT

An inflation debate brews over intangibles at the mall

by Timothy Aeppel, The Wall Street Journal; 2003-05-09; understating inflation; hedonic adjustment

inflation debate brews; intangibles; Mall.

Sun 2007-07-01 00:00 EDT

Sep 18 The FED's Deflation Smokescreen Craig Harris 321gold

The FED's Deflation Smokescreen, by Craig Harris; understating inflation; 2003-09-18

FED's Deflation Smokescreen Craig Harris 321gold; Sep 18.

Sun 2007-07-01 00:00 EDT

Shadow Government Statistics: 3. Consumer Price Index (UPDATE)

by Walter J. Williams; understating inflation; 2004-09-22; updated 2006-10-01; hedonic inflation adjustments

3; consumer price index; Shadow Government Statistics; Update.

Fri 2007-05-25 00:00 EDT

National Security and Homeland Security Presidential Directive

2007-05-09; comprehensive national policy on the continuity of Federal Government

Homeland Security Presidential Directive; national security.