Steve Keen's Debtwatch Sun 2009-08-30 14:33 EDT

It's Hard Being a Bear (Part Two)

Cassander

One of the reasons I'm still a bear on the economy is because the economists in the optimists camp are relying upon very bad economic theory. If that theory is telling them good times are ahead, that's one of the best predictors of bad times you could have. Capital Assets Pricing Model (CAPM) preached that stock market price shares accurately, that the amount of debt finance a company has doesn't affect its value, and many other notions that have gone up in smoke during the GFC. CAPM developer William Sharpe ``assumed a miracle'': all investors agree about the future and their expectations about the future are correct. Macroeconomic theory has been dominated by IS-LM model erroneously attributed to Keynes but actually due to convervative neoclassical John Hicks, which ``emasculated what was original in Keynes's General Theory, and this bowdlerised version of Keynes was then demolished by Friedman in the 1970s to usher in the Monetarist phase''

Bear; hard; part; Steve Keen's Debtwatch.

ClubOrlov Wed 2009-08-26 14:22 EDT

That Bastion of American Socialism...the United States military

kollapsnik

Over the past few months the American mainstream chatter has experienced a sudden spike in the gratuitous use of the term "Socialist." It was prompted by the attempts of the federal government to resuscitate insolvent financial institutions. These attempts included offers of guarantees to their clients, injections of large sums of borrowed public money, and granting them access to almost-free credit that was magically summoned ex nihilo by the Federal Reserve. To some observers, these attempts looked like an emergency nationalization of the finance sector was underway, prompting them to cry "Socialism!" Their cries were not as strident as one would expect, bereft of the usual disdain that normally accompanies the use of this term. Rather, it was proffered with a wan smile, because the commentators could find nothing... ``Since the end of the Civil War, Americans have become accustomed to thinking of war as something that happens elsewhere, to other people. Thus, the news that the US is bombing this or that land, for no adequate reason, killing and maiming numerous civilians, produces in us neither the normal human reaction of revulsion, nausea and disgust, nor the conviction that we must take the fight to our own monstrous leaders, lest we too become monsters. Life under domestic military occupation might bring home some welcome realizations, and start Americans down the long road of atoning for the sins of their forefathers, who have run roughshod over much of the rest of the planet for far too long.''

American social; bastion; ClubOrlov; United States military.

ClubOrlov Wed 2009-08-26 13:53 EDT

The Slope of Dysfunction

kollapsnik

(Update: click here for a special version for the Nihonjin care of Masayuki.) Perhaps you have heard of the Peak Oil theory? Most people have by now, even the people whose job used to involve denying the possibility that global crude oil production would peak any time soon. Now that everybody seems a bit more comfortable with the idea, perhaps it is time to reexamine it. Is the scenario Peak Oil theoreticians paint indeed realistic, or is it firmly grounded in wishful thinking? Here is a typical, slightly outdated Peak Oil chart. I chose it because it looks pretty and conveys the typical Peak Oil message, which is that global crude oil (and natural gas condensate) production will rise to a lofty peak sometime soon, and then drift down...

ClubOrlov; dysfunctional; Slope.

Thu 2009-07-30 00:00 EDT

Jesse's Café Américain: The Worst Is Yet to Come

Jesse's Café Américain: The Worst Is Yet to Come -- Howard Davidowitz; ``the briefly sunny period in 1930-1 when most economists and public officials agreed that the Depression was already over and the economy was back on track...t was the second half of the great stock decline after the 1929 Crash that did the most damage, because this is when the carnage moved from financial assets and the banks into the real economy''

comes; Jesse's Café Américain; worst.

Thu 2009-07-23 00:00 EDT

naked capitalism: Is Liquidity Really Good for You?

``just because a certain amount of liquidity is good, it does not necessarily follow that more is always better''; Richard Kline: ``The first issue when liquidity is provided to markets for any overall regulator, should and must be, "How do we prevent asset overpricing as a consequence? "''

Liquidity Really Good; naked capitalism.

