imnotadoofus

The Diminishing Impact of Debt on U.S. Economic Growth

A LOT HAS BEEN SAID THAT WE ARE EMBRACING KEYNESIAN SOLUTIONS; THAT IS MASSIVE DEBT INCREASES TO FOSTER MORE CONSUMPTION. BUT VON MISES AND ROEPKE ALSO POINTED OUT THAT GOVERNMENT OWNERSHIP AND CONTROL THROUGH HEAVY REGULATION ACTUALLY IS MORE AKIN TO THE FASCIST ECONOMICS OF GERMANY, ITALY and SPAIN DURING THE 30s. THE CONTROL OF CAPITAL, NOT THE OWNERSHIP IN THE MAIN, WAS THE ESSENCE OF THAT STRATEGY. FOLKS TEND TO FORGET THAT HITLER HAD THE BANKS AND MAJOR INDUSTRIES UNDER HIS CONTROL OR IN HIS CAMP DURING HIS CHANCELLORSHIP BEFORE WWII. LITTLE DID THEY REALIZE HOW THEY WOULD BECOME PRISONERS OF HIS MADNESS AS WELL.

Marc Faber: 'It Will All End in Disaster'

Keynesian economics did not pull us out of the Depression as by 1939 the unemployment rate was still 25%. It was WWII and massive restrictions on spending via coupons, etc., resulting in forced savings, that were part of the answer. And the result was a massive increase in investment in the War Machine rather than massive transfer payments that Obama proposes. The balance was monetary policy during the war years.

Robbing Peter to Pay Paul is not the answer and can hardly be considered morally edifying even if the President suggests that it is. And converting the Fed Government into a massive money machine when no one knows whether they have won or lost in the game just encourages corruption on a similar scale. And all the masses know is that they did not get their "fair share" and that someone else has to be tapped for that as well. The end result, as a recent member of the EU said, is the "road to hell."


On Mar 25 03:38 PM Just Say Whoa! wrote:

> >These Austrian Economists have been shown to be right, but the Keynesians
> are still in control of policy.
>
> Yeah!
>
> The Hoover administration practiced Austrian economics ("laissez
> faire approach to the economy").
>
> That was fabuously successful! Why it led to something called "The
> Great Depression".
>
> The Great Depression was loads of fun for Americans and Europeans,
> too!
>
> 25% of young American boys were too malnourshed to be accepted by
> the military in WWII. What a stroke of genius these Austrian economists
> are, huh?
>
> And who ended the Depression? Austrian economists?
>
> Yeah, it's not like the massive Keynesian spending on military equipment
> that the US did in it's buildup to WWII pulled us out of the Depression?
>
>
> What? It did?
>
> But this guy says that Keynesian spending don't work!

Obama to the Rescue?

I keep getting irritated when journalist keep insisting that the $700 billion "bail-out" was to rescue Wall Street. Does the writer mean Bear Stearns, Lehman, Wachovia, etc. They are gone and the survivors have been decimated and thier principals' economic benefits destroyed in the process. The process is to buy mortgages from community banks and other regional banking entities--as well as insurance companies and foreign banks--that hold these mortgages at the insistence of the Democratic supporters in Congress who insisted that Fannie and Freddie support the origination of these "toxic loans." Wall Street was also urged to securitize them by these GSE institutions. So how the $700 billion is really a bail-out of those who bought these loans, not the originators of the SIVs, CDOs, etc. Wall Street was an only the producer of these vehicles. And now they have suffered as a result and are blamed for the crisis, which is nonsense.

Amity Shlaes: Paulson Plan Bring On Accounting Deja Vu

As a professional investor I have argued with colleagues that the mark to market imposition imposed by FAS 157 and 159 beginning late in 2007 would have consequences. A CEO of a mortgage REIT told me that he was concerned about Bear Stearns. I asked why and he said that with $300 billion in assets it only required a 5% haircut to eliminate its capital, which was $15 billion. I thought he was too pessimistic since the Bear was a venerable Wall Street institution, but he suggested that FAS 157, the "fair value" accounting rule, would wipe out its capital.

So much for the Bear. Now it--FAS 157--has further eroded capital across the financial sector and has been instrumental in the demise of WaMu and probably the cause of the impromptu marriage of Wells and Wachovia. But it also was partly responsible--in my opinion--for the many other disasters that have these past few months. As capital is eroded by the irrational mark downs, investors and wholesale funding agencies pull their lines and/or withdraw funds. And the rating agencies also contribute to the downward spiral by calling into question the ability of institutions to survive its downgrades. All this because of a foolish mark-to-market rule that bears little resemblance to the actual value of the assets in question. ABX and CMBX are the arbiters, not the discounted cash value of the asset in question, whether pooled real estate mortgages or other assets similarly packaged and sold world wide. So goes the conflagration!!!!!