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Showing posts with label Financial Markets. Show all posts
Showing posts with label Financial Markets. Show all posts

Friday, May 5, 2023

The Debt Default


For John, BLUFThis historic information notwithstanding, a default on our debt would be a bad idea, causing problems in the financial realm and in the international (informational) realm.  Nothing to see here; just move along.




From The Hill, by Opinion Contributor Alex J Pollock, 10/07/21 12:01 PM ET.

Here is the lede plus two:

Every time the U.S. government’s debt gets close to the debt ceiling, and people start worrying about a possible default, the Treasury Department, under either party, says the same thing: “The U.S. government has never defaulted on its debt!” Every time, this claim is false.

Now Treasury Secretary Yellen has joined the unfailing chorus, writing that “The U.S. has always paid its bills on time” and “The U.S. has never defaulted. Not once,” and telling the Senate Banking Committee that if Congress does not raise the debt ceiling, “America would default for the first time in history.”

This is all simply wrong. If the United States government did default now, it would be the fifth time, not the first. There have been four explicit defaults on its debt before. These were:

  1. The default on the U.S. government’s demand notes in early 1862, caused by the Treasury’s financial difficulties trying to pay for the Civil War.
  2. The overt default by the U.S. government on its gold bonds in 1933.
  3. The U.S. government default in 1968 by refusing to honor its explicit promise to redeem its silver certificate paper dollars for silver dollars.
  4. The 1971 breaking of the U.S. government’s commitment to redeem dollars held by foreign governments for gold under the Bretton Woods Agreement.
This is pretty straight forward, although the "types" of defaults are different to some degree.  However, a default is a default, a broken promise.

If you thought the dateline was odd, I agree.  My assumption is that this is an update of an older article, not properly reviewed by the editors.

Hat tip to Ann Althouse.

Regards  —  Cliff

Tuesday, February 4, 2020

Krugman Recants, Sort Of


For John, BLUFThe election of Donald John Trump, Representative Adam Schiff notwithstanding, is not the end of the world.  I am not even sure you can see the end of the world from here.  Nothing to see here; just move along.




From Red State, by Sister Toldjah, 3 February 2020.

Back in 2016 (9 November 2016) Nobel Laureate Paul Krugman wrote, in The New York Times, that the markets were going down, for a very long time.

Still, I guess people want an answer:  If the question is when markets will recover, a first-pass answer is never.
Dr Krugman has his PhD in Economics and his Nobel Prize in the same area.

So, recently he had to reevaluate his prediction.  He was being interviewed by PBS's “The Firing Line” host Margaret Hoover:

“The economy is doing pretty well at the moment.  Do you agree?” Hoover asked.

“Yeah,” Krugman admitted.  “I mean… there’s a lot of stuff that we’re not taking care of that we should be taking care of, but look — best estimate is that Trump has added about $300 billion at an annual rate to the budget deficit.  That’s a big stimulus.  That’s almost as big as the Obama stimulus at its peak.  So, sure.”

He then claimed that the results of the stimulus were “little bang for the buck” considering the size of the deficit.

“So the Trump economy hasn’t been all bad?” Hoover pressed.

“No,” Krugman replied.  “I mean, full employment is good. Those of us who were screaming for more stimulus back in the days when unemployment was nine percent still think that some stimulus is good even now.”

Now, if the Democrats can see this and adjust their their arguments, we might make some progress.

Hat tip to the InstaPundit.

Regards  —  Cliff

Saturday, April 21, 2018

Rules (and Common Sense) Ignored


For John, BLUFAre there no ethics down in DC?  Rules for thee, but not for me?  Nothing to see here; just move along.




From the Blog Site, The Future of Capitolism, by Mr Ira Stoll, 20 April 2018.

Here is how it starts off:

A federal judge is threatening to appoint a "private prosecutor" to press a criminal investigation about FBI leaks to the press in an insider trading case.

The Justice Department opened a criminal investigation in December 2016 into the leaks.  But progress has been slow, or opaque, enough that Judge P. Kevin Castel of the United States District Court of the Southern District of New York issued a two-page order on April 2, 2018, raising the prospect of hiring his own lawyer.

This has nothing to do with Russiagate.  But, it is a bad sign that a Federal Judge is upset about leaking by the FBI.

When I was a junior functionary in the Pentagon I thought that those who leaked information, always in the furtherance of their personal agenda, were unethical low lifes.  I still lean that way.  Earn it by the power of your arguments or go away.

