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  • Fiscal Grand Bargain: Are Spending Cuts And Revenue Increases Both Needed? Part 2 [View article]
    Huh? I thought part of what the election showed was that we've decided to allow the use of math...

    So, If for example, Massachusetts pays more in Federal taxes than it receives in Federal support, and Mississippi receives more in Federal support than it pays in Federal taxes, how does the per capita basis matter?

    The point jerrydd was trying to make is that there is a very high correlation between the blueness of a state and ratio of the federal payments to the federal receipts.
    Nov 13, 2012. 12:04 PM | Likes Like |Link to Comment
  • Fiscal Grand Bargain: Are Spending Cuts And Revenue Increases Both Needed? Part 2 [View article]
    Well if spending less on nation defense is a radical idea, we need to start talking about how to make it more mainstream. The US spends almost as much as the rest of the world combined on "National Defense". If there is a conflict any where in the world, we're involved. Throughout the history of the US there was always a tax increase to pay for our wars -- Until the Afghan and Iraqi wars (where there was a tax decrease). Most people would call me liberal, but I consider myself a fiscal conservative. And as such, I need someone to explain the return on investment for the money we are investing in conflict in the middle east. Which is to say why aren't we trying to win the religious wars the same way Germany is trying to win the battle of Europe (I.E. economically instead of militarily)?
    Nov 11, 2012. 09:59 AM | 3 Likes Like |Link to Comment
  • Bernanke Doubles Down On Fed Put [View article]
    James, I have no reason to believe The Fed has specific intentions to distribute wealth to any particular segment. Certainly the removal of limits for financial influence in politics and incestuous relationship between Goldman Sachs and the Fed should cause worry about the future, but the point of my concern is the unintended consequences of the CURRENT actions the Fed. I believe the Fed is actually trying to keep this giant "house of cards economy" standing by any means possible.

    And, I agree that the Fed cannot target who the beneficiaries are. But my point is that our current policies (that tax income from labor much more heavily than income from investment, at the same time when demand for labor does not exceed supply) are going to continue to redistribute wealth to the owners of the most valuable (not highest price) wealth assets (…calling these people traders in my earlier post was incorrect and confusing).

    My point was that I'm not concerned that QE3 will cause inflation. My concern is how risk is being redistributed. Removing returns from the lowest risk investments (i.e. treasuries) forces the search for returns to investments with more risk. As you point out trading is a zero sum game. Actually, I believe it is more like a casino where the house takes their cut off the top prior to distributing the "winnings". But the difference is while the casinos understand that gambling is a losing game, the investment firms seem to be allowed by current policy, and forced (by ZIRP, etc) to take their "house money" and put it back into the game. This appears to me to be a very unsustainable state.

    Inflation will eventually occur. But assigning who the beneficiaries are will be much more complex than just debtors. Inflation does not equally distribute itself among all prices (wages, commodity prices, retail, wholesale, and interest rates, etc). So the simple notion that debtors will benefit assumes that the debtor has the cash flow to continue to pay off the debt. In this regard the poor have always been screwed The lie that the poor could be debtors is what got his ball rolling...). The middle class have not yet realized how screwed they are because the availability of debt allows most of them to continue to muddle through. The rich think they've got it made because on paper they are doing great; some will win, some will lose. Of course the uber-rich will all be winners because ultimately the thing the winners will have in common is that they are the actual owners of (not people that borrowed to own) cash flows that give them the unrestricted choice to be lenders or borrowers (as an investment choice and not as a necessity).
    Sep 3, 2012. 11:44 AM | 1 Like Like |Link to Comment
  • Bernanke Doubles Down On Fed Put [View article]
    Thanks James!

    But I'm still a bit confused. It seems to me that what the Fed is holding is treasuries that were purchased at inflated prices (QE artificially affects total demand). And while the purchase of these bonds by the Fed may make the bonds seem like a good investment in the short term, the holding of an excessively large position of bonds purchased at the top of a market that have coupons less than the rate of inflation feels like a transfer of value to somewhere else. Since the equity markets seem to be the major beneficiary of QE I come to the obvious conclusion... But I really don't believe this is a conspiracy; it's just an example of how benefits get distributed between renters and landlords (i.e. borrowers and lenders).

