Tuesday, March 29
Friday, March 18
Video: A Bleak Long-Term Economic Picture for Japan?
I'll admit up front that I don't have a ready prediction that X will happen by Y date. But here are some of the macro elements to keep in mind:
1. Japan is a major surplus country, meaning it produces and sells much more than it consumes. Much of the savings the country generates, which have to go somewhere, have been invested at home in Japanese Government Bonds (JGBs) and abroad in U.S. dollar denominated assets. Alongside China, Japan is the second largest holder of U.S. treasury debt with as almost $1 trillion in holdings.
2. While Japan has a breathtaking 200%+ public debt/GDP ratio (the highest in the developed world), 94% of that debt is Japanese owned. What this means, basically, is that so long as the Japanese keep buying JGBs then Japan's fiscal future is in its own hands. In contrast, the U.S. depends on foreigners to finance a large portion of its federal deficit. The thrifty Japanese save enough to finance their Keynesian stimulus policies all by themselves and still have plenty left over to spot Uncle Sam!
Now, the Japanese savings rate has been steadily declining to what would seem an unsustainable level in terms of maintaining the current fiscal course.
Continue reading the full article published on SeekingAlpha here.
Thursday, March 17
Tuesday, March 15
Monday, March 14
Monday, March 7
Mervyn is the Man
Anyone following the ongoing financial crisis (yes, it's not over yet) closely these past few years has probably noted the markedly different rhetoric coming from two central banks on opposites sides of the Atlantic.
Governor Mervyn King is Ben Bernanke's equivalent at the Bank of England. This weekend he again excoriated Too Big to Fail banks, which predictably led to HSBC threatening to leave town (again).
Is Mervyn out of his mind? I mean, however will London's economy and the U.K.'s tax receipts survive if megabanks like HSBC relocate to Singapore?
The oft-repeated threat by Too 'Bigger' to Fail megabanks that they'll leave town for lax regulatory and lower tax enclaves in Switzerland, Asia, etc. shouldn't scare anyone. If in fact they do carry through on this threat I for one would be at the airport to wave them off goodbye.
For starters, many megabanks don't pay much in the way of local taxes. But that's not the main reason we should call the Too Bigger to Fail bankers' bluff.
With respect to megabanks' threatening to leave town, author Michael Lewis recently made the following analogy:
Megabanks pose a risk to the health of the economy, just like the water-poisoning utility poses a risk to the well being of the community. When something goes wrong at the Too Big to Fail banks, like it did in 2007-2008, everyone suffers in the form of bigger deficits, higher taxes and lost jobs.
Meanwhile, it looks to be another record setting year for banker bonuses.
Between Governor King and the Independent Banking Commission's Sir John Vickers it would appear that the U.K., unlike the U.S., has the right people in the right place at the right time.
Bravo, Mervyn! Keep up the good fight!
P.S. Interestingly, Mervyn in his pre-BoE life was Michael Lewis' tutor at the London School of Economics.
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| BoE Governor Mervyn King |
Is Mervyn out of his mind? I mean, however will London's economy and the U.K.'s tax receipts survive if megabanks like HSBC relocate to Singapore?
The oft-repeated threat by Too 'Bigger' to Fail megabanks that they'll leave town for lax regulatory and lower tax enclaves in Switzerland, Asia, etc. shouldn't scare anyone. If in fact they do carry through on this threat I for one would be at the airport to wave them off goodbye.
For starters, many megabanks don't pay much in the way of local taxes. But that's not the main reason we should call the Too Bigger to Fail bankers' bluff.
With respect to megabanks' threatening to leave town, author Michael Lewis recently made the following analogy:
Your local utility is found to be poisoning the community's water supply, which is making people sick. However, in order to continue providing electricity the utility says that it has to be allowed to poison the water. If the community doesn't allow it to keep poisoning the water then it will leave town for another location which is ok with this.
The obvious response to this lunacy is to tell the utility to take a hike -- our community can find someone else to provide non-polluting electricity!Banks are like utilities. They both fulfill important functions. However, Too Big to Fail megabanks are not the only firms capable of providing banking services. If Too Big to Fail firms leave town then other smaller banks, which don't poison the local water, would gladly step into their place. There is nothing so special that Too Big to Fail banks do that can't be easily and quickly replaced. In fact, they are much, much easier to replace than an electricity utility.
Megabanks pose a risk to the health of the economy, just like the water-poisoning utility poses a risk to the well being of the community. When something goes wrong at the Too Big to Fail banks, like it did in 2007-2008, everyone suffers in the form of bigger deficits, higher taxes and lost jobs.
Meanwhile, it looks to be another record setting year for banker bonuses.
Between Governor King and the Independent Banking Commission's Sir John Vickers it would appear that the U.K., unlike the U.S., has the right people in the right place at the right time.
Bravo, Mervyn! Keep up the good fight!
P.S. Interestingly, Mervyn in his pre-BoE life was Michael Lewis' tutor at the London School of Economics.
Sunday, March 6
Video: U.S. Brain Drain Problem Undermining Competitiveness & Job Creation
Addressing this issue should be a 'no-brainer'. Congress' inability to do so is shameful.
Saturday, March 5
Video: Nassim Taleb Interviewed on Charlie Rose
The author and professor was on Charlie Rose this week talking about debt, financial fragility, the Fed and Bernanke, why Europe is more robust than the U.S., and other topics.
Link to interview here.
Link to interview here.
Friday, March 4
Thursday, March 3
Wednesday, March 2
Chart of the Month: Healthcare Bang (or lackthereof) for the Buck
This one is so outrageous that it deserves more heft than the usual Chart of the Day, or Week title.
In fact I almost dubbed it Chart of the Year, but to be prudent I wanted to to wait a little a longer to see how this chart plays out.
Education Site: Those interested in careers in healthcare and healthcare reform, might be interested in Guide to Online Schools degree and certificate programs in the medical field.
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| (click to enlarge) |
In fact I almost dubbed it Chart of the Year, but to be prudent I wanted to to wait a little a longer to see how this chart plays out.
Education Site: Those interested in careers in healthcare and healthcare reform, might be interested in Guide to Online Schools degree and certificate programs in the medical field.
Tuesday, March 1
Video: On the Winnability of Asian Land Wars
In the below classic 'Battle of Wits' scene from the movie The Princess Bride, Vizzini was *dead* wrong on his advice to "never go in against a Sicilian when death is on the line".
(For anyone not familiar with this movie and/or the full sequence of events which lead up to this scene's punch line, here's a link to a full-scene length clip.)
Are Vizzini, outgoing Defense Secretary Robert Gates, and STRATFOR also wrong about getting involved in a land war in Asia?
Alexander the Great, for one, may possibly wish to posthumously beg to differ.
(For anyone not familiar with this movie and/or the full sequence of events which lead up to this scene's punch line, here's a link to a full-scene length clip.)
Are Vizzini, outgoing Defense Secretary Robert Gates, and STRATFOR also wrong about getting involved in a land war in Asia?
Alexander the Great, for one, may possibly wish to posthumously beg to differ.
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