Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
>>>But, I attribute that to investment banking creating massive amounts of liquidity through leverage and securitized debt, and not so much to the low Fed funds rate (directly) as our own capital account surplus fed the financial markets.<<<
I agree with you to a degree. Securitization of debt did not add to leverage - it allowed firms and housing to be funded by the capital markets, when before they were serviced primarily by banks. The low (essentially zero for a while) funds rate in my mind promoted the culture of easy money. Sure, it is not to be blamed for all that ails us, but it was misused as a key tool in Fed's arsenal.
>>>Funding our deficit is not a problem. Loss of the confidence fairy, maybe.<<<
Aren't these two absolutely related? :-) Loss of confidence is going to result in us being unable to fund the deficit. Yeah, sure the Fed can 'print' the money by crediting the Treasury's account, but unless the Fed can extract a similar amount from private hands via a sale of investments the specter of inflation will hit us faster than we can spell the word. Heck, just look at what is going on in Europe. If ECB could magically solve the problem by now, don't you think they would have? Why would you think it will be different with us when the confidence in our finances get broken? Number of PhDs on staff at the Fed won't make any difference.
>>> I really detest the idea the dollar fundamental is linked to being the "less sucky" investment.<<<
What dollar fundamental? Last I checked we were down against the yen, against precious metals and even against the euro. People may postulate all day long that the Fed is not 'printing' money via QE, but it is exactly what it is doing. It is 'investing' in Treasury paper and expanding the money supply. My 'sucky' comment related to the 'quality' (actually the lack there of) of the Treasury paper. If Europe's experience is any guide, no sovereign will repay its debts, at least not even close to 100%. The ONLY reason for debt yields to be negative is the flight to 'safety' -- as iron as it may be.
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
Ah, the Holy Grail of economics and society in general -- to have all needs and wants satisfied without a day's worth of work. All courtesy of the new El Dorado - the Fed. All hail the MMT!
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
C'mon, of course there is crowding out! The 60% of my income that I pay in various taxes crowds out the goods and services I would otherwise purchase.
You are probably referring to 'debt crowding out' -- i.e. both private and public can borrow with impunity because the Fed can print as much money as is needed. I get that. But I hope you realize that such printing seriously distorts the investment climate and creates colossal bubbles. And the negative bond yields you cite isn't because institutions want to invest in them but because many don't have another choice. If only a few instruments are allowed to be counted as reserves and one goes away (mortgage-backed securities), what is left but government paper? And given that the EU countries have started to topple, Japan and the US are seen as 'less sucky' so investments go into our paper. At a deficit run-rate of $1.4 trillion annually and negative real GDP growth, how many years do you think it will take before we find ourselves in the same predicament the EU is in?
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
You are right, we should learn from Greece as well. And the lesson will be complementary to the one we learnt from Japan. So, from Japan we learnt that massive fiscal stimulus does NOT work to create sustainable economy but does add-up to the debt pile. From Greece we should learn that government spending on credit does indeed come to a catastrophe one day.
It is really a very simple concept: government spending is accompanied by a lot of waste (including paying for the government itself) and it takes the resources out of private spending where they can be spent a lot more effectively (presumes the debt will be repaid and not inflated away).
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
Hogwash. What we need to learn from Japan is that two decades of annual spending binges have done one thing only: increase the debt. It is a structurally-sick economy that has little entrepreneurship and success depends on political connections.
Thailand Flooding Will Ravage Tech Earnings Into 2012 [View article]
davcnsit,
Thank you for the information!
XRTX announced at the Nedham conference yesterday that Thai floods were 'neutral' to the business, which supports your statement that SI is benefiting while NSS is suffering. The stock continues to rally though because margins on the SI side are significantly above the margins in NSS.
Please continue to update as the story in Thailand unfolds! Did the government extend the 5-day holiday?
The U.S. Senate fails to advance Pres. Obama's $60B infrastructure plan that would have provided direct aid for highway and rail projects and set up a new infrastructure bank. The vote fell short of the 60 needed to bring the bill to the floor. [View news story]
At least some good news for the day! Enough of Obama's spending binge.
Former FDIC chief Sheila Bair blames European banks and their regulators for the European financial crisis. The Basel committee needs to quickly adopt standardized measures of risk set by regulators, not banks, she says; instead, "European regulators have turned risk assessment into an insider's game where the bankers are calling the shots." [View news story]
Blair's blame for the crisis is misplaced and self-serving. The crisis actually originates WITH the regulators who forced banks to hold EU debt paper as recognized form of capital/collateral. Also, if anyone believes the banking industry is self-regulated is seriously off the mark.
Oh, and let's also not forget that if governments exercised some spending restraint this whole issue will be a mute point.
