naked capitalism Sun 2009-09-13 15:35 EDT

Is economic boom around the corner?

Edward Harrison of Credit Writedowns

...growth underpinned by high debt accumulation and low savings can continue for a very, very long time. In the United States, by virtue of America's possession of the world's reserve currency, an increase in aggregate debt levels has been successfully financed for well over twenty-five years...it is wholly conceivable that we could experience a multi-year economic expansion on the back of renewed monetary and fiscal expansion...Marc Faber: ``Don't underestimate the power of printing money''...but NDK continues to ``disrespect the power of printing money. There are few transmission mechanisms to get that printed money into the real economy.'' pebird comments (paraphrasing Faber?): The US (and Europe) per capita wealth must be driven down to a global benchmark - that is what globalization means. Which is easier - bringing 800 million Chinese plus 500 million Indian workers up to Western standards or 400 million Western workers down to global standards?

corner; economic boom; naked capitalism.

Asia Times Online Sun 2009-09-13 10:25 EDT

THE BEAR'S LAIR : Possible October surprises

Martin Hutchinson

The inflation that might be expected in the United States from unprecedented expansionary monetary policies has failed to appear, while huge budget deficits have yet to produce higher interest rates. Far from being signs of a new economic paradigm, this merely means new bubbles are forming...Commodities and gold therefore are the destination of this year's hot money and are forming the new bubble...a fair-sized bubble has developed in the T-bond market...however...a modest resurgence in US inflation or difficulty in a long dated T-bond auction could cause confidence to flee the Treasury bond market and yields to leap uncontrollably upwards...the long-term costs of excessively cheap money are beginning to be seen in the US economy itself. By allowing money to remain so cheap for so long, and by running incessant payments deficits, the United States has surrendered the advantage of its superior long-established capital base, narrowing its capital cost advantage over emerging markets and exporting that capital to countries with less profligate approaches. Huge budget deficits, themselves worsening the trade deficit, merely export yet more US capital to the surplus nations. That makes it inevitable that the years ahead, in which the United States will no longer enjoy a capital advantage over its lower-wage competitors, will see highly unpleasant declines in US living standards.

Asia Times Online; BEAR'S LAIR; Possible October surprises.

Calculated Risk Fri 2009-09-04 19:01 EDT

Junk Bond Default Rate Passes 10 Percent

CalculatedRisk

From Rolfe Winkler at Reuters: U.S. junk bond default rate rises to 10.2 pct -SP The U.S. junk bond default rate rose to 10.2 percent in August from 9.4 percent in July ... Standard & Poor's data showed on Thursday. The default rate is expected to rise to 13.9 percent by July 2010 and could reach as high as 18 percent if economic conditions are worse than expected, SP said in a statement. ... In another sign of corporate distress, the rating agency has downgraded $2.9 trillion of company debt year to date, up from $1.9 trillion in the same period last year. Bad loans everywhere ...

Calculated Risk; Junk Bond Default Rate Passes 10 Percent.

naked capitalism Tue 2009-09-01 13:10 EDT

Twenty-Five Years to Work Off the Debt Overhang?

T. S. Eliot was right. Human beings cannot stand very much reality. As much as I have an appetite for bearish views (I figure the optimist case gets disproportionate air time), the headline of Ambrose Evans-Pritchard's latest piece, ``Our quarter-century penance is just starting,'' is grim even by the standards of the bearish faithful. Great comment by DownSouth, quoting Martin Luther King and Reinhold Niebuhr to the effect that by delegating to elites what should be the role of labor unions and grass-roots organizations. Niebuhr wrote: ``when collective power, whether in the form of imperialism or class domination, exploits weakness, it can never be dislodged unless power is raised against it'' ``Before we can fix the economy, the polity must be repaired first.''

debt overhang; naked capitalism; working; years.

Thu 2009-07-30 00:00 EDT

Will The Dollar Standard Collapse?

By John Carney; Sahm Adrangi opines ``Abandoning the gold standard has gradually resulted in a very overvalued US dollar, and that the dollar is headed for disaster. The dollar standard is inherently flawed and increasingly unstable. Its collapse will be the most important economic event of the 21st century.

Dollar Standard Collapse.

Tue 2009-06-16 00:00 EDT

A 'Copper Standard' for the world's currency system? - Telegraph

by Ambrose Evans-Pritchard; Beijing is trying to extricate itself from dollar dependency as fast as it can; dollar losing reserve status

Copper Standard; Telegraph; world's currency system.

Fri 2008-11-07 00:00 EST

naked capitalism: It Isn't Over Until the Fat Lady Sings

Benoit Mandelbrot warned ``Markets are very, very risky more risky than the standard theories assume.''

Fat Lady Sings; naked capitalism.

Tue 2008-09-23 00:00 EDT

Y Combinator To Offer Standardized Funding Legal Docs

Y Combinator To Offer Standardized Funding Legal Docs; open source legal documents for venture capital

Offer Standardized Funding Legal Docs; Y Combinator.

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.

Wed 2008-05-07 00:00 EDT

naked capitalism: Jeremy Grantham: "Immoral Hazard" and the Loss of Standards

Immoral Hazard; Jeremy Grantham; losses; naked capitalism; Standard.

Fri 2008-01-18 00:00 EST

Money Matters: Cheap Money Extracts A Terrible Price In The End

by Elaine Meinel Supkis; "Eventually the Chinese and the Muslims just might unite forces and force a gold standard again."

Cheap Money Extracts; ending; money matters; terrible price.

Tue 2007-11-20 00:00 EST

Subprime fallout: Preparing for the next financial crisis | vox - Research-based policy analysis and commentary from Europe's leading economists

Subprime fallout: Preparing for the next financial crisis, by Stephen Cecchetti; standardize securities, encourage exchange-based trading

commentary; Europe's leading economists; Financial Crisis; prepared; research-based policy analysis; subprime fallout; Vox.

Tue 2007-11-20 00:00 EST

naked capitalism: Another Sighting of a Sensible Markets Reform Proposal

Stephen Cecchetti suggests standardized securities, exchange-based trading

naked capitalism; Sensible Markets Reform Proposal; Sight.

Sat 2007-09-08 00:00 EDT

Robert Reich's Blog: Moral Hazard

moral hazard double standard; "ownership society" a cruel farce; welfare for the rich (wealthfare)

moral hazard; Robert Reich s blog.

Sat 2007-09-08 00:00 EDT

naked capitalism: Robert Reich: The Moral Hazard Double Standard

welfare for the rich; wealthfare

Moral Hazard Double Standard; naked capitalism; Robert Reich.

Mon 2004-03-15 00:00 EST

FpML.org

-- Financial products Markup Language; XML Standard for Swaps, Derivatives, and Structured Financial Products

FpML; org.