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levin70

levin70
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  • Greece Says That It Will Default On June 5th, And Moody's Warns Of A 'Deposit Freeze' [View article]
    The reason is that because no one outside of the troika is holding a material amount of greek liabilities.

    Lehman was so devastating because it triggered runs on MMA's when the rumour went around that weekend that someone would "break the buck" come monday morning. It turned out it was the reserve fund. That triggered half a trillion outflow by 3pm that monday and started the panic.

    No one wants to own greek liabilities, unlike lehman. So no, i really don't think there will be an issue this time.
    May 22, 2015. 12:31 PM | Likes Like |Link to Comment
  • Greece Says That It Will Default On June 5th, And Moody's Warns Of A 'Deposit Freeze' [View article]
    If Greece defaults and the Greek banking system collapses, stocks and bonds will crash all over Europe. Many believe that such a crash can be "contained" to just Europe, but that is really just wishful thinking.

    What evidence is there that this is true? None really. Exposure to non-governmental greek liabilities outside of greece is minimal. And almost all of the exposure to governmental liabilities is held by the troika.

    http://bit.ly/1cQiqO7

    The losses incurred by the IMF and EFSF and european central banks will have little effect on the european, UK or US banking systems, nor will the reduction in value of less than 40 billion Euro's of loans held by banks outside of greece. There is enough equity in the US, UK and european banking system to weather 40 billion euro's in losses.
    May 21, 2015. 12:05 PM | 2 Likes Like |Link to Comment
  • Yes, The Fed Does Directly Influence The Broad Money Supply Through QE [View article]
    Craig

    The FED doesn't buy it from you. A bank buys it from you. The bank credits you with increasing your demand deposit account at the bank.

    At this point, you no longer have a $100,000 treasury cert, but do have a demand deposit account at teh bank with $100,000 in it. So you are still where you were in terms of net financial assets - in this case $100,000 demand deposit instead of $100,000 treasury security.

    The bank now has your bond (asset) and also a liability (the funds in your demand deposit account. The bank now sells the bond to the FED. The bank no longer has your bond and now has a reserve account (asset) at the FED with $100,000. So now the bank has an asset (reserve account at the FED with $100,000) and a liability (the $100,000 in your demand deposit account)

    The FED now has your $100,000 bond (asset) and has a reserve balance to the bank (liability)
    May 7, 2015. 01:35 PM | 2 Likes Like |Link to Comment
  • Doubling Down On Silliness [View article]
    but in a world where Central Banks are severely limited (legally) in what they can do I just don't see the transmission mechanism through which Central Banks can achieve this.

    Cullen: If the congress and the president were to sign a law tomorrow that granted the fed the ability to purchase any security with any duration, would Sumner's expectation argument regarding ngdp targeting become feasible in your view?
    Nov 3, 2014. 12:52 PM | Likes Like |Link to Comment
  • Student Loan Debt Crisis Debunked [View article]
    Lets get some new data to show that the problem is getting worse.

    In 2012 there were 23 million enrolled college students. Fall 2014 admission was only 21 million.

    source: http://1.usa.gov/1wrhLsD

    In 2012 total student loan balance outstanding was $1,131 trillion. In 2014 total outstanding student loan balance had increased by 143.3 billion to $1,274 trillion (this amount is before enrollment of 2014 academic year: balance is as of June 30, 2014).

    Source: G.19 report from the fed at http://1.usa.gov/1chfTup

    So admissions are actually declining but loan balances are still increasing substantially. Of course, this in no way whatsoever could have an effect on spending by these individuals as the author of this article portends.

    Regards
    Oct 20, 2014. 11:43 AM | 1 Like Like |Link to Comment
  • Japan's Public Debt Problem Will Have Global Implications [View article]
    The examples you site are completely wrong.

    Greece has no control over its currency. The European Central Bank is the only entity that can issue Euro's - Greece cannot. Greece is a currency user, not a currency issuer

    The argentine debt in question was issued and payable in US dollars. Again, Argentina has absolutely no control and cannot issue USD.

    Again, i reiterate. Every JPY outstanding under JGB's will be paid at 100% face value. The only question is how much inflation will result.
    Oct 1, 2014. 12:18 PM | Likes Like |Link to Comment
  • Japan's Public Debt Problem Will Have Global Implications [View article]
    There is zero probability of default. Japan is a sovereign currency issuer. Every JGB will be paid at 100% of face value. The only question is how much inflation will result, not if default will occur.
    Sep 30, 2014. 04:55 PM | 1 Like Like |Link to Comment
  • Long-Term Outlook - Bleak! [View article]
    Good article.