Harbin Electric (HRBN) shareholders yesterday approved the company's $24/share offer to go private via a merger with Tech Full Electric, ending a year-long struggle amid fraud allegations from a short seller. The share closed at $22.55 on Friday. U.S.-based VP Christy Shue gets an exit package worth nearly $2.3M. (PR)[View news story]
SivBum,
Hope and wish should be something you arm yourself with. In this long 'take private' transaction the one thing in plentiful supply are words and empty gestures -- like the vote. The thing in short supply? Money. Don't get distracted with the lips, watch the hips. Ring me up when the transaction gets funded.
Harbin Electric (HRBN) shareholders yesterday approved the company's $24/share offer to go private via a merger with Tech Full Electric, ending a year-long struggle amid fraud allegations from a short seller. The share closed at $22.55 on Friday. U.S.-based VP Christy Shue gets an exit package worth nearly $2.3M. (PR)[View news story]
Hmm, isn't it premature to be running the victory lap? What did this vote really change? Has money changed hands? Save tne dance and the shampaigne for then.
Can you say "conflict of interest?" Credit-rating companies routinely award higher rankings to debt issued by banks and corporations that pay them the most, while bonds from countries and cities that pay about half as much as issuers of less creditworthy debt are “rated more harshly,” according to a new study. [View news story]
Well, let's see: could it be because countries, counties and cities are sitting at an all-time debt load? Didn't we have sovereign defaults in Latin America in the 1980s? Or Greece in 2011 (ok, not an OFFICIAL default, but any time someone is forced to take a 50% haircut, I call it default). We have had cities and county defaults as well.
Thailand Flooding Will Ravage Tech Earnings Into 2012 [View article]
davcnslt,
Thank you for your excellent post. 'Boots on the ground' always give plenty of color.
I do stand behind the 'equipment is built as I type this' comment. It is based on comments by Driver from XRTX and on the latest WDC CC. Speculation I have recently read suggests that of the 40% loss in capacity in Thailand about 20% might be brought fairly quickly (i.e. read this quarter) in the rest of the world (it was excess before), about 4% might be taken by SSDs (mostly mobile) and about 10% may be lost due to weak PC demand. This will only leave about 6% as truly 'lost'. If this speculation turns out to be correct, the recovery may indeed occur within this quarter and next.
Thoughts?
What is the 'tall pole on the tent' part? Some suggested it is heads, some that it is sliders, some that it is motors.
Taking advantage of a law rushed through the legislature, PA Gov. Corbett declares a fiscal emergency and takes over Harrisburg, the state's capital. This comes just days after city council filed for bankruptcy protection, so the legal issues are flying. For the moment, the Corbett move means bondholders and unions will remain protected. (PR) [View news story]
The White House reveals details of its student loan relief plan a day ahead of Pres. Obama's announcement. Monthly payments for some students will be reduced to 10% of discretionary income, debt balances will be forgiven after 20 years of payments, and some students can consolidate their loans with government loans into a single payment with a reduced interest rate. [View news story]
And there will be a 100,000 new federal jobs created to support this program. The actual forgiveness will save $1 billion, the administrative cost will be $10. The taxpayer is on hook for the $11. But worry not, it is all on the federal credit card. We can't default - unlike Greece, we can print our money ... and have, repeatedly, over the last 2 years.
Of course, when we print all the money we need we will bankrupt our economy, but our politicians are not concerned. Obama will be long gone, his name will be on libraries and places he built with taxpayer dollars and his great vision of a poor, equally-miserable society would have been achieved.
Thailand Flooding Will Ravage Tech Earnings Into 2012 [View article]
Nidec up and running.
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
I agree with you to a degree. Securitization of debt did not add to leverage - it allowed firms and housing to be funded by the capital markets, when before they were serviced primarily by banks. The low (essentially zero for a while) funds rate in my mind promoted the culture of easy money. Sure, it is not to be blamed for all that ails us, but it was misused as a key tool in Fed's arsenal.
>>>Funding our deficit is not a problem. Loss of the confidence fairy, maybe.<<<
Aren't these two absolutely related? :-) Loss of confidence is going to result in us being unable to fund the deficit. Yeah, sure the Fed can 'print' the money by crediting the Treasury's account, but unless the Fed can extract a similar amount from private hands via a sale of investments the specter of inflation will hit us faster than we can spell the word. Heck, just look at what is going on in Europe. If ECB could magically solve the problem by now, don't you think they would have? Why would you think it will be different with us when the confidence in our finances get broken? Number of PhDs on staff at the Fed won't make any difference.
>>> I really detest the idea the dollar fundamental is linked to being the "less sucky" investment.<<<
What dollar fundamental? Last I checked we were down against the yen, against precious metals and even against the euro. People may postulate all day long that the Fed is not 'printing' money via QE, but it is exactly what it is doing. It is 'investing' in Treasury paper and expanding the money supply. My 'sucky' comment related to the 'quality' (actually the lack there of) of the Treasury paper. If Europe's experience is any guide, no sovereign will repay its debts, at least not even close to 100%. The ONLY reason for debt yields to be negative is the flight to 'safety' -- as iron as it may be.
