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  • Kevin Drum Asks A Question About The Attainability Of A 4%/Year Inflation Target [View article]
    None of the above

    What you would need is simply as follows:

    1) Amend the 1913 act to allow the FRB system to allow for the purchase of any debt or equity security in whatever quantity, at whatever duration they desire, and to be able to hold those securities for however long they want to hold them

    2) A statement from the FRB that they will start buying every security they can until such time as inflation expectations hit the desired 4% mark, which should take about 5 minutes, maybe less
    Oct 13, 2015. 06:34 PM | Likes Like |Link to Comment
  • The 'Something For Nothing' Society [View article]
    We decry the declining quality of online articles and long for something better written and researched, not seeing that this is the inevitable consequence of avoiding paying for good writing (I confess, I avoid paywalls too)

    Pot - meet kettle
    Oct 2, 2015. 02:50 PM | 11 Likes Like |Link to Comment
  • Are Fiscal And Monetary Policy Too Tight? [View article]

    I think you are missing the point. What Mr. Roche is saying is that the US Gov't should use its balance to recapitalize private balance sheets so that the private sector will take on more risk taking activities. He is pretty much saying that there is very little monetary policy can do right now - one item mentioned would be to go to an actual negative O/N funds rate. There has been discussion of things like outright NGDP targeting, but as Mr. Roche has indicated in past articles barring significant changes to the 1913 reserve act that it most likely would not be possible.

    NGDP targeting could be possible but not with the current restrictions on the ability of the FED to purchase assets outside of government issued or backed securities. Change the 1913 act and you could make a credible argument that the FED could set expectations and drive an NGDP target.
    Sep 23, 2015. 08:26 PM | 2 Likes Like |Link to Comment
  • Are Fiscal And Monetary Policy Too Tight? [View article]
    Here is the problem with #3

    What infrastructure projects? If you think the chinese model of the state forcing the building ghost cities, ghost airports, ghost high speed trains is the way to go i disagree. Look at the what is happening in california with the high speed full employment for professionals train that probably will never be built but will result in "infrastructure" spending in the order of 30-40 billion that will be wasted on auditors, lawyers, consultants and professional environmentalists

    We have all the infrastructure we need currently. We could spend more for maintenance, but maintenance spending has no multiplier effect. Making a bridge more steady will not increase economic output.

    High speed trains are a complete waste. We have cheap air travel. High speed trains will have zero multiplier effect, in fact i believe they will have a negative mutliplier.
    Sep 23, 2015. 11:56 AM | 3 Likes Like |Link to Comment
  • Fed Leaves Rates Unchanged - Some Brief Thoughts [View article]
    There was also 12% inflation in 1981. You cannot compare 1981 to today.
    Sep 18, 2015. 07:54 PM | 2 Likes Like |Link to Comment
  • The Problem With 'Existing Store Sales' [View article]

    the problem is that the growth rate of sales in the top 100 had previously been a fairly good predictor of total retail sales growth. Look at the following article

    Page 14

    Top 100 year over year track pretty well to total yoy retail sales growth. Yes data is only through 2012, but still. Its not like there was no online or new retail stores in 2012 or 2011.
    Sep 16, 2015. 06:47 PM | Likes Like |Link to Comment
  • Come Back 'loanable Funds' - All Is Forgiven [View article]
    I disagree in part. Central banks will not lend unlimited reserves and will not lend reserves against insufficient capital, except in exigent circumstances (ie as lendor of last resort to maintain the functioning payment system)
    Sep 15, 2015. 04:53 PM | Likes Like |Link to Comment
  • China's Retail Boom [View article]
    Once again Scott - the problem is what if the headline number is made up