    I would add a 5th concern. Decline of real entrepreneurship. Too much wealth creation through rent seeking behavior is occurring today versus real wealth creation through entrepreneurship.
    Sep 29, 2014. 03:33 PM | 3 Likes Like |Link to Comment
  • A MMT View On The Theory Of Hyperinflations [View article]
    Hyper-inflationary events are typically born out of either (a) civil war or (b) losing a war while being invaded. They don't happen outside of exogeneous events.
    Sep 29, 2014. 02:07 PM | Likes Like |Link to Comment
  • What Everyone Remembers That Never Happened: Why Job Growth Will Be Revised Down [View article]
    FYI, for a while now, on a yearly basis, the employment survey results are tracked against state unemployment data. There is no longer a massive lag of up to a decade to refine the employment data. While not realtime, the adjustments are made after each year end to track to state unemployment data.
    Sep 17, 2014. 11:29 AM | 1 Like Like |Link to Comment
  • Who Determines Interest Rates? [View article]
    Excess reserves are a result of changes in the FRB balance sheet. That is why
    Sep 10, 2014. 06:37 PM | Likes Like |Link to Comment
  • Who Determines Interest Rates? [View article]
    Just a technical notation: the bank can keep vault cash and since 1959 those are considered legal reserves.

    With that notation, I agree with what LJK said.
    Sep 10, 2014. 06:36 PM | 1 Like Like |Link to Comment
  • Why Is Anybody Surprised That The Job Shortage Continues For So Long? [View article]
    The mystery is, rather, that there are people who expect a stagnation at the zero interest rate lower bound with fiscal policy dominated by austerity and 8 clogged credit channel to be short...

    Fiscal policy dominated by austerity? Really?

    FY 2004 Total US Govt Spending $2.293 trillion
    FY 2005 Total US Govt Spending $2.472 trillion
    FY 2006 Total US Govt Spending $2.655 trillion
    FY 2007 Total US Govt Spending $2.783 trillion
    FY 2008 Total US Govt Spending $2.983 trillion
    FY 2009 Total US Govt Spending $3.518 trillion
    FY 2010 Total US Govt Spending $3.457 trillion
    FY 2011 Total US Govt Spending $3.603 trillion
    FY 2012 Total US Govt Spending $3.537 trillion
    FY 2013 Total US Govt Spending $3.455 trillion
    FY 2014 Total US Govt Spending $3.651 trillion (estimate)

    FY 2004 Total US Govt Spending per capita $7,835
    FY 2014 Total US Govt Spending per capital $11,477

    US Govt spending on a per capita basis increases 46%. Far in excess of inflation over those 10 years (26.1% cumulative based on CPI)
    I don't think you understand the use of that word austerity.

    Regards
    Sep 8, 2014. 04:19 PM | 3 Likes Like |Link to Comment
  • How We Know High Inflation Is Coming [View article]
    You cannot have high inflation without high nominal wage growth. If you want to know when inflation will start picking up, look for outsized gains in nominal wages. Also, many of your conclusions are assumptions and not factual in this article.

    By saying that there is no way something can happen, like the reversal of FRB balance sheet additions is your assumption. Nowhere have you presented anything that would cause me to believe this was a factual statement.
    Aug 26, 2014. 04:34 PM | Likes Like |Link to Comment
  • Cry For Argentina: Fiscal Mismanagement, Odious Debt Or Pillage? [View article]
    "Who is at fault? The global financial press blames Argentina's own fiscal mismanagement, but Argentina maintains that it is willing and able to pay its other creditors. The fault lies rather with the vulture funds and the US court system, which insist on an extortionate payout even if it means jeopardizing the international resolution mechanism for insolvent countries"

    Totally incorrect. The issue is that the debt was issued with NY Law as basis for the debt. Argentine could have just as easily used Argentine law as the basis for the debt. But they chose to use NY Law to save a few basis points of interest. That is the issue. Argentine has the ability to pay the debt. Therefore, under NY law they are required to pay the debt, in full. And because of cross repayment provisions, which again are enforceable under NY law, they cannot simply pay other creditors and not pay the past creditors. The US courts are simply enforcing NY laws as designated by the agreements themselves. The US courts cannot simply not enforce US laws because a sovereign is involved.

    Argentine created this problem. Argentine will have to dig its way out of this problem. My guess is that they will be smart enough to never issue another financing with NY law as the basis for the agreements.
    Aug 12, 2014. 02:52 PM | 6 Likes Like |Link to Comment
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