Paul Krugman is on again today about the disappearing middle class, and how the Bush tax cuts are and always have been a huge, unfair giveaway to “the rich,” whoever they are. Because I happen to remember that the Bush tax cuts actually were an across-the-board cut in marginal rates, together with strong reductions in taxes on capital, I wondered how Krugman gets from there | Read More »
Paul Krugman has just declared the onset of another Great Depression. To him a Depression is characterized by a long-term deflationary trap, but that’s not the reason Depressions are to be avoided. Depressions are bad because of long-term unemployment, which tears at people’s lives and at the fabric of society. So far, I’m with him. After all, to the best of my knowledge, I’m the | Read More »
In regard to the battle over changing the tax treatment of carried interest: I don’t want to see capital gains taxes raised under any circumstances, and in fact I think they should go all the way to zero. But I’m not inclined to fight too hard to keep carried interest taxed as capital gains rather than ordinary income. For one thing, the carried interest to | Read More »
Most European stock markets have opened down almost 3%, with some down almost 4%. US stocks are down about 3.5% there, the equivalent of almost 400 Dow points. The 30-year bond yield is now a hair above 4%. I heard people yesterday speaking of a bit more calm in US credit markets than has been the case in recent days. There are good signs here | Read More »
As I wrote here yesterday, we ‘ve just seen the remarkable spectacle of more than a dozen fractious finance ministers come together to puncture the risk of a Lehman-style market debacle. Taking a page out of Ben Bernanke’s playbook, they cobbled together and announced a package of 750 billion euros (nearly a trillion dollars) in liquidity guarantees. Think about that number. It’s twice the size | Read More »
Holy smokes, people. They said it couldn’t be done. But it looks like the European finance ministers decided to get together and disprove everyone who has been saying for days now that they couldn’t even come close to acting in a coordinated way. They pulled 440 billion euros out of a hat, as a bailout fund for sovereign states. The IMF kicked in another 250 | Read More »
The situation in Europe in regard to Greek debt may be entering a new phase, and I’m talking about something more serious than tear gas and Molotov cocktails. Now that the EU and the IMF have agreed on (and the key legislatures have ratified) a 110 billion euro bailout for Greece, the question has become: will it be enough? Greece faces unusually severe austerity budgets, | Read More »
We’ve had a remarkable run in US notes and bonds over the past several weeks. The economically-sensitive 10-year note briefly yielded more than 4% in mid April. After an astounding rally yesterday, buying in the 10-year continues this morning, and its yield is down to 3.57 as I write. I’m at a loss to convey the magnitude of this move in such a short time. | Read More »
The healthcare law is the first step in what will probably become a sustained movement to shift the balance of economic power in the US from producers to consumers. It’s going to be accomplished by steadily increasing the tax burden on high earners and expanding benefits to those who earn relatively less. We’ve seen this before. It was more or less the effect of the | Read More »
The major health insurance and provider stocks leaped upward on the open, as expected. (They just acquired 32 million new customers in the most ideal way: it’s now illegal not to buy their products.) They all came back down again on some initial profit-taking, and now they’re drifting back upward again. Big Pharma stocks started strong and stayed strong. Devices are looking steady. Capital markets | Read More »
About the value of China’s currency: we all know it’s undervalued. The Chinese know it’s undervalued. They can see it in consumer-price inflation, which is now up between 2 and 3 percent after being subdued for much of 2009. They can see it in a 15% jump in housing prices in some cities. And they can see it in the growing concern among ordinary Chinese | Read More »
Can this be for real? The Democrats are folding student-loan reform into the health bill so it can be enacted without 60 votes in the Senate. I’ve written about this here. There’s been a lot of talk about student-loans since the current Administration came to power. The two key features that reportedly will make it into the healthcare legislation are: 1) Putting an end to | Read More »
Barack Obama came to office promising universal healthcare, to end the carbon economy, and to fix education. Numbers one and two were clear enough, but we’ve never gotten too much insight into number three, beyond Education Secretary Arne Duncan’s “Race to the Top” program. (The latter is essentially a remake of No Child Left Behind.) On the finance side, the student loan industry is populated | Read More »
The only explanation I can think of for this is that Arnold is still nominally a Republican. His emergency budget plan for the state of California builds in an expectation of funds from the current and/or the next Federal stimpack. Standard & Poor’s observed, rationally enough, that there’s no guarantee that Obama will write over so much of your and my money to California, so | Read More »
2009 was one of the very best years in history for the financial industry, with over $50 billion in profits for the top half-dozen firms alone. Forget for a moment about the fact that this industry was literally saved from death with taxpayer dollars. The real question is, what are they there to do? The short answer to that question is that the financial industry | Read More »
Some major news has been hitting global financial markets hard over the last day or so: there is a prospective default by Dubai World, which is an investment vehicle operated by the second-largest of the seven United Arab Emirates. It appears that a total of about $80 billion in debt is now at risk. About $10 billion of that is subject to rollover in the | Read More »
I think of the RedState community as my extended family, and I’m grateful to all of you for reading my past missives on markets and finance. I’ve been all but absent from the front page for months now, and I owe you an explanation. First, my businesses have been performing very well this year, and being a CEO is time-consuming. Second, and more interesting to | Read More »
There are many good reasons to have a deep conversation about how health insurance works in this country, because there is a lot of things wrong with it. What we’re getting from Obama and Congress, however, is a PR campaign designed to distract us from the fact that they would like to change not health insurance, but practically everything about health care itself. Reports have | Read More »
Here’s Lanny Davis, the former Clinton team member and all-around Democratic good guy, on the subject of the “public option” crowding out private competition, and becoming a stalking horse for a single-payer system: “I favor a public option – but the White House needs to explain better why, if public option is heavily subsidized by tax dollars, it won’t always have substantial competitive advantage over | Read More »
This morning, the Commerce Department published the much-awaited first look at US second-quarter GDP. You’re going to hear in the news that the recession is officially over, because the economy is reported to have shrunk in Q2 at a 1.0 percent annual rate. This compares with 6.4% in the first quarter. The report also includes a large downward revision to the Q1 number, as well | Read More »
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