Tue 2009-04-21 00:00 EDT

Mish's Global Economic Trend Analysis: Is Debt the Lifeblood of the Economy?

``Rather it is savings that is the lifeblood of the economy, because without adequate savings, extending credit is nothing but a pyramid scheme that eventually implodes, which is of course what happened.''

debt; economy; lifeblood; Mish's Global Economic Trend Analysis.

Mon 2009-04-06 00:00 EDT

Bill Moyers Journal . Transcripts | PBS

ex-banking regulator William K. Black calls fraud: ``make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you're a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there's going to be a disaster down the road.''

Bill Moyers Journal; PBS; Transcript.

Thu 2009-01-15 00:00 EST

Jesse's Café Américain: Did the New Deal Fail?

Jesse's Café Américain: Did the New Deal Fail? ``The New Deal was so "ineffective" that the Fed panicked and doubled reserve requirements in a draconian pre-emptive response because they feared inflation!'' ''In a fiat regime inflation and deflation are primarily...the end result of a series of policy, fiscal, and political decisions.''

Jesse's Café Américain; New Deal failed.

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.

Sun 2008-10-26 00:00 EDT

Joe Bageant: The Bailout in Plain English

``We will pay because the only language we have to describe our world is that of our oppressors because we have been taught to think in Wall Speak.''

Bailout; Joe Bageant; Plain English.

Mon 2008-08-04 00:00 EDT

Hussman Funds - Weekly Market Comment

Bagehot's Rule and the Cost of Being "Technically Insolvent"; "Fannie Mae and Freddie Mac were given open-ended government guarantees through January 2009. This open-endedness is a big mistake, because the potential costs are being as vastly understated as the pre-war estimates of the Iraq invasion."

Hussman Funds; weekly market comments.

Thu 2008-07-03 00:00 EDT

Information Arbitrage: Straight-talk on FAS 157: Blackstone and their Banker Buddies Have it Wrong

gap management; "Trading risk becomes liquidity risk when you can't trade...Do real stress-testing of liquidity scenarios and construct a capital structure that address much of the liquidity risk posed by non-standard assets...So why do risk managers and bank managements' so consistently make bad decisions? Probably because there is an over-reliance on measures that are seemingly quantifiable."

Banker Buddies; Blackstone; FAS 157; Information Arbitrage; straight-talking; wrong.

Thu 2008-07-03 00:00 EDT

The Necessary War by William S. Lind

The Necessary War, by William S. Lind; reviews Pat Buchanan's "Churchill, Hitler, and the Unecessary War"; demolishing Churchill; "n both World Wars, the U.S. came out a winner because it left most of the fighting to others." "Debunking comic-book history and replacing it with the real thing is vital if America is to avoid the dual trap of cultural Marxism and Brave New World."

necessary war; William S. Lind.

Mon 2008-06-30 00:00 EDT

Mish's Global Economic Trend Analysis: Shiller's Keynesian Claptrap

"We are in this mess because consumers and the government were both spending more money than they have, year in and year out, racking up debts well beyond their ability to finance them."

Mish's Global Economic Trend Analysis; Shiller's Keynesian Claptrap.

Mon 2008-01-07 00:00 EST

Money Matters: Mexican Truckers Still Allowed Into US

by Elaine Meinel Supkis; "All the world's currencies are 'misaligned' because monetarism is the new tool for DESTROYING OTHER NATION'S INDUSTRIAL POWERS!"

allowed; Mexican truckers; money matters.

Tue 2007-12-04 00:00 EST

Mish's Global Economic Trend Analysis: Paulson's Plan Is Nothing But Lip Service

anonymous industry insider: "how are rate cuts going to help anything when what the system needs is "more balance sheet," and there's none to be found, and in fact credit continues to contract?"; plan will because underwater buyers should and will walk away

lip services; Mish's Global Economic Trend Analysis; Paulson's Plan.