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  • Europe Is Coming Apart [View article]
    Yes, I second that, very little to disagree with, as it happens.
    Oct 19 11:58 AM | 1 Like Like |Link to Comment
  • Europe Is Coming Apart [View article]
    Ok, if you want to play wordgames I'll leave you to it. I gave you a link where I set out my position on the topic.
    Oct 18 10:03 PM | 2 Likes Like |Link to Comment
  • Europe Is Coming Apart [View article]
    You seem to suggest that I want to abolish the financial sector. Nice straw man argument, but it's not what I want. Even in the quote I specifically refer to the financial engineering part, certainly not all banking or finance.

    Luckily I have set out my position in greater detail here;
    http://seekingalpha.co...

    The cost of the crash? Do you really have to ask?
    Oct 17 06:52 PM | 2 Likes Like |Link to Comment
  • Europe Is Coming Apart [View article]
    ["First, the bailouts specifically of the financial sector didn't cost money, they made money for the Treasury"]

    I wasn't just mentioning the bail-outs but the crash itself. Compared to the cost of the crash, the bail-outs aren't even a rounding error.

    And where do I argue for, or even suggest I want to abolish the financial sector? I want to regulate it better so that the chances of it crashing the economy are reduced, not abolish it at all.

    We were able to do that from the 1930s to the 1980s, it isn't rocket science.
    Oct 17 02:57 PM | 1 Like Like |Link to Comment
  • Europe Is Coming Apart [View article]
    ["the services provided by the sector are concretely valued by its customers at a lot more than its costs."]

    Undoubtedly true for many, but quite a few, those who were persuaded to take on mortgages that they really couldn't afford, this isn't the case

    Further, what helps enormously is that large parts of the costs are externalized, bail-outs, broken economies, etc.
    Oct 17 11:29 AM | 1 Like Like |Link to Comment
  • To The Fed's Critics: Deflation, Rather Than Inflation Was Always The Bigger Risk [View article]
    William, you take some beating in the cognitive dissonance department. Your model predict hyperinflation as a result of "money printing" yet

    - for five years, nothing of that hasn't materialized.

    - The same in Japan

    - At the end of QE, bond yields plunge, not explode, the bond market clearly doesn't believe you. Aren't markets always right?

    - You brush aside a simple model that can explain all this and more as Keynesianism and that's supposed to be bad, despite overwhelming evidence that what produced the crisis was a lack of demand, hence a very Keynesian world

    - You brush aside Japan's experience with deflation and proclaim it good, yet you have to acknowledge that wages will simply fall with prices and why would rational consumers going on a spending spree if they expect prices to be lower tomorrow? Why not look at countries that have had actual experience with deflation before you announce it as something to be welcomed.

    Basically you live in a fantasy world, your economic model doesn't explain anything that is actually happening out there, and brush aside models that do much better without any further explanation.

    I'm done discussing with you, you go on live in your fantasy world, it's hard to argue with true believers that can rationalize everything, in your case whole swathes of reality, away for the sake of what? Ideological purity?
    Oct 17 10:00 AM | 3 Likes Like |Link to Comment
  • To The Fed's Critics: Deflation, Rather Than Inflation Was Always The Bigger Risk [View article]
    ["Please explain to me how deflation is a "risk" to the economy. How is an increase in consumer purchasing power a "bad" thing?"]

    Sigh. you think nominal wages would stay at the same level? You think consumers are going to spend more when they expect things to get cheaper tomorrow? You think debt levels aren't going to explode with deflation?

    And yes, I'm siding with Keynesian economics, simply because:
    - I suppose in your textbook universe markets always clear and Say's Law holds all the time, but out there is overwhelming evidence that the crisis was one of demand shortfall, most notably caused household deleveraging after $9T was wiped of their balance sheets and the secondary effects this produced. I've put some arguments and figures in the article, but instead you think
    - If everybody start deleveraging at the same time you get funny things, stuff like a liquidity trap, a balance sheet recession, or even a Fisherian debt-deflationary cycle.
    - And guess what, the economy has behaved exactly according to these Keynesian models, where in a demand shortfall, expansionary monetary policy isn't very effective but doesn't produce inflation, big budget surpluses do not drive up interest rates, etc.
    - Not even the markets believe in inflation, QE is coming to an end and what happens? Bond markets crashed, not exploded.

    All you do is labeling me a Keynesian (terrible, I should be arrested!) and saying it's not true, hyperinflation is just around the corner, the US economy is worse off (while in fact it has the best recovery in the developed world). You might wanna study what happened in japan after 1990, deflation, not inflation. Same sort of economic shock.

