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Martin Lowy

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  • Proof Of A Structural Change In The U.S. Workforce [View article]
    Doug, my hypothesis is the nature of work available in the U.S. has been changing and that the population has not kept up educationally. For that reason, I think we are likely to continue to see more of the same until we have a larger percentage of people getting good post-secondary education, which they cannot get if they finish high school not being ready for it.
    Aug 14 04:46 PM | 2 Likes Like |Link to Comment
  • Coming Soon To An Economy Near You: Personal Checking Accounts At Your Central Bank [View article]
    Checking accounts are more labor-intensive and therefore should be foreseen as a Fed service. But savings accounts, why not? What good is the middle person? Then we would not need deposit insurance for savings accounts. Big help with TBTF.

    Oh, you say, banks are the private sector; therefore preferable. Banks are the private sector? Who you kidding?
    Aug 4 02:34 PM | Likes Like |Link to Comment
  • What Will Fed Do When The Overheated Sectors Carrying U.S. Economy Start Cooling? [View article]
    I agree that automotive is at risk. I just wondered what the author meant.
    Jul 27 07:57 AM | Likes Like |Link to Comment
  • What Will Fed Do When The Overheated Sectors Carrying U.S. Economy Start Cooling? [View article]
    What are the hot sectors you are talking about?
    Jul 26 02:21 PM | Likes Like |Link to Comment
  • The Problem Is Not Debt? [View article]
    Sorry. The European banks and near-banks were in worse shape than the U.S. banks and the European economies are in worse shape than the U.S. The European banks only survived because the Fed afford swap lines to the European central banks. Without those, almost every large bank in Europe would have failed or been bailed out by government.

    BTW Lehman was regulated--by the SEC--the SEC was supposed to be Lehman's prudential regulator but it failed to do the job.
    Jul 26 08:02 AM | Likes Like |Link to Comment
  • The Problem Is Not Debt? [View article]
    Your explanation is correct, Cullen. But you should add that in the four years before August 2007, American homeowners extracted about a trillion dollars of equity from their homes and spent it (See graphs at Calculated Risk for a partial explanation. See p. 7 of Debt Spiral for more info.). That made the economy look that much better than people's disposable income would have made it. It was the reversal of that process of equity extraction that damaged the economy most immediately.
    Query whether the economy is now being propped up by lending such as subprime car loans. If you assume that subprime car loans are going to default in large numbers, you then would assume large numbers of repossessions and a double whammy on car sales, as sales to subprime borrowers no longer take place and repossessed late model cars flood the market.

    The most fundamental problem, as I assume you know, is that middle class earnings peaked in 1999. Consumption increases since then have had to come from borrowings.
    Jul 25 09:04 AM | 13 Likes Like |Link to Comment
  • Does QE Finance Government Spending? [View article]
    "The idea that the Fed is financing the deficit implies that the US Treasury could not otherwise sell the bonds at the current rates. I find this very hard to believe"

    But was the Fed's rationale not that QE would depress long-term rates? Are you saying that long-term rates are market rates nevertheless?
    Jul 24 09:04 AM | 1 Like Like |Link to Comment
  • Yes, Interest Rates Are Artificial [View article]
    In your Canadian example, you say that the amounts involved in the transactions where rates actually are set are trivial, but nevertheless they are used as benchmarks for other rates. That, it seems to me, elides the question of the extent to which the benchmark rate controls when credit risk, duration and other factors are considered in the private rate-setting. Do the relationships between market rates and the benchmark rate remain constant? Or do they have the capacity to fluctuate? E.g., the TED spread type of change that occurs when creditworthiness comes into question.
    Jul 17 10:08 AM | Likes Like |Link to Comment
  • Eye On The Market Broadcast: Household Incomes And Inflation [View article]
    The state-by-state is a real eye-opener, Doug. Thanks.
    Jun 23 08:25 AM | 1 Like Like |Link to Comment
  • Market Valuation, Inflation And Treasury Yields: Clues From The Past [View article]
    Thanks, Doug.
    Apr 5 02:20 PM | Likes Like |Link to Comment
  • Is The Stock Market Cheap? [View article]
    Doug, the PE10 implies a rate of return, does it not? A p.e. of 25 should imply a 4% rate of return, to put it simplistically. What would it look like to graph the implied rate of return of the PE10 against a basket of interest rates, including both long and short rates?
    Apr 3 11:33 AM | Likes Like |Link to Comment
  • Regression To Trend: A Perspective On Long-Term Market Performance [View article]
    Excellent as usual, Doug. And I presume that it is low interest rates that keep the stock market up. If that is correct, then when interest rates go up, the stock market will go down. We know interest rates will go up. We just don't know when or how much.
    Apr 2 04:26 PM | 1 Like Like |Link to Comment
  • Un-Redeeming Greenspan: Why The Fed Was To Blame For The Housing Bubble [View article]
    Nicely done. But you are missing the transatlantic piece. The European banks bought a large part of the PLS-based securities (either directly or through conduits) as a regulatory arbitrage that had close to infinite returns on regulatory capital despite slim spreads. The Fed's FAS 46 ruling in 2004 also was crucial because it opened the way for bank conduits that were effectively guaranteed by the banks to issue ABCP and make loans with the proceeds (not necessarily in that order), again with practically no regulatory capital to back them up.

    The bottom line, IMO, is that the Fed and other central banks, as well as politicians, love loose credit because it makes the economy look good--until it doesn't.
    Apr 2 04:03 PM | 1 Like Like |Link to Comment
  • 'Keynesian' Myths And Misunderstandings [View article]
    Is there any difference when investment means R&D rather than buying plant and equipment?

    Is there any difference when investment means designing and implementing a marketing program rather than buying plant and equipment?

    Is there any difference when investment means buying plant and equipment in a foreign country?

    I would appreciate an article discussing these and similar questions.
    Mar 10 09:17 AM | Likes Like |Link to Comment
  • The Big 4 Economic Indicators: Real Personal Income Less Transfer Payments [View article]
    Great stuff, Doug! Rewarding to study.
    Mar 4 02:16 PM | Likes Like |Link to Comment