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  • The Minimum-Wage Stimulus [View article]
    If the idea is such a wonderful one Felix, why stop at $15 per hour. Why not $15,000,000 per hour and then we can all be warren buffet, right?

    If you want all low level service jobs to go the way of the do-do bird, by all means. An example, at $15 hour, it would be far more economical to replace every fast food worker with an touch enabled tablet (think Ipad) and a machine to make the food. If you think that can only happen in the fast food industry, you are wrong, very wrong.

    All this will do is drive the substitution for capital for labor ever greater towards capital.
    Jun 24 04:25 PM | 2 Likes Like |Link to Comment
  • Why Is New Home Construction Lagging? [View article]
    Student loan debt is your answer.
    Jun 20 12:46 PM | 2 Likes Like |Link to Comment
  • Fitch Notices Credit Bubble In China [View article]
    Pettis has the best idea, IMO.
    Jun 19 12:25 PM | Likes Like |Link to Comment
  • 77 Years Of Being Wrong Just Isn't Enough [View article]

    I disagree with this statement:

    "But in a slack time, every new retiree who collects SS creates a job opening for someone who needs work, and the dollars paid in benefits have a relatively high economic multiplier."

    All you have to do is look at the chart of job losses and gains for the past decade by age bracket and you will note that +56 age category has seen the highest net gain of jobs
    Jun 17 03:30 PM | Likes Like |Link to Comment
  • Japan Doesn't Need To Default [View article]
    No, they don't go bankrupt if they get paid 100% in legal tender of the issuer country. I am not sure where you live, but where i live, when banks get paid back 100% they don't go bankrupt
    Jun 17 11:15 AM | Likes Like |Link to Comment
  • Japan Doesn't Need To Default [View article]
    Their banks are just as captive as ours are. If you don't already know, the 18 primary dealers are required by law to submit bids for 100% of every US treasury security offered in every US treasury auction. They work the same way.

    Once again, it comes down to whether the Japanese continue to see utility holding the yen after the event, not what interest rate will get paid.
    Jun 13 06:26 PM | Likes Like |Link to Comment
  • Japan Doesn't Need To Default [View article]
    It's not hilarious. The question is will the japanese no longer see utility in holding their own currency in the event this occurs. That is the question, as that will determine whether printing yen to meet redemption would cause problems. If the japanese would see continued utility in holding yen, then yes, they would go right ahead and continue buying jgb's. If not, then that would represent a problem.
    Jun 13 04:22 PM | Likes Like |Link to Comment
  • The Perils Of Low Mortgage Rates [View article]
    The new house is $100,000 more not $50,000.
    Jun 10 04:55 PM | Likes Like |Link to Comment
  • What The Great Natural Experiment Reveals About QE [View article]
    It could be something other than LSAP that differentiates the US from EU. Its not like you held every other variable constant.
    Jun 10 04:50 PM | 1 Like Like |Link to Comment
  • The 'Tuesday Rally' And Recency Bias [View article]
    Treasuries trade over $500 billion per average trading day. $2.4 billion in fed purchases is a meaningless drop in the bucket, wouldn't you say
    Jun 5 03:32 PM | Likes Like |Link to Comment
  • Kyle Bass Versus The BoJ [View article]
    I disagree with certain conclusions from the article. Japan is a currency issuer, not a currency user. Japan will at a certain point realize that paying off its debt is the easiest thing it can do, and more than likely will take those steps to pay off its debt.

    The question that is truly important is how will it deal with the after affects of paying off its debt.
    Jun 4 10:44 PM | Likes Like |Link to Comment
  • A Failure To Act: Fed Policy And Interest Rates [View article]
    I Disagree David

    Firms will draw on credit lines and take down loans if they see liquidity available today, especially when its very cheap, that they believe won't be there tomorrow, when they might actually need it. A lot of the larger company borrowing over the past 4 years has been in this vein.

    May 31 01:32 PM | Likes Like |Link to Comment
  • But Stocks Don't Tend To Fall When The Fed Tightens Interest Rates [View article]
    Stocks in general react poorly to changes in inflation that are not properly anticipated by the market. If the Fed is tightening, then the market has a general idea on the path of inflation and adjusts appropriately.
    May 30 04:12 PM | Likes Like |Link to Comment
  • Europe's Catch-22 Situation Finally Losing Its Edge? [View article]
    Only Greece has actually reduced its spending levels from the onset of the crisis, the other peripheral members have increased their spending levels. So I am not sure that the continued use of the word "austerity" is really correct. In addition, they could also have left the Euro and become currency issuers instead of currency users. I think this would have been the best outcome for them. I just do not see the northern European countries engaging in the policies to make themselves less competitive to help out their southern brosefs as feasible. They can see where it got the Southern states.

    In addition, chicken or the egg question regarding the following quote:

    The removal of exchange rate risk and increased credibility of monetary policy led to an inflow of capital from the center (banks) to the periphery, where it created a boom and inflation differentials started to build up as a result.

    Does savings in one nation lead to a BOT deficit in another or the other way around? The national income equations would appear to be direction causation neutral.
    May 28 06:57 PM | Likes Like |Link to Comment
  • Unsteady As She Goes [View article]
    The excess reserves are there because of prior and continuing fed action to increase its balance sheet. If it wants to drain those reserves first, it will have to part with its purchases

    Therefore, draining reserves will be last in line to occur if they fed wants to simply let its portfolio roll (i believe the current ave maturity is now around 6 years?)
    May 26 03:28 PM | Likes Like |Link to Comment