morph366

A Global Problem with No Solution

"I’ve heard nothing out of Washington which says to me that the White House has a plan for addressing long-term structural problems in terms of unemployment, capital flows, and interest rates"

Over the last 9 years since the Nasdaq bubble popped the White House, Fed and its various incumbents have had a plan - keep encouraging the financial sector to find new bubbles to inflate.

Dear Fed: The Problem is Solvency, Not Liquidity

It's harder to admit that the banking system is insolvent and more palatable to the electorate that it is a liquidity problem. Paulson probably realized that buying those toxic assets last fall would have displayed the true extent of the structural insolvency of the banks so a decision to smudge, pretend and extend was initiated.
It's reminiscent of the way that Japan dealt with the bursting of its bubble since 1990.

Does Anyone Actually Believe in Market Efficiency?

The EMH may be true and markets may well be "correctly" valued at any instant in time - but people are a bit fickle and they can massively change their minds about valuation in the blink of an eye.

U.S. Accounting Irregularities Not Exception to the Rule

Don't worry - once we've got this nasty recession thing behind us no one will remember that we fudged the numbers - will they?

S&P Case-Shiller Rolling Over?

What’s next…free tents?

Can I make a suggestion about what would be a good wheeze?

When you buy a car under certain credit arrangements you end up borrowing a certain amount over a period of 3/4 years and then you pay off a balloon payment. This makes the monthly debt servicing costs more palatable for the typical budget constrained consumer.

Why not use similar logic and have the Treasury and/or Fed re-structure the public finances in a similar manner so that the annual debt service is reduced and that a large portion of the debt is re-classified as a balloon which doesn't get paid off until the end?

The US Recession Is Not Over: But The Party Is.

You tell a very good story about your dad but old habits die hard for that peculiarly Anglo-Saxon mindset which parades its wealth and power on the world stage while piling up massive obligations to foreigners.
If one wants to apportion blame it is hard to know who is the more reprobate - the great pretenders or those gullible enough to indulge their pretences.

How and When Will the Fed Reverse the Huge Addition to Bank Reserves?

I seriously don't mean this to be taken as offensive but when I read most of your contributions I am reminded of the expression.

"For every problem there is one solution which is simple, neat, and wrong."

Down Fridays

"Let's hope Monday's trade is a little better than that (i.e. not falling another 2%+)"

There are a lot of traders on the short side hoping that Monday will see exactly that kind of follow through... perhaps too many!

Dollar Delight at Equity Slump

You make a couple of assertions that have not supported.
When you say that "the global economy requires a strong dollar to more easily make the next leg higher in business cycle trade." it is not at all clear whether that is either required or what the policy-makers want to see happen. As long as the dollar doesn't plummet or become too erratic the conventional wisdom seems to be that the dollar should remain "cheap" to promote US exports.

What is the reason behind invoking 1150 on the S&P 500 and why does it have to be next month?

Warning: The Coming Credit Dislocation

Until last week the solution was to buy Australian dollars.
Now (as per Borat) not so much!

Here's Why Asia Must Eventually Ditch the Dollar

re NolmSpartacus

Not to be pedantic but it was Nixon in 1971 who cut the convertibility to gold

PPI: An Economic Frost Warning

I believe that you are right to see the PPI number as an ominous development for the inflationist's solution
A deflationary spiral is part economic and part psychological and to get out of one is a very tricky proposition even for the Fed with its control of effectively unlimited public funds
So far despite all of the efforts to boost asset prices, there is no urgency in the supply chain and no real pricing power because those in the front line know that there is still a notable timidity in final demand.

The Gold- Dollar Inverse Relationship

Re CautiousInvestor


There is at least one currency where gold has appreciated more than it has against the dollar over the last five years - UK sterling.

Spare a Dollar? Why We Need a New Monetary System Now

Thanks for a good article
What I don't understand is the assertion by Martin Wolf that dollar weakness will help to alleviate deflation in the US. When many of the nations that the US would want to export to are pegging their currencies to the US dollar doesn't that mean that deflation is in fact being exported back to them?

I Nominate Miss Alabama For The Nobel Peace Prize

Reminds me of this from the BBC website

"When Henry Kissinger won the Nobel Peace Prize in 1973, the distinguished musical satirist Tom Lehrer decided that he could no longer perform. "It was at that moment that satire died," says Lehrer, "There was nothing more to say after that."