Hat tip to the InstaPundit.

Regards  —  Cliff

Thursday, April 5, 2018

A Global Citizenry?


For John, BLUFThe world is on the road to perdition.  The experts agree.  In the mean time, the People turn populist, which means they reject the policies (and styles) of their leaders.  Nothing to see here; just move along.




from The Guardian, by Mr Rana Dasgupta, 5 April 2018.

Here is the lede plus three:

After decades of globalisation, our political system has become obsolete – and spasms of resurgent nationalism are a sign of its irreversible decline. What is happening to national politics? Every day in the US, events further exceed the imaginations of absurdist novelists and comedians; politics in the UK still shows few signs of recovery after the “national nervous breakdown” of Brexit.  France “narrowly escaped a heart attack” in last year’s elections, but the country’s leading daily feels this has done little to alter the “accelerated decomposition” of the political system.  In neighbouring Spain, El País goes so far as to say that “the rule of law, the democratic system and even the market economy are in doubt”; in Italy, “the collapse of the establishment” in the March elections has even brought talk of a “barbarian arrival”, as if Rome were falling once again. In Germany, meanwhile, neo-fascists are preparing to take up their role as official opposition, introducing anxious volatility into the bastion of European stability.

But the convulsions in national politics are not confined to the west.  Exhaustion, hopelessness, the dwindling effectiveness of old ways: these are the themes of politics all across the world.  This is why energetic authoritarian “solutions” are currently so popular: distraction by war (Russia, Turkey); ethno-religious “purification” (India, Hungary, Myanmar); the magnification of presidential powers and the corresponding abandonment of civil rights and the rule of law (China, Rwanda, Venezuela, Thailand, the Philippines and many more).

What is the relationship between these various upheavals? We tend to regard them as entirely separate – for, in political life, national solipsism is the rule.  In each country, the tendency is to blame “our” history, “our” populists, “our” media, “our” institutions, “our” lousy politicians.  And this is understandable, since the organs of modern political consciousness – public education and mass media – emerged in the 19th century from a globe-conquering ideology of unique national destinies.  When we discuss “politics”, we refer to what goes on inside sovereign states; everything else is “foreign affairs” or “international relations” – even in this era of global financial and technological integration.  We may buy the same products in every country of the world, we may all use Google and Facebook, but political life, curiously, is made of separate stuff and keeps the antique faith of borders.

Where to start?

Fortunately, the name of the source gave me a clue.  The Guardian.  Need I say more?  OK then.  Mr Dasgupta is a novelist and as a Fulbright Scholar, attended the University of Wisconsin–Madison.  That explains some things right there.

Is this just another anti-Brexit screed?

Sure looks like it, underneath.

At the ends, it says:

Third, and finally: we need to find new conceptions of citizenship. Citizenship is itself the primordial kind of injustice in the world. It functions as an extreme form of inherited property and, like other systems in which inherited privilege is overwhelmingly determinant, it arouses little allegiance in those who inherit nothing. Many countries have made efforts, through welfare and education policy, to neutralise the consequences of accidental advantages such as birth. But “accidental advantages” rule at the global level: 97% of citizenship is inherited, which means that the essential horizons of life on this planet are already determined at birth.
If you read Professor Amy Chua’s book, Political Tribes:  Group Instinct and the Fate of Nations, most of those European nations grant Citizenship based on birth, but the United States is a “super-group”.  You come here, follow the rules, and you are one of us. In this digital age you can be an e-Citizen of Estonia, but if you want clean water you have to either fix your own place or emigrate.  The problem is, there are certain limitations, such as carrying capacity and the ability to generate jobs.  Not everyone is a digital genius and some of us have to chop potatoes, so the rest can have dinner. And, the author loves to poke at US President Trump.  In one place he says:
It is not merely Donald Trump’s personality that causes him to act like a sociopathic CEO.
That is kind of tacky.  And, he puts President Trump on the same plane as President Erdoǧsan.  Let us have some sense of proportion here.
Several have noted the parallels in style and substance between leaders such as Donald Trump, Vladimir Putin, Narendra Modi, Viktor Orbán and Recep Tayyip Erdoğan.
Ignored in all this is the fact that transnational financial dealings don’t mean we all think alike.  Yes, as Americans we believe all men are created equal, etc, but not everyone does.  Further, rather than the French Revolution having abolished God, it made room for new forms, where God, or the Party, is superior to the state.  While Islam was before the French Revolution, Communism was after it.  In both cases the Faith, and the Faith Leader (Lenin, Stalin, Mao, Kim 1, 2, 3) provides the Faith Wisdom to the secular government.  Much as happens in theocratic Islam, as in Iran.  The author is looking for trouble here.