All my personal opinions, of course.
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
You are probably referring to 'debt crowding out' -- i.e. both private and public can borrow with impunity because the Fed can print as much money as is needed. I get that. But I hope you realize that such printing seriously distorts the investment climate and creates colossal bubbles. And the negative bond yields you cite isn't because institutions want to invest in them but because many don't have another choice. If only a few instruments are allowed to be counted as reserves and one goes away (mortgage-backed securities), what is left but government paper? And given that the EU countries have started to topple, Japan and the US are seen as 'less sucky' so investments go into our paper. At a deficit run-rate of $1.4 trillion annually and negative real GDP growth, how many years do you think it will take before we find ourselves in the same predicament the EU is in?
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
It is really a very simple concept: government spending is accompanied by a lot of waste (including paying for the government itself) and it takes the resources out of private spending where they can be spent a lot more effectively (presumes the debt will be repaid and not inflated away).
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]
Thailand Flooding Will Ravage Tech Earnings Into 2012 [View article]
Thank you for the information!
XRTX announced at the Nedham conference yesterday that Thai floods were 'neutral' to the business, which supports your statement that SI is benefiting while NSS is suffering. The stock continues to rally though because margins on the SI side are significantly above the margins in NSS.
Please continue to update as the story in Thailand unfolds! Did the government extend the 5-day holiday?
The U.S. Senate fails to advance Pres. Obama's $60B infrastructure plan that would have provided direct aid for highway and rail projects and set up a new infrastructure bank. The vote fell short of the 60 needed to bring the bill to the floor. [View news story]
Former FDIC chief Sheila Bair blames European banks and their regulators for the European financial crisis. The Basel committee needs to quickly adopt standardized measures of risk set by regulators, not banks, she says; instead, "European regulators have turned risk assessment into an insider's game where the bankers are calling the shots." [View news story]
Oh, and let's also not forget that if governments exercised some spending restraint this whole issue will be a mute point.
Harbin Electric (HRBN) shareholders yesterday approved the company's $24/share offer to go private via a merger with Tech Full Electric, ending a year-long struggle amid fraud allegations from a short seller. The share closed at $22.55 on Friday. U.S.-based VP Christy Shue gets an exit package worth nearly $2.3M. (PR) [View news story]
Hope and wish should be something you arm yourself with. In this long 'take private' transaction the one thing in plentiful supply are words and empty gestures -- like the vote. The thing in short supply? Money. Don't get distracted with the lips, watch the hips. Ring me up when the transaction gets funded.
Harbin Electric (HRBN) shareholders yesterday approved the company's $24/share offer to go private via a merger with Tech Full Electric, ending a year-long struggle amid fraud allegations from a short seller. The share closed at $22.55 on Friday. U.S.-based VP Christy Shue gets an exit package worth nearly $2.3M. (PR) [View news story]
Can you say "conflict of interest?" Credit-rating companies routinely award higher rankings to debt issued by banks and corporations that pay them the most, while bonds from countries and cities that pay about half as much as issuers of less creditworthy debt are “rated more harshly,” according to a new study. [View news story]
Thailand Flooding Will Ravage Tech Earnings Into 2012 [View article]
Thank you for your excellent post. 'Boots on the ground' always give plenty of color.
I do stand behind the 'equipment is built as I type this' comment. It is based on comments by Driver from XRTX and on the latest WDC CC. Speculation I have recently read suggests that of the 40% loss in capacity in Thailand about 20% might be brought fairly quickly (i.e. read this quarter) in the rest of the world (it was excess before), about 4% might be taken by SSDs (mostly mobile) and about 10% may be lost due to weak PC demand. This will only leave about 6% as truly 'lost'. If this speculation turns out to be correct, the recovery may indeed occur within this quarter and next.
Thoughts?
What is the 'tall pole on the tent' part? Some suggested it is heads, some that it is sliders, some that it is motors.
Taking advantage of a law rushed through the legislature, PA Gov. Corbett declares a fiscal emergency and takes over Harrisburg, the state's capital. This comes just days after city council filed for bankruptcy protection, so the legal issues are flying. For the moment, the Corbett move means bondholders and unions will remain protected. (PR) [View news story]
The White House reveals details of its student loan relief plan a day ahead of Pres. Obama's announcement. Monthly payments for some students will be reduced to 10% of discretionary income, debt balances will be forgiven after 20 years of payments, and some students can consolidate their loans with government loans into a single payment with a reduced interest rate. [View news story]
Of course, when we print all the money we need we will bankrupt our economy, but our politicians are not concerned. Obama will be long gone, his name will be on libraries and places he built with taxpayer dollars and his great vision of a poor, equally-miserable society would have been achieved.