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Martin Lowy

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  • 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
  • How 2014 Could Be Like 1929 [View article]
    Thanks, Cam. Insightful, as usual.

    Does it not appear quite possible that the Chinese Govt/banks will use some form of extend and pretend so that even though 43% will come due in 2014, most of it will be rolled over even though it may not be creditworthy? That has been the pattern elsewhere in the world in such situations.

    If that is correct, then the denouement will not occur in 2014 but the amount of the risk will grow for the future. Will China eventually monetize the risk (while at the same time reforming the system, as it reduces its level of financial repression)? My guess is that the leaders understand all this and that they will get through two more years while they figure out the best policy combination.
    Feb 17 09:21 AM | 4 Likes Like |Link to Comment
  • These Charts Speak Louder Than Words [View article]
    You only used percentages. Don't you have to multiply percentages by numbers of people in the category? My understanding is that the number of people in the over-65 age group has been growing significantly as the boomers age. No?

    Most responsible estimates put the percentage of the decline in the participation rate due to retirements at around 40%. Some say 50%. That leaves plenty of room for the other factors as well. Why argue that the entire sky is falling? Isn't a piece of it sufficient?
    Feb 15 10:07 AM | 5 Likes Like |Link to Comment
  • Repo Markets Demand Taper Because Of Taper [View article]
    Nice. Isn't it wonderful that the over-leveraged might actually get caught again? The best thing that could happen to reduce the income of the 1%.
    Feb 13 10:02 AM | Likes Like |Link to Comment
  • Why The Next Global Crisis Will Be Unlike Any In The Last 200 Years [View article]
    The graph is indeed arresting. How big a crisis becomes, however, is likely to be based largely on the degree to which the debtors have borrowed in currencies that they are able to print. Although it is true that sometimes governments default on obligations in their own currencies (e.g., Russia after the breakup of the Soviet Union), that usually occurs only after a political upheaval. I wonder whether political upheavals are likely in, say, the U.S. or Japan.

    In most cases of overindebtedness in one's own currency, nations inflate their way out of the problem. That has its costs, but it does not necessarily entail crisis. Financial repression also can take other forms that also do not create crises.

    The indebted nations in the euro seem to me most likely to be at risk, and that will cause problems for all who have lent to them. But will that trigger a global crisis when most large investors do know the difference between borrowing in one's own currency and borrowing in something else.

    So, yes, slower growth, I agree. A discrediting of economic theories that exalt debt, I sincerely hope. But global crisis worse than 2008, I do doubt.
    Feb 11 04:14 PM | 2 Likes Like |Link to Comment
  • The Crisis Of Modern Economics [View article]
    Very thoughtful. Thank you. One of your points is, I think, that using GDP as the fundamental standard for economic policy has serious flaws. I have been wondering whether there might nor be a better standard based on middle class incomes, if we could define that. My guess is that such a standard would lead to more long-term policies rather than the short-term stimulus that governments find so tempting. What do you think?
    Feb 7 12:33 PM | 1 Like Like |Link to Comment
  • Bitcoin For Wal-Mart And Target [View article]
    Fine piece, Edward, but a couple of questions: (1) Are there not some regulatory issues that might stand in the way of issuing a private currency that is effectively denominated in dollars? And since the currency is a debt obligation of the issuer, might it not be a security? Maybe not; I just raise the issues. (2) I understand your tie to the min wage, which is clever, but why should the government not do this itself? It thereby maintains control of the money supply and eliminates the issues that derive from multiple payments media. If the government did it, I think it would fairly soon lead to a global system that would supplant banks in most transactions. A great boon to consumers, though bad for the banks. I am not worried about the banks myself.
    Feb 7 12:00 PM | Likes Like |Link to Comment
  • Gasoline Volume Sales, Demographics And Our Changing Culture [View article]
    Excellent commentary, Doug. Thanks.
    Jan 25 08:49 PM | Likes Like |Link to Comment
  • The Increasing Number Of Euro Fools [View article]
    Antonio, I agree with your last sentence. But it appears that some economists do not--e.g., Krugman seems to me to have suggested that the Fed could always keep rates low, no matter what else is going on. And the central bankers seem content for people to believe that they have such powers. Perhaps an article on that subject would be worthwhile.
    Jan 9 09:25 AM | Likes Like |Link to Comment
  • How To Save The Euro [View article]
    Great summary! Thanks. I will pass this along to friends.

    One of the areas that I have been working on includes the German banks' loans to periphery entities. One of the phenomena is that the euros from German banks (and French, Swiss, Dutch and UK banks) created the local wherewithal for Irish and Spanish banks (at least) to pump up their real estate markets. The German banks might well have become insolvent if the countries involved had not bailed out their own banks that owed the money to the German banks. This complicity by the German banks in the problems of the periphery countries should, I think, get more exposure because it seems to me that it counters the German position that Germany and German institutions did not create the problems. Whether the German public could be convinced of that, I do not know. But as far I know, little has been written about the role of German (and other non-periphery) institutions in the flow of funds that created much of the current problem of periphery debt.
    Jan 8 09:39 AM | 2 Likes Like |Link to Comment