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  • Anti-austerity Syriza set to sweep Greek elections  [View news story]
    Exactly: default is a trick that works once but Greece will still have an economy that's more than 50% government and no way to pay for it without borrowed money. Ultimately "austerity" means Greeks need to produce enough of value to pay the bills - in the long run what else will work?
    Jan 25, 2015. 05:04 PM | 3 Likes Like |Link to Comment
  • Worried About Not Being Worried  [View article]
    The cash created has ended up on corporate balance sheets or in the hands of wealthy individuals. There's only so much food and gas the upper 1% can consume so it's no surprise the inflation is showing up in assets that appeal to them particularly if they can be viewed as investments. This includes expensive property in SF and NYC, as well as art, and yes stocks. Only indirectly is this spilling over into the Joe Sixpack economy. JMHO.
    Jun 4, 2014. 09:29 AM | 2 Likes Like |Link to Comment
    Charles, out of curiosity, try adjusting that minimum wage for CPI-W intsead of the standard inflation metric.
    May 12, 2014. 01:05 PM | Likes Like |Link to Comment
  • Market Decline: Get A Grip!  [View article]
    Well some of us look at it and say, shucks, we can accomplish our goals with the savings we have now - oops, unless there's inflation. And there's the rub - with yields on bonds at government mandated absurd lows, we face a Hobson's choice of taking equity risk, or taking inflation risk. We don't have a choice that doesn't involve risk. Well, I guess we could work till we drop dead.
    Jan 28, 2014. 12:55 AM | 1 Like Like |Link to Comment
    There really isn't any such thing as capitalism - there's freedom, and then there's everything else.
    Marx invented the term capitalism to make it seem as if all the alternatives were just isms.
    Jan 17, 2014. 10:06 AM | Likes Like |Link to Comment
  • Portfolio Projections From 2013  [View article]
    Thanks as always IT. Re. stocks, you've put them all in one bucket, but it seems what you mean to say is "US equities". What about international equities? During the most recent leg up in bubble 3.0, they've lagged noticeably. Might their prospective returns therefore be a lot better than what you've cited for stocks here?
    Dec 17, 2013. 10:31 AM | Likes Like |Link to Comment
  • Is There Skill In The Mutual Fund Industry?  [View article]
    If at some point investors have largely abandoned active funds, we might see investor capital available to active strategies become a scarce resource, such that those investors can expect a more reasonable share of the alpha. A new equilibrium would be reached that would keep enough active investors in the game to hopefully continue the valuable price discovery function of our markets. Think of a world where virtually all regular joes invested in index funds and a small pool of accredited investors and pension funds extracted and shared in the small alpha available from active strategies.
    Dec 13, 2013. 07:48 PM | Likes Like |Link to Comment
  • The Effect Of The Affordable Care Act On Medical Care Inflation  [View article]
    The ACA could conceivably reduce overall heathcare costs by insuring more people due to earlier, more effective treatment of problems. On the flip side, people may consume more preventative healthcare, but that would roughly equate to the candy bar getting bigger as well as pricier. Other than earlier treatment, I don't see much in the ACA that would actually bring costs down. Had they passed a single-payer system one could see monopoly buying power being used to force down costs, though the flip side of that is that quality and quantity might also be forced down (shrinking the candy bar).
    I'm not sure how worried to be about health care's share of GDP. After all, many components of GDP have shifted over the past 100 years. For example, a lot smaller fraction of GDP is spent producing food, but this isn't because we produce less food - we produce enough food and are rich enough to produce many other things, including better health care.
    Dec 5, 2013. 10:40 AM | Likes Like |Link to Comment
  • More QE Risks Higher Inflation  [View article]
    You have cause and effect backward - velocity is low precisely because there's been so much QE and it's all going to institutions that are just parking the reserves. Look at a long term chart of velocity and you'll see that it's at unprecedented lows.

    So are you apologists saying not to worry because you're hoping/expecting that this sorry state of affairs is here to stay? If not, then how will the fed ever unwind all the QE as velocity rises and avoid high inflation? Your position is not unlike that of global warming deniers who can claim there's nothing to worry about because disaster hasn't yet occurred - it's not a serious argument. I have yet to see any of you offer a plausible exit scenario that doesn't involve high inflation, and we worriers suspect it's because you either haven't/won't think it through, or you can't make the numbers work.
    Nov 5, 2013. 09:55 PM | 1 Like Like |Link to Comment
  • Inflation, Deflation, And Putting  [View article]
    Apologists for current policy always point to the fact that things haven't blown up yet. But no one ever asks them how inflation is avoided in the future. It seems that one of two very unlikely things will have to be true in the future: (1) historically low velocity will persist for decades, or (2) economic growth will rebound to developing country levels. I doubt they'd claim (2) with a straight face. So would they be forced to admit their hoping for (1), a Japan-like outcome?
    Oct 4, 2013. 11:51 AM | 1 Like Like |Link to Comment
  • Fed Tightening Is The Real Issue, Not Tapering  [View article]
    I also am skeptical that it can be unwound in any reasonable time frame. So what happens if velocity and /or lending ever begin to pick up? Both are at extreme, never before seen lows - would have been nice to see those charts too. Still a great article, thanks for posting it.
    Sep 24, 2013. 12:32 AM | 1 Like Like |Link to Comment
  • Straight Outta Stockton: Meredith Whitney Comes Out Swinging In 'Fate Of The States'  [View article]
    You forgot to mention the underlying driver - politicians anxious to buy votes with extra services their taxpayers can't really afford, and pension benefits to political allies that gladly get votes today in exchange for benefits to be paid tomorrow when they're safely out of office. Tomorrow is arriving fast.
    Jun 5, 2013. 03:32 PM | 1 Like Like |Link to Comment
  • S&P 500 Price Is 2 Years Ahead Of Earnings  [View article]
    Ah, but share prices will correlate with EPS, not total earnings per se. Imagine a world where earnings are barely moving forward but companies with no better alternatives use their excess cash to retire shares.
    May 30, 2013. 11:45 PM | Likes Like |Link to Comment
  • A False Dawn In The Land Of The Rising Sun  [View article]
    I wouldn't call Japan's demographics "frightening". I'd call exponential population growth in the face of limited natural resources frightening! At some point, the world as a whole will have to undergo a similar transition, at the very least to a stable population. This could happen as soon as 2050. Japan is giving us a peek into the future.
    May 28, 2013. 10:54 AM | 2 Likes Like |Link to Comment
  • Beware Long-Term Damage From Stock Market Bubble Forming Now  [View article]
    "distortions in relative prices are actually more dangerous to the economy than across-the-board price inflation"

    This is a very important insight, and I can't understand why mainstream economists don't seem to realize this or even acknowledge it.
    May 17, 2013. 10:47 AM | 4 Likes Like |Link to Comment