If we can't unite Afghanistan, how are we going to unite the world?

A long analysis, but not a good analysis.

Regards  —  Cliff

Friday, October 2, 2015

Gleichschaltung


For John, BLUFHow can it be science is politicians can shut it down if they disagree with it.  Nothing to see here; just move along.



Gleichschaltung is the word Law Professor Glenn Harlan Reynolds uses to describe this incident, report in The Hill.  Fairly appropriate.

Here is part of what Professor Reynolds extracted from the article.

Five top Democratic economists are criticizing Sen. Elizabeth Warren (D-Mass.) and the left-leaning Brookings Institution for forcing one of its nonresident economic fellows to resign.

Warren raised concerns earlier this week that Robert Litan, a nonresident and unpaid economics fellow at the think tank, was using Brookings to peddle an industry-backed study that was critical of a financial advice regulatory pitch championed by Warren and the White House.

In a letter to Brookings earlier this week, Warren questioned the independence of the study, which Litan openly notes in the text “was supported by the Capital Group, one of the largest mutual fund asset managers in the United States.”

Hours later, Litan was forced to resign.

The Democratic economists say they’re “concerned” about Litan’s treatment.

They said Warren’s approach and Brookings’ “complicity with it threatens ad hominem attack on any author who may be associated with an industry or interest whose views are contrary to hers.”

Well, Senator E Warren is a US Senator, and she should be free to question a study.  The really embarrassing thing is that Brookings Institution caved and caved so quickly.  On the other hand, Ms Warren should be concerned that Brookings rolled over so easily.  Is she abusing her position?

Hat tip to the InstaPundit.

Regards  —  Cliff

Sunday, July 12, 2015

Unfunded Liabilities at State and Local Levels


For John, BLUFRetirement liabilities are dragging down Greece and could drag us down.  Nothing to see here; just move along.



Mr Jeffrey Carter, in his blog Points and Figures, talks about Government debt, including Government pensions, and talks about solutions.  The post is "Want to Know How to Stop a Centralized Bureaucracy?  Math."
My friend Mark Glennon runs Wirepoints.  He was on a radio show recently talking about public pensions.

Public pensions have bankrupted the state of Illinois, counties, and virtually all municipalities in Illinois.  Bill Gurtin of Gurtin Fixed Income has said he would decline buying the public debt of two places:  Puerto Rico and anywhere in Illinois.

Often, we think of the monolithic corporation as being a danger to freedom in America.  It’s a pretty easy seed to plant with people that have to deal with companies like Comcast and ATT everyday.  But, behind that monolithic corporate giant is an out of control larger monolith.  The government.  The government regulates corporations, but who regulates the government?

It’s easy to say, “the voters”.  But, in states like Illinois every district over every geographic square inch has been gerrymandered to death.  Kingmakers have cut up voters to make sure certain things happen. Tammy Duckworth has decided to run for Senate in Illinois.  Democrats aren’t worried about her House seat-the election won’t be competitive.  A Democrat is virtually guaranteed to replace her.  Last week, there was a primary to replace Aaron Schock in Peoria.  Republicans aren’t too concerned since the district has been drawn to guarantee Republican domination.  In certain parts of the state, there are severe social consequences to going against the local Machine.  In the city of Chicago, it’s tougher to be an out of the closet Republican than it is to be gay!

This post includes an audio segment from our local radio show, The Financial Exchange (WRKO, 680).

Hat tip to the InstaPundit.

Regards  —  Cliff

Monday, June 8, 2015

Perry on Banks


For John, BLUFI am looking forward to Amy Goodman giving Governor Perry points.  Nothing to see here; just move along.



Over at PJ Media the writer Jazz Shaw, gives us "Rick Perry is ready… to regulate Wall Street".  Doesn't this make him sound like Senator E Warren?

From the article I take it that Governor Perry is for providing the ability to operate to the smaller banks and for letting the big banks suffer the consequences of their errors.  It was also interesting, per the article, that Texas has had some success with its own banking regulations.

Hat tip to the InstaPundit.

Regards  —  Cliff