The following is an excerpt from Murray Rothbard’s excellent book, “A History of Money and Banking in the United States.”  The passage outlines how the gold standard prevented governments from using inflation as a device to manipulate their currencies, something of great concern to China now in 2009.  However, Word War [...]

When the United States closed the gold window in 1971, the world entered a new era in which nearly all money was supported by nothing more than the full faith and credit of the governments issuing it.  If one looks back to the history of paper money, no government has had the discipline to maintain [...]

This is another post I originally ran on Naked Capitalism last month. As you know, I have turned more positive about the potential for a cyclical economic recovery. However, I am unchanged regarding much of the sentiment expressed in this post – that any upturn must be considered with suspicion because the underlying fundamentals of [...]

This is a post I originally posted over at Yves Smith’s site, Naked Capitalism, a few weeks back just before the G-20 meeting. My intent here is not to malign Obama, Roosevelt or Hoover or make facile comparison but to identify important differences between the economic situation facing Obama and the one that faced [...]

Has the bear market come to an end? It is certainly hard to say. In January, I called for 10% down in U.S. equities, which is basically where we are now (7900 on the Dow vs. the present 7776). My view has been that we would break through 2002 and 1998 lows [...]

The political realities of solving a financial crisis have often meant circumventing legislative approval to meet the exigencies of a particular situation.  This was certainly the case in 1995 during the so-called Tequila Crisis in Mexico.  And I believe it is the case again today in 2009.  Before I go into how this applies to what is presently happening in the Obama Administration, I thought an example from 1995 would be illustrative.

James Montier has a very good piece out via John Mauldin (JohnMauldin@InvestorsInsight.com) on the need for real economy stimulus over financial sector stimulus.
The quote I find most memorable goes to the heart of our debate about the financial system:
Investors seem to be rather excited about banks posting profits at the moment. Frankly, if a bank [...]

Yesterday, I posted an item on Naked Capitalism about the bankruptcy of Yamaichi Securities in 1996 as testament to lingering weakness in a country’s financial sector if sick financial institutions are not dealt with swiftly. In essence, the entire Japanese banking sector remained weak for years despite multiple cyclical upturns after the Bubble Economy [...]

The following passages are excerpts from Charles Kindleberger’s book “The World in Depression.”
The Creditanstalt
Just as in May 1873 and July 1914, with tension growing among Germany, France, and Britain, the crack, when it came, appeared in Austria.  In the early spring of 1931, a Dutch bank wrote a polite letter to the Creditanstalt in Vienna [...]

Rohatyn, a Democrat, talks about the role of government in crisis, infrastructure spending and lessons from New York City’s near economic collapse n the 1970s from his perspective. Royatyn is widely credited with saving New York City from bankruptcy. His tale makes for a good precedent for today’s economic woes.