Wall Street Breakfast: Must-Know News [View article]
"Somebody said it yesterday - liquidity does nothing to fix insolvency."
Yes, but its an unproven assumption.
Lets try housing in Las Vegas, for instance. Lets say John Q. and Nancy bought a nice 3BR 2BA in '07 for 300K, in today's market its worth 240, tops. refi on a 5 Year ARM @3%, goose the economy to 3% GDP, and voila, affordable housing for 5 more years. Just kicking the can down the road you say? John and Nancy now are able to work for the next 5 years, building their cash reserves and assets the old fashioned way. If John does no more than apply the extra cash flow from the 2% Payroll taxes reduction to the mortgage balance, they are just that much closer to being back above water, and there is a good chance they will have been able to pay off that last car loan by then, and reduce that old credit card debt. And if the economy continues to grow, albeit slowly, the property value, as calculated in federal Reserve Notes, may very well go up by 10-30% in 5 years. If you buy this story, I know of some nice Swiss Chalets I'd like you to look at.
"The profits that were created in this exercise were "dilutive" to everyone in the US's individual wealth. In my view....it's morally wrong."
Maybe the solution you are looking for is a resurrection of "The Windfall Profits Tax".
I've seen a slightly different version applied at the state and local level to combat "Profiteering" in cases, when the enterprising owner of an independent retail outlet with a full storage tank decided to raise prices at the pump after the hurricanes hit the refineries in Louisiana a few years ago.
While such measures have proven popular at the consumer level, the populist enthusiasm for such measures tend to diminish when the reality sets in at the boardroom level that Houston really does have a problem.
Wall Street Breakfast: Must-Know News [View article]
Relax, Robert. There is plenty of ink available to print all the digital dollars necessary to ensure global liquidity. Remember, all those Monopoly Dollars will end up right back in the USA when they buy all the US made products like beef, pork, and chicken, and will help pay for the overhead for our manufacturing proxy in China so we concentrate on quality control while still getting the best consumer prices on the planet. Santa Claus is coming to town. T'is the season for large scale Consumer Driven Beta Testing.
The world suffers from a leadership vacuum which will be all too evident at this weekend's G-20, William Pesek writes. "There’s a sense that the world’s problems are too formidable to fix... What we need is an adult or two in the room to make sure leaders tackle the big challenges of our day. Good luck finding any." [View news story]
Great. Lay off 30% of the Government employees, so they can come and bid down labor rates by 50%, since they are likely already "retired" at 50% of scale or more, and only "need" half as much. Then we can listen to them complain all day about how much more in taxes they are paying.
I doubt in principle it matter as long as it works. Its just that sometimes sticks may work better than carrots. Your point is well taken that the effects on inflation is a consideration as well, though it seems deflation is the greater concern as of late. Sometimes action is seen as necessary to stimulate prices to encourage economic activity, in which case subsidies would perhaps be the best option all things equal. And taxes have a way of making folks head spin, so there is that to consider as well.
Even though we perhaps don't like to admit it, bigger is better when it comes to survival in an increasingly global market with lots of big fish in the sea. Competitiveness today means lower costs and overhead and that includes lower interest rates. The US is still behind when it comes to matching the competition in the heavyweight class. That's how the big fish get bigger, by eating the littler ones. Even if the little guys can win in the MPG category, they just can't compete when it comes to pulling the heavier loads.
It appears we're all in violent agreement here, so allow me to throw a curve ball just to make it interesting. I'm of the opinion that MMT, by default use of the "Theory" moniker, discredits itself coming out of the blocks. We need a better name, for now I prefer MMF for Modern Monetary Facts. Hey, it sounds more authoritative, and it has a nice ring to it since it rhymes with IMF.
To quibble even further, I believe there are a few other good reasons to impose taxes, perhaps most importantly as a proven means to mitigate the age-old risks associated with concentration of wealth in the hands of too few. It also can be a useful tool in accelerating the demise of outdated industries to help facilitate the move to newer technologies, an example might a tax on Whale Oil in a move toward electric lights. Some make more sense than others, depending on whose ox is gored, but I wholeheartedly agree with the proposition that imposing taxes to reduce the number of zeros on the national debt scoreboard is beyond logic at best and counterproductive to the max.
In fact, the irrational behaviour patterns that are produced by advocates of this sort of thinking are IMO among the most destructive man-made forces known. Latest Mini-rant now complete.
