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Bill Gross on Risk Seeking Return and Safe Carry

Edward Harrison — Tue, 27 Mar 2012 14:00:32 +0000

Bill Gross is out with his monthly commentary. Because his points are central to the discussion of policy and markets right now, I am going to write this weekly newsletter commentary outside the paywall. The major question is about how to invest in a world that levers much more slowly in total, and can delever sharply in selective sectors and countries. Gross has some answers and I have some comments on the macro backdrop

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The Giant 21st Century Asset Grab

Michael Hudson — Fri, 02 Mar 2012 13:56:11 +0000

The financial plan is basically an asset grab. They want to load the whole economy down with debt. A consumer will come in and say, I’d like to take out a loan. They’ll say, how much do you earn? Everything over subsistence they’ll want as a loan

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Rickards on Iran and QE3

Edward Harrison — Thu, 09 Feb 2012 18:47:20 +0000

Jim Rickards, author of Currency Wars, was on capital Account last night and he thinks both QE3 and war with Iran are distinct possibilities. Take a look

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Economics in the Age of Deleveraging

Steve Keen — Wed, 01 Feb 2012 16:00:05 +0000

Clearly, economic policy is now far more complex than it appeared to be before the GFC. As we enter this Age of Deleveraging, the worst thing we can do is apply policies that appeared to work during the preceding Age of Leverage—but were in fact predicated on ever-rising private sector indebtedness. Politicians should be sceptical of conventional economic advice at this time; it would be much wiser to study the history of the 1930s instead

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Banking Wasn’t Meant to Be Like This

Michael Hudson — Mon, 30 Jan 2012 02:00:36 +0000

the banks now browbeat governments – not by having ready cash but by threatening to go bust and drag the economy down with them if they are not given control of public tax policy, spending and planning. The process has gone furthest in the United States. Joseph Stiglitz characterizes the Obama administration’s vast transfer of money and pubic debt to the banks as a “privatizing of gains and the socializing of losses. It is a ‘partnership’ in which one partner robs the other.” Prof. Bill Black describes banks as becoming criminogenic and innovating “control fraud.” High finance has corrupted regulatory agencies, falsified account-keeping by “mark to model” trickery, and financed the campaigns of its supporters to disable public oversight. The effect is to leave banks in control of how the economy’s allocates its credit and resources

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Markets Vanish – “In a Flash”

Frederick Sheehan — Sun, 08 Jan 2012 23:49:57 +0000

Government interference extends unstable market conditions longer than would otherwise be true. By doing so, George Eliot's observation (at the bottom, here) is even more appropriate in

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Steve Keen on HARDtalk on the financial crisis and the economy

Edward Harrison — Mon, 28 Nov 2011 02:00:55 +0000

This time it's Steve Keen on the hotseat on HARDtalk. Now, Steve is one of the few economists who actually predicted the global financial crisis. But what about the possibility of another Great Depression? That possibility and how to avoid it were the topics of conversation in this 25-minute interview. Great stuff

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Juergen Stark explains ECB opposition to monetisation is not about inflation

Edward Harrison — Sun, 27 Nov 2011 00:30:39 +0000

As I have been saying at Credit Writedowns, the ECB’s opposition to monetising sovereign debt is not about inflation concerns but rather its resistance to moving into a politicised quasi-fiscal role

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Debt Deflation on the rise

Michael Hudson — Sun, 20 Nov 2011 02:00:53 +0000

“Without consumption, markets are going to shrink. Companies won’t invest, stores will close, “for rent” signs will spread on the main streets and local tax revenues will fall. Companies will lay off their employees and the economy will shrink more. Why aren’t economists talking about these effects of debt deflation, which are becoming the distinguishing phenomenon of our time? They advocate giving more money to the banks, hoping that somehow everything will be okay, as if the banks would lend out the money to fund new production and employment. Mainstream economics and political leaders in both parties are failing to ask why the banks are using these giveaways to speculate abroad, pay their managers bonuses and high salaries or to pay dividends rather than to lend to small businesses or do other things to actually get the economy moving again. This phenomenon cannot be explained without seeing that debt service is siphoning off revenue into the financial sector, which is not recycling it back into the production-and-consumption economy.”

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Manufacturing inflation in a wage deflationary environment

Edward Harrison — Mon, 10 Oct 2011 14:00:32 +0000

How does manufacturing CPI inflation benefit an economy in which incomes are falling? When inflation rises and incomes are stagnant or falling, the economy rolls over

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