    I suggest you give the following blog a read

    Mr. Balding essentially goes and looks at the data provided and finds that it is highly unlikely to add up to 10.8% growth given that the top 100 retailers saw sales growth less than 2% for 2014. In the report on the 100 largest retailers, no category of retail sale was higher than 8.7% - and that was jewelry - not a category that is going to make or break retail sales on a national level no?
    Sep 15, 2015. 01:40 PM | 1 Like Like |Link to Comment
  • Why China Will Not Fall Into The Middle Income Trap [View article]
    So if the government decides the GDP number next year is 6%, do you think that validates what you state above? Many smart people, who actually live in work in China point out that the GDP numbers coming out of China cannot reconcile with other information that is produced. That GDP is essentially manufactured and that it is currently impossible to know anything about current GDP. In advanced economies, GDP goes through multiple estimate revisions. Ever seen an estimate revision for GDP in China - that estimate that is produced within 15 days of quarter close, far sooner than any other advanced economy produces its first estimate?
    Sep 10, 2015. 03:22 PM | 2 Likes Like |Link to Comment
  • U.S. Recession Risk Is Still Low, Based On August Labor Market Data [View article]
    The problem with all the indicators above is there is absolutely no forward predictive power. 1 month they are fine at the bottom of the chart, the next month they are top of the chart and there is a recession.

    You need indicators that give you more than 2 weeks notice of an impending recession
    Sep 9, 2015. 11:30 AM | Likes Like |Link to Comment
  • Why General Motors And Fiat Chrysler Combining Isn't Farfetched [View article]
    From their 2014 year end financials they had a combined GP of basically $26 billion. Not sure why $4 billion would be a show stopper.
    Sep 2, 2015. 06:57 PM | Likes Like |Link to Comment
  • We Still Have A Buck In The Till - We're Solvent! [View article]
    Debt is only meaningless if its coming due soon in regards to this issue. If a company does not have any maturities for 10 years, the debt to market cap right now in the O&G space is quite meaningless unless they are in such dire straight that they cannot even make the interest payments. What you need to do is go to the last 10K and look at the 5 year runoff note. 2015 debt maturities plus 2016 debt maturities are what are really important right now
    Aug 31, 2015. 06:31 PM | 6 Likes Like |Link to Comment
  • The U.S.'s Debt 'Supercycle' Ended In 2007... [View article]
    Where are you getting your 77%? Have you got info that breaks out NP's liabs from the B.101 table in the Z1 report? That shows 81% as of 12/31/2014?
    Aug 27, 2015. 12:18 PM | Likes Like |Link to Comment
  • Buy Chinese Stocks After The Bubble [View article]
    In the us there is a clear delineation between what debt is held by government and what debt is held by the public (households, corporations, banks)

    Not the case in China. Essentially the vast majority of all the debt in china somehow makes its way to the state in one form or another - for example via hidden guarantees from State enterprises contained within wealth management products).

    So when you say things like debt in china is a much lower level than in the US, that is not really true. In addition, that debt in the US is backed by productive assets (assets which have actual cash flows). THis is not the case in China. NPL's in china if based on western banking standards would be on the order of 25-30% of all chinese bank loans. I find it hilarious when i read accounting policies for chinese banks that show that they only show a loan as non-performing if the entity has been out of existence for more than 6 months. Sorry, at that point, it was long past time to record the loan as non-performing. A significant majority of bank loans made to provincial government financing vehicles have no clear repayment schedule, they are simply being rolled over at the order of the CPOC. You can see this based on the near continuous liquidity injections by the Central Bank of China to the banking industry. 140billion yuan overnight according to CNBC.

    QE does not finance anything. QE is simply an asset swap with the intent of forcing investors to take more risks (ie they cant own treasuries so they buy more risk based assets). The treasury securities purchased by the FED were already outstanding when they bought them. They did not finance anything.

    Go take a look at GDP charts on a quarterly basis for every advanced industrial country other than china. Notice the fact that it doesn't move in a straight line. Now look at China GDP on a quarterly basis. If you think that the CPOC can somehow engineer countrywide GDP on such a linear basis, again, i have a few bridges in brooklyn to sell you.
    Aug 26, 2015. 06:06 PM | Likes Like |Link to Comment
  • China's Grand Economic Strategy [View article]
    None of whats been happening has anything to do with the SDR issue. China is facing huge internal pressures and is trying to find the way to put the genie back in the bottle with the least amount of damage. It is of course failing.

    From trying to quell spiking o/n shibor to having to lend the hong kong monetary authority RMB, things are not well in china right now.
    Aug 26, 2015. 05:54 PM | 1 Like Like |Link to Comment