Japan's Unsustainable Debt Burden: Playing With Fire [View article]
"Japan's prime ministers have continuously stepped down due to age-old hierarchical backdoor political practices that will further hinder Japan's future economic prospects."
One could perhaps make the same argument with respect to the UK, another democracy with a figurehead royal family and a rotating Prime Minster acting in a sort of Speaker of the House role.
But the idea that this is some kind of Achilles Heel is in my view misguided. IMO, this seems to be a among the more positive models for modern developed democratic states. Quite civilized, actually, perhaps an actual improvement on our own Constitutional structure.
"Why not use a replicator and just make it $15 trillion and pay off the debt."
While against company policy to answer "why don't you" questions, I'll make an exception this time in hopes you will take the challenge and answer the question >why should we?<
1) We have a national interest in proving a safe haven for savings, albeit at nominal rates to enable retirees and others to park money until needed.
2) Much of the so called "Debt" is in fact long term obligations to produce sufficient digital bits to enable printing of long term annuity like payments such as Social Security checks. Some would argue perhaps effectively that a one time payout to grandpa Jones would perhaps provide better stimulus for new cars and college educations for the grandkids, but would provide little assurance of grocery money over the next 30 years or so.
3) The flood of money all at once would result in the inflationary scenario that is anticipated by the gloomers and would justify all their caveman theories of social development.
OK, that's a start. Plenty more where that came from. Now its your turn to tell us all why we should even consider paying off the national debt?
While on can argue that the US spends a disproportionate amount, the data that I am aware of contradicts this conclusion.
The case in point to which I refer is a comparison of the UK with the US. We are traditionally blessed here with a higher standard of living, and consequently a life expectancy here of about 5 more years. Yes, we are fortunate to have the resources to improve upon what is among the best model if not the best historical model of success.
One could argue that citizens there would welcome the additional resources to enable such a high standard, while many of the less enlightened among us scoff at the level of social achievement made or inspired by our more noble brethren.
Japan's Unsustainable Debt Burden: Playing With Fire [View article]
"Holders of yen debt can't use their yen returns without converting and thus locking in inflation-generated value losses."
If you are referring to present circumstances, in fact, the holder of a J-Bond would reap a handy return on its 1% Bonds when the persistent trend is deflationary. It seems we are often focused on ROI in terms of interest earned when in fact cash is its own reward when in deflation drives strong currency and consequent buying power.
In this case, holders of debt would be able to lock in deflation generated value increases, contrary to your stated proposition. We're not nearly as far along the curve, but if 10 year treasuries were to continue at 2% while deflation is at 4% one could reap a reasonable return in terms of buying power, while many will perhaps fret needlessly when it is necessary to touch the principal due to small interest dividends in violation of an often repeated habit formed during inflationary times.
Wall Street Breakfast: Must-Know News [View article]
Yes, but its an unproven assumption.
Lets try housing in Las Vegas, for instance. Lets say John Q. and Nancy bought a nice 3BR 2BA in '07 for 300K, in today's market its worth 240, tops. refi on a 5 Year ARM @3%, goose the economy to 3% GDP, and voila, affordable housing for 5 more years. Just kicking the can down the road you say? John and Nancy now are able to work for the next 5 years, building their cash reserves and assets the old fashioned way. If John does no more than apply the extra cash flow from the 2% Payroll taxes reduction to the mortgage balance, they are just that much closer to being back above water, and there is a good chance they will have been able to pay off that last car loan by then, and reduce that old credit card debt. And if the economy continues to grow, albeit slowly, the property value, as calculated in federal Reserve Notes, may very well go up by 10-30% in 5 years. If you buy this story, I know of some nice Swiss Chalets I'd like you to look at.
HFT: THERE IS A LACK OF MEASUREMENT [View instapost]
Holiday Greetings.Thanks for the research. You are definitely onto something here. I'll be tuned in for future updates.
Important Story On Fed Actions [View article]
Important Story On Fed Actions [View article]
Maybe the solution you are looking for is a resurrection of "The Windfall Profits Tax".
I've seen a slightly different version applied at the state and local level to combat "Profiteering" in cases, when the enterprising owner of an independent retail outlet with a full storage tank decided to raise prices at the pump after the hurricanes hit the refineries in Louisiana a few years ago.
While such measures have proven popular at the consumer level, the populist enthusiasm for such measures tend to diminish when the reality sets in at the boardroom level that Houston really does have a problem.