    ALL you say is basically based on a prediction that hasn't materialized and there is a simple Keynesian model explaining why it hasn't happened so I'm not sure how you can condemn that a-priory with such aplomp. While you're explaining an imaginary world, that simple Keynesian model explains the real world.
    Oct 17 01:19 AM | 3 Likes Like |Link to Comment
  • To The Fed's Critics: Deflation, Rather Than Inflation Was Always The Bigger Risk [View article]
    ["No, it's not. It's the world's reserve currency. But the Fed wants it to be the world's ONLY currency, giving them worldwide economic power."]

    Complete nonsense

    ["Because it's a certainty it will actually happen. You can't print money without experiencing inflation."]

    You might have to actually read the article. If not that, look at the markets. QE is coming to an end and what do the bond markets do? They collapse, not explode.
    Oct 17 12:32 AM | 2 Likes Like |Link to Comment
  • Europe Is Coming Apart [View article]
    Communism, socialism, these are mostly empty terms these days used by people who only have a vague grasp of their meaning and prefer labeling instead of dealing with arguments. It's tiring. It belongs in a political philosophy blog, not here, this is about economics, how to improve the economy. I don't really care what label is stuck on it, as long as it works.

    After all those years writing here for a largely American public I still have to get used to the level of ideological rectitude here. Nothing remotely comparable exists in my own country. We can learn a lot from America, to have a dispassionate economic debate is definitely something you guys can learn from us.
    Oct 16 07:25 PM | 4 Likes Like |Link to Comment
  • Europe Is Coming Apart [View article]
    Cap leverage, higher capital requirements, fix perverse incentives, couple mortgages to income, downpayments, etc.

    It was done in the 1930s, we didn't have a financial crisis until it was liberated in the 1980s, I think much of the financial engineering doesn't contribute to GDP (it's zero-sum exchange) and might well detract from it (you know, the trillions in production we lost since 2008..)
    Oct 16 07:11 PM | 1 Like Like |Link to Comment
  • To The Fed's Critics: Deflation, Rather Than Inflation Was Always The Bigger Risk [View article]
    ["Bernanke is trying to make U.S. exports so cheap that the U.S. dollar becomes the world's currency."]

    The dollar was the world's currency before bernanke was born

    ["When inflation hits - which it certainly will - the dollar's value will crash. People can either choose to acknowledge the truth, or sit back and watch as most of their wealth get eaten away by hyperinflation."]

    I'm glad you are so confident, but why should we acknowledge "the truth" before it actually happens. Especially as there are people like me who actually think deflation is a bigger risk..
    Oct 16 03:35 PM | 2 Likes Like |Link to Comment
  • QE Forever Is What Stocks Want [View article]
    ["Long-term investors should be appalled by what James Bullard said this morning. Unless the Fed does QE forever, the day of reckoning for stocks will eventually come. In the meantime, the Fed keeps sucking more and more money into a market that is trading at valuations that won't be sustained in a QE-less world."]

    QE is ending this month and monetary policy isn't targeting asset prices. If the economy can stand on its two feet, so should asset prices be able to, perhaps. More importantly, those that erred on the side of caution and raised rates have come to pay for it (eurozone 2011, Sweden 2013).

    Low rates are not primarily caused by central banks but by a world savings glut. In the face of the prospect of the end of QE bond yields have tumbled, not exploded.
    Oct 16 03:06 PM | 2 Likes Like |Link to Comment
  • To The Fed's Critics: Deflation, Rather Than Inflation Was Always The Bigger Risk [View article]
    ["So it can be seen here that the second round of the implementation of the Quantitative Easing Policy, and in particular the Large Scale Asset Purchases, was tied to concerns about deflation."]

    And with respect to that, not entirely without success, but imploding, not exploding bond yields show what's lying underneath.
    Oct 16 01:49 PM | 1 Like Like |Link to Comment
  • To The Fed's Critics: Deflation, Rather Than Inflation Was Always The Bigger Risk [View article]
    ["How so? Why hyperinflation? Why not Japan? Constant, turgid disinflation and deflation. With UE at around 5%."]

    Yes, the essence of the article is that that was always the much bigger threat.
    Oct 16 01:17 PM | 1 Like Like |Link to Comment
  • To The Fed's Critics: Deflation, Rather Than Inflation Was Always The Bigger Risk [View article]
    Lessons from Sweden:
    http://bloom.bg/1rf4PQ9
    Oct 16 09:29 AM | Likes Like |Link to Comment
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