    And perhaps what we're looking for is not an example of a tipping point but more of a tripping point (where it's not one more straw on the donkey's load that brings it to its knees but the unseen obstacle in the path it's on...)
    Sep 1, 2012. 08:51 PM | Likes Like |Link to Comment
  • Bernanke Doubles Down On Fed Put [View article]
    James, All this talk as if people know what they're talking about leaves me with a number of questions. The most interesting is where does all that QE money actually go? The fact that "inflation is not a concern" seems to me to be something that someone should be concerned about. I am not encouraged by the observation that in the current economy there appear to be multiple forces that are tending to lower wages. Or that so far, only commodities such as oil that are sold in dollars worldwide seem to have resultant price increases. So if all the QE money is ultimately just profits for the trading of financial instruments, where is the benefit in an economy that is not growing? Is it simply a hidden transfer of wealth to the traders with the largest positions? And most importantly is there a tipping point in this process that has unintended consequences?
    Sep 1, 2012. 10:48 AM | 3 Likes Like |Link to Comment
  • JPMorgan's (JPM) trading loss could reach $9B, say people briefed on the situation, with red ink piling up as JPM moves faster than expected to exit its money-losing positions. Jamie Dimon was way off when he warned in May that the initial $2B loss could double in coming quarters. JPM will disclose more details in its July 13 earnings report.  [View news story]
    So what you're really saying is: "I can't believe I didn't sell my JPM earlier."
    Jun 28, 2012. 09:39 AM | 2 Likes Like |Link to Comment
  • Markit flash eurozone PMI comes in at 48.7 vs. 49.2 expected and 49.3 prior, suggesting the eurozone has slipped back into a technical recession. Following the weak numbers, EU's Barroso says the sovereign-debt crisis is far from over. Euro -0.45% to $1.315.  [View news story]
    technical recession: Well, actually it is a recession, but all the words used to describe it must be positive and encouraging to long investors...
    Mar 22, 2012. 10:33 AM | 1 Like Like |Link to Comment
  • Politicians' talk of $2.50/gallon gasoline isn't realistic, and the U.S. already enjoys the "cheapest energy in the world,” T. Boone Pickens says. He's “frustrated” that legislation which would put more natural gas into commercial trucks has gone nowhere: "You put natural gas... into heavy-duty trucks, you can bring down the price of diesel gasoline. I don’t understand why they [Congress] don’t understand."  [View news story]
    They don't understand because unlike T-Boone, they don't stand to make their next $billion from their investments in natural gas....
    Mar 6, 2012. 05:54 PM | Likes Like |Link to Comment
  • S&P cuts Greece's credit rating to SD - Selective Default - from  CC following the country's insertion of retroactive collective action clauses into its debt. "The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms ... (it) materially changes the original terms of the affected debt."  [View news story]
    With all 5 major Central Banks actively printing; I think the real question is as we print the $50 trillion needed to avoid collapse by deflation, are we also printing it slowly enough to avoid collapse by inflation...
    Feb 29, 2012. 08:30 AM | 1 Like Like |Link to Comment
  • S&P cuts Greece's credit rating to SD - Selective Default - from  CC following the country's insertion of retroactive collective action clauses into its debt. "The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms ... (it) materially changes the original terms of the affected debt."  [View news story]
    Yes It's crazy! But what do you think all the negotiations have been about. Go look back at how much money is allocated to "sweeteners". This is the new label for what used to be called bribes and kickbacks before corruption was legal. The goal of all of this is to transfer the losses from the private sector to the public sector before it all comes apart. Last October, I would have said: Impossible! But now, it looks to me like they actually may be able to pull it off.
    Feb 28, 2012. 08:27 AM | Likes Like |Link to Comment
  • S&P cuts Greece's credit rating to SD - Selective Default - from  CC following the country's insertion of retroactive collective action clauses into its debt. "The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms ... (it) materially changes the original terms of the affected debt."  [View news story]
    Well, if there's anyone important that's still unhappy., it just means someone forgot to pay a bribe... Time to print more money!
    Feb 27, 2012. 05:32 PM | Likes Like |Link to Comment
  • Global Question For Bureaucrats: What Have You Done For Us Lately? [View article]
    Greece has already defaulted. All that's left is to decide who plays the part of Lehman Bros and who is Goldman Sachs...
    Feb 15, 2012. 09:07 AM | Likes Like |Link to Comment
  • Initial Jobless Claims: -19K to 366K vs. +9K consensus. Continuing claims +4K to 3.60M.  [View news story]
    Fortunately for the market, math word problems direct the reader to the irrelevant.

    Initial Jobless Claims: -19K to 366K vs. +9K consensus
    that means less people were fired than the previous period (and the wild ass guess made by "experts")

    Continuing claims +4K to 3.60M
    that means the total number of people still able to claim benefits (i.e didn't find a job) increased.

    I'm sure it will be spun positive, but given that over the same period that the number of newly unemployed decreased and the total number of unemployed increased; that's not good news for the unemployed...

    And given that people whose unemployment benefits have run out (or are looking for their first job) are simply not counted; the real unemployment picture is really discouraging.

    I can only imagine how bad it would be if it weren't for the Republicans protecting the job creators tax status...
    Dec 15, 2011. 10:04 AM | 4 Likes Like |Link to Comment
  • A Week Of Historic Economic Tragedy Ahead [View article]
    The trick is to not tell anyone... The Fed loaned $7.7T to the banks interest free in 2008, then the banks made $168M for their bonuses and then paid it all back before anyone knew about it.

    Combine that with the fact that Paulson has shown insider trading isn't illegal when you're in the right circles and a simple solution is obvious,

    Why can't the ECB just take a huge "loan" from the FED, make a giant leveraged "bet" on the market, make public the information that makes the bet pay off, cash in, buy all the bad debt, pay off the players that don't want to go along, pay back the FED, and end all this uncertainty.
    Dec 5, 2011. 09:21 AM | 5 Likes Like |Link to Comment
  • European leaders say that Greece will receive no more bailout aid from Europe until it agrees to meet its commitments to the euro zone. Speaking after talks concluded between senior EU leaders and Greek Prime Minister George Papandreou, French President Nicolas Sarkozy told a news conference: "Our Greek friends must decide whether they want to continue the journey with us."  [View news story]
    And of course the other issue is: what problem is solved if Greece continues to take this (and subsequent) bailouts? Austerity and periodic money from the other eurozone countries will not fix the Greek Economy. The only benefit is the can gets kicked down the road one more time it gives France & Germany more time to leverage Spain and Italy as they pretend they have found a solution.
    Nov 3, 2011. 09:41 AM | Likes Like |Link to Comment
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