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kertch

kertch
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  • The Money Printers' M&A Ball - Where The Debt Zombies Go To Mate [View article]
    Did you mean 4th quarter 2015? Or did you actually mean 4th quarter 2014?
    Jun 26, 2015. 11:45 AM | Likes Like |Link to Comment
  • The Smaller Economy Getting Smaller Still [View article]
    Yes, I agree David. If the money was not spent at all it would have a large economic impact.
    Jun 25, 2015. 12:21 AM | Likes Like |Link to Comment
  • The Smaller Economy Getting Smaller Still [View article]
    David,

    "The impact of defense spending is huge and ubiquitous."

    So is any other type of government spending within domestic economy.

    "Money that is currently being spent in the defense budget, were it to be withdrawn, it would not be spent on anything else. What would it be spent on?"

    Really? Ask any Democratic congressman and they will come up with a dozen things to spend the money on, like free college education for example. Just take the word "free" and put it in front of any basic service and you have the Democratic platform, means tested of course (have to blame the rich). The question is not about whether or not the money is spent. The question is if the money spent produces productive activity or just consumes resources. The old Soviet Union and the present Democratic Peoples Republic of Korea are examples of extremely high levels of military spending or "stimulus" as you call it. They are both examples of economic failure. A missile launcher and a bronze statue of Lenin have the same economic status - consumption of resources with no productive benefit. Unless you want to claim that the statue of Lenin inspires workers to work harder and increase productivity. However, my immigrant friends from eastern Europe will dispute it.

    "Despite this, there is a glut of savings right now, people who have money spend as little of it as they can."

    No David, there is a credit glut.
    Jun 24, 2015. 01:00 PM | Likes Like |Link to Comment
  • Alexis Tsipras- Angel Of Mercy Or 'Trusty' Of The Central Bankers' Debt Prison? [View article]
    The problem is that Greece still runs a budget deficit, so the debt would begin to grow again. And why not? If the Eurocrats are willing to monetize the debt, the Greeks will surely serve them up the next $300B over the next decade.
    Jun 24, 2015. 11:59 AM | Likes Like |Link to Comment
  • The Smaller Economy Getting Smaller Still [View article]
    David,

    "Clearly they do, if the United States Navy were to be eliminated, the economy of San Diego and other port cities would be devastated."

    The cessation of military spending would indeed devastate the local military port economies. But to the overall economy it makes no difference where the money is spent.

    "This is all money that would not otherwise be spent and it is a very large "fiscal stimulus" programme, ... "

    Stimulus is stimulus. Why would the money not be spent? Overall, I prefer military spending to transfer payments because of the skills development and technology development associated with it. The race for military technological supremacy is a great driving force that sooner or later feeds innovations to the private sector. The list of these technologies is quite long. However, an aircraft carrier, a jet fighter, or a solder that never see action have the same economic status as a welfare recipient. It represents the consumption of resources with no productive output.
    Jun 24, 2015. 11:26 AM | Likes Like |Link to Comment
  • The Smaller Economy Getting Smaller Still [View article]
    David,
    There is essentially no macroeconomic difference between military spending and welfare spending. The only exceptions are 1) Military spending generally requires skilled labor which increases the skilled labor pool in the general economy and 2) military technology often results in spinoffs that add to economic productivity and have even created entire new industries, but this is incidental and not a planned part of military spending. Historically, militaries have been used to capture and secure resources from someone else, or to protect those resources from someone else. In the modern world, only the latter role is accepted, so the military functions as a national insurance policy. As such, it is a necessary expense, but an expense none the less, and no matter how many jobs are created for "insurance agents", any more than necessary is non-productive.
    Jun 23, 2015. 01:38 PM | Likes Like |Link to Comment
  • The Smaller Economy Getting Smaller Still [View article]
    "Military spending is planned waste. It does nothing for the economy."