Wall Street Breakfast: Must-Know News [View article]
Wall Street Breakfast: Must-Know News [View article]
The world suffers from a leadership vacuum which will be all too evident at this weekend's G-20, William Pesek writes. "There’s a sense that the world’s problems are too formidable to fix... What we need is an adult or two in the room to make sure leaders tackle the big challenges of our day. Good luck finding any." [View news story]
Important Story On Fed Actions [View article]
I doubt in principle it matter as long as it works. Its just that sometimes sticks may work better than carrots. Your point is well taken that the effects on inflation is a consideration as well, though it seems deflation is the greater concern as of late. Sometimes action is seen as necessary to stimulate prices to encourage economic activity, in which case subsidies would perhaps be the best option all things equal. And taxes have a way of making folks head spin, so there is that to consider as well.
Important Story On Fed Actions [View article]
Even though we perhaps don't like to admit it, bigger is better when it comes to survival in an increasingly global market with lots of big fish in the sea. Competitiveness today means lower costs and overhead and that includes lower interest rates. The US is still behind when it comes to matching the competition in the heavyweight class. That's how the big fish get bigger, by eating the littler ones. Even if the little guys can win in the MPG category, they just can't compete when it comes to pulling the heavier loads.
Important Story On Fed Actions [View article]
To quibble even further, I believe there are a few other good reasons to impose taxes, perhaps most importantly as a proven means to mitigate the age-old risks associated with concentration of wealth in the hands of too few.
It also can be a useful tool in accelerating the demise of outdated industries to help facilitate the move to newer technologies, an example might a tax on Whale Oil in a move toward electric lights. Some make more sense than others, depending on whose ox is gored, but I wholeheartedly agree with the proposition that imposing taxes to reduce the number of zeros on the national debt scoreboard is beyond logic at best and counterproductive to the max.
In fact, the irrational behaviour patterns that are produced by advocates of this sort of thinking are IMO among the most destructive man-made forces known.
Latest Mini-rant now complete.
Important Story On Fed Actions [View article]
Japan's Unsustainable Debt Burden: Playing With Fire [View article]
One could perhaps make the same argument with respect to the UK, another democracy with a figurehead royal family and a rotating Prime Minster acting in a sort of Speaker of the House role.
But the idea that this is some kind of Achilles Heel is in my view misguided. IMO, this seems to be a among the more positive models for modern developed democratic states. Quite civilized, actually, perhaps an actual improvement on our own Constitutional structure.
Important Story On Fed Actions [View article]
While against company policy to answer "why don't you" questions, I'll make an exception this time in hopes you will take the challenge and answer the question >why should we?<
1) We have a national interest in proving a safe haven for savings, albeit at nominal rates to enable retirees and others to park money until needed.
2) Much of the so called "Debt" is in fact long term obligations to produce sufficient digital bits to enable printing of long term annuity like payments such as Social Security checks. Some would argue perhaps effectively that a one time payout to grandpa Jones would perhaps provide better stimulus for new cars and college educations for the grandkids, but would provide little assurance of grocery money over the next 30 years or so.
3) The flood of money all at once would result in the inflationary scenario that is anticipated by the gloomers and would justify all their caveman theories of social development.
OK, that's a start. Plenty more where that came from. Now its your turn to tell us all why we should even consider paying off the national debt?
Expansionary Austerity? [View article]
The case in point to which I refer is a comparison of the UK with the US. We are traditionally blessed here with a higher standard of living, and consequently a life expectancy here of about 5 more years. Yes, we are fortunate to have the resources to improve upon what is among the best model if not the best historical model of success.
One could argue that citizens there would welcome the additional resources to enable such a high standard, while many of the less enlightened among us scoff at the level of social achievement made or inspired by our more noble brethren.
Japan's Unsustainable Debt Burden: Playing With Fire [View article]
If you are referring to present circumstances, in fact, the holder of a J-Bond would reap a handy return on its 1% Bonds when the persistent trend is deflationary. It seems we are often focused on ROI in terms of interest earned when in fact cash is its own reward when in deflation drives strong currency and consequent buying power.
In this case, holders of debt would be able to lock in deflation generated value increases, contrary to your stated proposition. We're not nearly as far along the curve, but if 10 year treasuries were to continue at 2% while deflation is at 4% one could reap a reasonable return in terms of buying power, while many will perhaps fret needlessly when it is necessary to touch the principal due to small interest dividends in violation of an often repeated habit formed during inflationary times.