Articles By: Guest Author

This page is a post from outside of Credit Writedowns' regular contributors.

Here are my most recent posts

Is Italy running out of money?

Is Italy running out of money?

Institutional investors have learned how to create and game self-fulfilling prophecy runs in various asset markets. (George Soros understood this and demonstrated its efficacy with his effort to break the pound in 1992.) Indeed, this is one of the “secrets” to manufacturing higher absolute returns if you are a hedge fund portfolio manager – namely, creating and managing such bandwagon effects. It is a plausible simple story with a self-fulfilling aspect to it.

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“Great Recession” Far Worse Than We Had Been Previously Told

“Great Recession” Far Worse Than We Had Been Previously Told

Included in the BEA’s first (“Advance”) estimate of second quarter 2011 GDP were significant downward revisions to previously published data, some of it dating back to 2003. Astonishingly, the BEA even substantially cut their annualized GDP growth rate for the quarter that they “finalized” just 35 days ago — from an already disappointing 1.92% to only 0.36%, lopping over 81% off of the month-old published growth rate before the ink had completely dried on the “final” in their headline number. And as bad as the reduced 0.36% total annualized GDP growth was, the “Real Final Sales of Domestic Product” for the first quarter of 2011 was even lower, at a microscopic 0.04%.

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How does fiscal consolidation affect the economy?

How does fiscal consolidation affect the economy?

The research presented below from the IMF from October 2010 “finds that fiscal consolidation typically reduces output and raises unemployment in the short term. At the same time, interest rate cuts, a fall in the value of the currency, and a rise in net exports usually soften the contractionary impact.”

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Do economic crises lead to policy reform?

Do economic crises lead to policy reform?

If economic crises make the short-run pains of reforms easier to bear, then crises could yield considerable long-run benefits. But this column argues that the recent global financial crisis has been wasted thus far. It suggests that it is political crises – and not economic turmoil – that actually bring about reforms.

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Debt ceiling dynamics are bond bullish

Debt ceiling dynamics are bond bullish

Warren Mosler argues that either way the debt ceiling debate goes, the economy remains vulnerable to looming external shocks. And that is bullish for bonds.

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QE3, Treasury Style

QE3, Treasury Style

What happens on August 3rd if no debt ceiling negotiation is reached in the US. This column argues that Treasury could go around, not over the debt ceiling limit by using its constitutional authority to mint money.

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The European project is doomed without reform

The European project is doomed without reform

Europe is in a dire situation. If it doesn’t address the underlying causes of the Greek crisis quickly, Europe’s political project will face the same fate as communism and the US Confederacy, writes James K. Galbraith.

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After careful consideration, I remain bearish

After careful consideration, I remain bearish

The S&P has gone from 2 standard deviations below the 20-day moving average on the 16th June to 2 standard deviations above it now, something it did prior to the 87 crash when it rallied 6.4% in the week prior to the crash. It has been doing this more and more frequently recently although not of the scale of swing we have just seen. Our economists have already said that a single payroll figure is not sufficient to cause QE3 to which I agree. Commodity prices are telling us that further Asian stimulus is not going to happen unless offset by demand destruction elsewhere in the world. The risks are clearly mounting up.

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Contagion Fear in Europe

Contagion Fear in Europe

Most analysts agree that Greece is insolvent. This column argues that the issue is whether Greece’s troubles are contagious.

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The Mosler Plan for Greece

The Mosler Plan for Greece

The following is an outline for a proposed new Greek government bond issue to provide all required medium term euro funding for Greece on very attractive terms. The new bond issue includes an addition to the default provisions that eliminates the risk of loss to investors. The language added to the default provisions states that while in default, and only in the case of default, these transferable securities can be used directly, by the bearer on demand, at face value plus accrued interest, for payment of any debts, including taxes, owed to the Greek government.

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The Eurozone Could Break Up Over a Five-Year Horizon

The Eurozone Could Break Up Over a Five-Year Horizon

Nouriel Roubini writes that the current “muddle through” approach to the eurozone (EZ) crisis is not a stable disequilibrium; rather, it is an unstable disequilibrium. Either the member states move from this disequilibrium toward a broader fiscal, economic and political union that resolves the fundamental problems of divergence (both economic, fiscal and in terms of competitiveness) within the union or the system will move first toward disorderly debt workouts and eventually even break-up, with weaker members departing. Over a five-year horizon, the odds of a break-up are at least one-third.

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Can Obama cut the deficit and have job growth too?

Can Obama cut the deficit and have job growth too?

Stephanie Kelton demonstrates that as long as unemployment remains high, the deficit will remain high. Here’s the formula: Spending creates income. Income creates sales. Sales create jobs. If you think you can cut the deficit without destroying jobs, dream on. She argues that instead of dreaming about ways to pull off the impossible, it’s time get to work on a plan to increase employment.

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