    So is most other government spending. Transferring money to non-productive citizens also does nothing for the economy, at least in terms of increased productivity and living standards. The Europeans have been doing it for decades while spending very little on defense. The environmental-pollution model is being implemented, and even if not a substitute, it could certainly supplement and redistribution-socialism model. My own limited analysis of environmental projects and actions such as alternative energy and recycling finds over 90% of such actions are economically wasteful. If you want to lower someone's standard of living, have them spend 4 hours a week sorting through their garbage.
    Jun 22, 2015. 03:22 PM | Likes Like |Link to Comment
  • The Expensive 'Art' Of Aggregate Demand [View article]
    "What happens is that the savings-investment process is derailed. Savings that would have been matched with investments are foregone as they become “bottled up” within the CB System."

    Is this "bottling up" of savings the reason for the absurdly low Money Velocity we have been seeing since the recession began?
    Jun 20, 2015. 01:21 AM | Likes Like |Link to Comment
  • The Expensive 'Art' Of Aggregate Demand [View article]
    I don't know exactly how the 70% consumer spending figure is reached in GDP calculations, but on the surface the number has always seemed "iffy" to me. It implies that consumption is 70% of our economy while the other 30% is what? Production? Everyone knows that consumption cannot exceed production, at least for any sustainable length of time. Either the 70% GDP percentage is wrong, or it doesn't mean what we think it means. Perhaps someone can clarify.
    Jun 17, 2015. 03:25 PM | Likes Like |Link to Comment
  • The Warren Buffett Economy - Why Its Days Are Numbered (Part 5) [View article]
    You are right Jason, it's basically the same ideology in a different package. I see two basic ideological struggles:

    Freedom vs. Control.
    Personal Responsibility vs. Social Responsibility.

    There is often overlap between the two.
    Jun 17, 2015. 01:04 PM | 3 Likes Like |Link to Comment
  • Time To Redefine 'Easing' Too [View article]
    Then the Fed is fighting a losing battle. Unless there is general price inflation that raises all prices relative to housing, house prices will remain artificially inflated. The Fed has been unable to generate general price inflation and will be forced to continuously maintain high asset prices despite the growing deflation pressure on these assets. Think Japan, because they've been following the same policy for a quarter century now, which was caused by what? A real estate bubble! We don't need modest inflation to get out of this mess, we need large bout of inflation. Someone needs to take the loss on these impaired assets. It will either be the banks and GSE's through liquidation, or it will be the general population through inflation.
    Jun 17, 2015. 12:55 PM | Likes Like |Link to Comment
  • Time To Redefine 'Easing' Too [View article]
    David,
    Banks, especially savings and loans, always seem to get caught up in housing bubbles. The assumption generally is that in a market where home prices are steadily rising, a default by the borrower merely means a return to the bank of an asset of increased value. They just foreclose and resell the home at a higher price. The down payment and possible financing to the new buyer are just gravy. It's an almost risk-free deal for the bank, that is until housing prices drop, and then the wheels come off the wagon.
    Jun 16, 2015. 07:43 PM | Likes Like |Link to Comment
  • It Is Inflation [View article]
    David,
    From the article you cited:

    "Mexico’s low wages and improved logistics were part of the draw. But for Audi, which plans to ship the factory’s output all over the world, what tipped the scales was Mexico’s unrivaled trade relationships."

    I don't disagree that labor arbitrage is a part of the decision, but as the article points out, is not the only consideration, and in this case not even the most important consideration. Enough said on the subject.
    Jun 16, 2015. 06:54 PM | Likes Like |Link to Comment
  • Time To Redefine 'Easing' Too [View article]
    David,
    You are correct in observing that the relationship between interest rates and lending is not clear cut. During the Housing Bubble interest rates were higher than at present but loan demand was also higher. Perversely, lower interest rates can even reduce lending as lending standards are tightened to compensate for repayment risk, while higher rates can encourage lending by the opposite effect. Loans are not a commodity transaction who's supply/demand curve is based only on price, yet some economists insist on treating them that way.
    Jun 16, 2015. 06:44 PM | 1 Like Like |Link to Comment
  • The Warren Buffett Economy - Why Its Days Are Numbered (Part 5) [View article]
    "If psychology was all there is to investing, psychologists would be the richest people on the planet"

    Excellent Mr. Aniston! A quote I will share with others.
    Jun 16, 2015. 05:48 PM | 2 Likes Like |Link to Comment
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