Credit Writedowns Mon 2010-07-19 12:08 EDT

Misunderstanding Modern Monetary Theory

Paul Krugman wrote a post today regarding MMT called "I Would Do Anything For Stimulus, But I Won't Do That (Wonkish)." The gist of Krugman's post was to refute Modern Monetary Theory's view on money and deficits...Krugman's post mischaracterizes both MMT and Galbraith's statement...Krugman is trapped in a gold standard view of money as he assumes the government must issue bonds to fund itself. He forgets that we live in a fiat world...the problem for deficits is not national solvency but inflation and currency depreciation. That makes me worried about deficits. If that makes me an inflation hawk and anti-deficit, then so be it. Nevertheless, MMT does say the same thing about deficits, namely that they can lead to inflation. But MMT also says that inflation is not a problem when you have an enormous output gap from 17% underemployment. MMT proponents recommend deficit spending to close that gap. But you can't spend at will under MMT; eventually the output gap closes and inflation becomes a big problem...

credit writedowns; Misunderstanding Modern Monetary Theory.

PRAGMATIC CAPITALISM Tue 2010-05-18 15:17 EDT

11 REASON WHY DEFLATION REMAINS THE GREATER RISK

TPC

A nice follow-up here on our earlier piece. David Rosenberg has really nailed the macro picture in terms of inflation and deflation...why deflation remains the greater risk... * Credit is contracting. * Wage rates are stagnating. * Money supply growth is vanishing * The U.S. dollar is strong. * Commodities have peaked. * U.S. home prices are rolling over ... again. * Lumber prices tumbling (down nearly 17% from April 2010 highs) * Wal-Mart is cutting prices on 10,000 items. * Home Depot just cut prices on flowers, fertilizers, lawn equipment and outdoor furniture. * Taco Bell is offering two dollar combo meals. * The April U.S. retail sales report hinted at deflation in groceries, electronics, apparel and sporting goods.

11 reasons; deflation remains; greater risk; PRAGMATIC CAPITALISM.

zero hedge Mon 2009-09-21 14:35 EDT

Atlanta Fed On Federal Reserve Monetization Activities; $1.1 Trillion In USTs And Agency MBS Purchased To Date

The Fed now has $15 billion in purchasing power left under the Treasury component of QE. Of the $1,250 billion in MBS projected to be bought by the end of the year, the Fed was already purchased $840 billion, leaving $410 billion in budgeted purchases over the next three and a half months: about $125 billion per month. On September 15, the Fed purchased $2.05 billion in Treasuries, roughly in the 10-17 year sector; on September 16, it purchased $1.799 billion in the one-to-two year sector. It has purchased a total of $285.2 billion of Treasury securities through September 16.The Fed plans to purchase $300 billion by the end of October, or about six weeks from now, which makes for a pace of about $2.5 billion in purchases per week.

1; 1 Trillion; Agency MBS Purchases; Atlanta Fed; date; Federal Reserve Monetization Activities; ust; Zero Hedge.

Wed 2009-09-16 19:21 EDT

Corrosive, stinking Chinese drywall may be radioactive - Los Angeles Times

The final years of the U.S. housing boom and a disastrous series of Gulf Coast hurricanes created a golden opportunity for Chinese drywall manufacturers. With domestic suppliers unable to keep up with demand, imports of Chinese drywall to the U.S. jumped 17-fold in 2006 from the year before. That imported drywall is now at the center of complaints of foul odors seeping from walls. Hundreds of homeowners, most in Florida, have also reported corrosion to their air conditioners, mirrors, electrical outlets and even jewelry. State and federal authorities have traced the problems to Chinese-made drywall but haven't yet fully determined the causes. Some Chinese experts, however, suspect that the culprit is a radioactive phosphorus substance -- phosphogypsum -- that is banned for construction use in the U.S. but has been used by Chinese manufacturers for almost a decade.(china, building materials, defective products, health hazards)

corrosive; Los Angeles Times; Radioactive; stinking Chinese drywall.

Mish's Global Economic Trend Analysis Wed 2009-08-26 15:55 EDT

Emails from a Bank Owner regarding FDIC and Under-Capitalized Banks

Michael Shedlock

Here is an interesting Email from a Bank Owner and CEO regarding As of Friday August 14, 2009, FDIC is Bankrupt. ``I have been in banking for over 30 years and from my perspective this is much worse than anything I have seen.'' ABO, who as been in the business 30 years, writes: A comment concerning the FDIC - As of June 30 the rates being charged banks have increased substantially. Risk 1 category went to 12 basis points from 5, risk 2, 17 basis points, risk 3, 35 basis points, and risk 5, 50 basis points. Additionally, a 5 basis point special assessment is being charged on September 30 on total assets less tier 1 capital. It is probable that a second assessment will also be charged in December. The cost of FDIC insurance for a two hundred million dollar, 1 risk rated bank last year would have been around...

bank owner; capitalized banks; Email; FDIC; Mish's Global Economic Trend Analysis.

Tue 2009-06-16 00:00 EDT

Calculated Risk: Using Corporate Bonds as an Economic Predictor

``model predicts industrial production will fall another 17% by the end of the year, and the economy will lose another 7.8 million jobs on top of the 5.1 million it has shed since the recession began''

Calculated Risk; Economic Predictor; Using Corporate Bonds.

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 2009-02-26 00:00 EST

naked capitalism: China's Exports Fall 17.5%, Most Since Asian Crisis

5; Asian Crisis; China's Exports Fall 17; naked capitalism.

Thu 2009-02-26 00:00 EST

Hussman Funds - Weekly Market Comment: How to Climb Out of the Global Financial Hole - February 17, 2009

John P. Hussman

2009; climbed; February 17; global financial hole; Hussman Funds; weekly market comments.

Thu 2009-01-15 00:00 EST

The Institutional Risk Analyst: GSE Nation: Interview with Robert Feinberg

GSE Nation: Interview with Robert Feinberg; The Institutional Risk Analyst (IRA); 2008-03-17; ``the government-sponsored entity or "GSE" is now the preferred business model in the US'' ``public policy has been replaced by public relations in this country. Our leaders don't get told what they don't want to hear because the spin machine let's them pick up the Wall Street Journal and read what they want to read because it was placed by the PR firm hired by the banks or the GSEs for that purpose.''

GSE nationalization; Institutional Risk Analyst; interview; Robert Feinberg.

Fri 2008-11-07 00:00 EST

Wall Street bankers in line for $70bn payout |

Wall Street bankers in line for $70bn payout, by Simon Bowers | Business | The Guardian; 2008-10-17

70bn payout; lines; Wall Street bankers.

Fri 2008-11-07 00:00 EST

Mish's Global Economic Trend Analysis: Where Are Food Prices Headed?

2008-10-17; ``Judging from a broad basket of commodity prices, we are likely to see declining prices at the grocery stores in the weeks or months ahead''

Food Prices Headed; Mish's Global Economic Trend Analysis.

Tue 2008-10-07 00:00 EDT

naked capitalism: More on the Charge That JP Morgan Withheld $17 Billion From Lehman, Triggering Collapse

17; charges; JP Morgan Withheld; Lehman; naked capitalism; trigger collapse.

Mon 2007-09-17 00:00 EDT

Hussman Funds - The Fed: Magical Fairies and Pixie Dust - September 17, 2007

Hussman Funds - The Fed: Magical Fairies and Pixie Dust; "The Fed provides coordination, but it is a mistake to think it has power."

2007; Fed; Hussman Funds; magical fairy; pixie dust; September 17.