Talin

The Erroneous Credence of the Efficient Market

Like most investors I do not pay much attention to EMT. Still, in the hands of competent people... late Fisher Black p.e., makes you think.
Anyway, I have always thought the 100 dollars bill history a funny way of conveying the idiosincracy of (some) economics professors beleiving EMT and their detractors... but for other reasons: the theory states that you will not find 100 dollars on the street. As far as economics theory goes it is pretty close to reality: I have never found a 100 dollar bill on the street. ¿How many -dear fellow bloggers- have you found?

This Recession Will Be Anything but Deep

Thanks, Mr. Peng. Sorry I was misunderstood... what you say is what I mean. Too tragic what we are witnessing.

This Recession Will Be Anything but Deep

I enjoyed and had a good laugh... be bubbly. Peng is a genius... it is true; today real estate firms in Spain were finalizing debt restructurings. No more debt problems... be bubbly. We will choke in these exhilarating moments.

Speculating on the Future

Curbs-in gives a good point. What is happening now is basically the repudiation of a big chunk of America foreign debt. Congress decision on the TARP bill is the nearest statement institutionally made endorsing the repudiation. With al bonds worthless America will write off 3 trillion of foreign debt, most of the current account deficits of this decade. Now we know how the sustainability of the current account deficit and the external debt gets "solved". All of us were wondering in the past years how all this was going to turn up. How the "reserve money" country handles all this. Now we know the "trick" works. Not that all of this was cleverly masterminded -nobody is so clever to devise such a perfect scheme- but the end result is what eventually matters. America has now joined the nations that have defaulted on the external debt and it will join in the text books the likes of Mexico, Russia, Thailand, Argentina... only that the amounts are one order of magnitude higher that the combined repudiated debts of the former countries.

What will happen in the future I do not have a clue. If the current external default gets clouded in the total mess that is has created in the international market, camouflaged as a credit crisis o liquidity crisis (or greed crisis or whatever) perhaps foreign creditors will blame themselves and forget soon. Dollar of course will be higher (no more debts), America will continue importing, current account deficits accumulating again...exporting countries will be pretending they are selling and the US pretending they are paying. Till next round. In fact this is the third time since 1985 that the "trick" has worked; only that now is too obvious.