A Spooked Market Needs a Real Flop - Barrons.com
In terms of 'broken economies', one can't help but think of how economies often live on bubbles.
The US had its housing bubble and Spain is now ruing its own housing bubble that was.
Greece had its too much government and too much entitlements, unions, regulations, etc. bubble. And, now look at it.
Somehow, all too many seem blissfully turning away from the sovereign debt bubble of the US (driven in part by its Greek-like policies).
To think the US economy is getting back on sound footing with the policies in place today seems beyond ludicrous. But, then again, bubbles seem best viewed in hindsight - after they've popped.
Monday, May 28, 2012
Monday, May 21, 2012
THE US DELUSION ON DEBT: Inflation and Deflation Threats Decline - WSJ.com
Inflation and Deflation Threats Decline - WSJ.com
It was interesting to hear a commentator just now on Bloomberg point out that total Greek debt, including private bank debt and owed to the ECB is 1.25 trillion euros. He said, if Greece leaves the euro, then none of this is likely to repaid - at least in the near term.
This certainly has the ring of the housing bubble and, as you suggest, the end result is that savers and banks (who via Basel ... are to treat sovereign debt as 'safe') will face huge losses.
Spain, etc. are in trouble because rates have moved into the 6-7% range for government debt. What about the US? The Democrats seem to think social spending can go on forever with no consequences.
It looks like Greece will show the consequences - i.e. the lenders just don't get their money back.
All the public unions with their fat taxpayer paid pensions should be very leery - but ostriches sleep better at night.
As the article points out, 'perception' counts. Liberals are trying to build up the perception that the US will always pay its debts. But a bankers know with families and credit cards, at a certain point, the bank needs to stop lending and raise rates (i.e. what is happening in Southern Europe).
People also forget that after the Revolutionary War, government debts were often unpaid in cash or specie.
It was interesting to hear a commentator just now on Bloomberg point out that total Greek debt, including private bank debt and owed to the ECB is 1.25 trillion euros. He said, if Greece leaves the euro, then none of this is likely to repaid - at least in the near term.
This certainly has the ring of the housing bubble and, as you suggest, the end result is that savers and banks (who via Basel ... are to treat sovereign debt as 'safe') will face huge losses.
Spain, etc. are in trouble because rates have moved into the 6-7% range for government debt. What about the US? The Democrats seem to think social spending can go on forever with no consequences.
It looks like Greece will show the consequences - i.e. the lenders just don't get their money back.
All the public unions with their fat taxpayer paid pensions should be very leery - but ostriches sleep better at night.
As the article points out, 'perception' counts. Liberals are trying to build up the perception that the US will always pay its debts. But a bankers know with families and credit cards, at a certain point, the bank needs to stop lending and raise rates (i.e. what is happening in Southern Europe).
People also forget that after the Revolutionary War, government debts were often unpaid in cash or specie.
Tuesday, May 8, 2012
The need to change social policies: A New Port Emerges for Global Investors - WSJ.com
A New Port Emerges for Global Investors - WSJ.com
Neither Europe nor the US want to change union and labor-centric policies that encourage early retirement, high taxes and are anti-business and anti-investment.
They all want growth and look to Central Banks printing money to support the growth these countries also want.
Growth takes capital and entrepreneurship and fairly priced inputs of labor and raw materials.
Because union labor wants high salaries and benefits, it doesn't mean the businesses or economy can support them. And, entitlement societies don't encourage people to get educated or to go to work.
The US is borrowing 42% of every Federal dollar spent and a leading Democratic senator is on Bloomberg complaining of suggested Republican cutbacks in entitlements. His last name didn't sound Greek but his policies sure sound Greek.
Neither Europe nor the US want to change union and labor-centric policies that encourage early retirement, high taxes and are anti-business and anti-investment.
They all want growth and look to Central Banks printing money to support the growth these countries also want.
Growth takes capital and entrepreneurship and fairly priced inputs of labor and raw materials.
Because union labor wants high salaries and benefits, it doesn't mean the businesses or economy can support them. And, entitlement societies don't encourage people to get educated or to go to work.
The US is borrowing 42% of every Federal dollar spent and a leading Democratic senator is on Bloomberg complaining of suggested Republican cutbacks in entitlements. His last name didn't sound Greek but his policies sure sound Greek.
Friday, May 4, 2012
AN INTERESTING CONSUMPTION SPENDING ISSUE: Workforce Productivity Falling in U.S. - WSJ.com
Workforce Productivity Falling in U.S. - WSJ.com
An interesting point was brought up by someone (I believe it was on Bloomberg) with respect to consumer spending - i.e. that there are many Americans who are not paying their mortgages but are living in homes that have yet to be foreclosed on. These people have extra income to spend on consumption!
Will this income be there when they have to move and start paying rent?
An interesting point was brought up by someone (I believe it was on Bloomberg) with respect to consumer spending - i.e. that there are many Americans who are not paying their mortgages but are living in homes that have yet to be foreclosed on. These people have extra income to spend on consumption!
Will this income be there when they have to move and start paying rent?
Growth Focus Is a Smarter Call for Europe - WSJ.com
Growth Focus Is a Smarter Call for Europe - WSJ.com
Let's start with the beginning - "Squeezing demand through budget cuts".There is definitely an obfuscated and ignored side here:
Demand is being squeezed by higher VAT taxes (i.e. things cost even more, in PT the VAT is 23%) and personal and corporate income tax surcharges (i.e. less income to wage earners and less for businesses to reinvest). The VAT rate is too high to begin with. Given a choice, how many people go to the supermarket where prices are always 23% higher?
Let's start with the beginning - "Squeezing demand through budget cuts".There is definitely an obfuscated and ignored side here:
Demand is being squeezed by higher VAT taxes (i.e. things cost even more, in PT the VAT is 23%) and personal and corporate income tax surcharges (i.e. less income to wage earners and less for businesses to reinvest). The VAT rate is too high to begin with. Given a choice, how many people go to the supermarket where prices are always 23% higher?
Subscribe to:
Posts (Atom)
