I’m going to try to lay out the stresses pushing and pulling on the US economy in the medium term. I’m going to intentionally oversimplify some things in order to make the overall picture as clear as possible. And I’m going to apply a bit of a curve to the analysis, to account for the uncertainty surrounding the banking sector. (By that, I mean that | Read More »
Remember way back in the early Nineties, when history had ended? Global leaders and policymakers more or less settled on the “Washington Consensus”: a combination of free-market capitalism with at least a modicum of political liberty had won the Twentieth Century’s agonized debate over which system works best. Countries all over the world rushed to implement the new model after the fall of the Soviet | Read More »
Something quite major happened in finance this morning. All week, officials like Ben Bernanke and Tim Geithner have been hinting that nationalization is not the way to save the banking system. So today they only nationalized Citigroup halfway. As part of the TARP plan, and also in a supplemental purchase, you the taxpayer have purchased about $45 billion worth of convertible preferred stock in Citigroup. | Read More »
Things have been very fitful over the last several trading days, but there are several emerging themes that are operative over the short term. 1) Interest rates are on the rise. We’re now in the era of trillion-dollar deficits as far as the eye can see. Next week is going to be a quiet week, but the month so far has seen tremendous amounts of | Read More »
So it appears that Obama has floated a deficit reduction “plan,” and it seems like much deeper voodoo than anything we could have come up with. I use the scare quotes because, as always with this President, there’s no actual plan with details we could evaluate (and maybe criticize). All he did was float some ideas out to the Washington Post. Call it Economic Management | Read More »
There’s a remarkable story being reported in the New York Times. It’s remarkable in itself, and also because as far as I can tell, it’s only being reported in the Times. It’s a proposal by the Treasury for a radical way of restarting private participation in credit markets. I’m only going to give you the barest outlines of this with minimal analysis, because I can’t | Read More »
Today could turn out to be an important day in the ongoing financial and economic crises. Stock markets overseas are riding declines of about 3%. European trading suggests that US stocks may decline even more today, perhaps as many as 300 Dow points. The moves are significant because we’ve now decisively broken below the “technical support” level provided by the multiyear low reached in 2002. | Read More »
He only announced it a few minutes ago in Mesa, Arizona, but let’s look at how the markets are reacting to Obama’s mortgage-relief plan. The idea is to spend about $275 billion to give more money to Fannie Mae and Freddie Mac, and to facilitate refinancings of distressed mortgages. It’s still too early to give you an actual analysis of the plan, but I did | Read More »
Ok, so the Teacher And Firefighter Job-Preservation Act of 2009 is now law. Last week, President Obama told us that starting today, the stimulus would immediately speed saving succor to the US economy, using metaphors that suggested the stanching of an open wound. Are you feeling stimulated? A more true metaphor is that the stimulus will be like a fart in a windstorm. Why? Three | Read More »
I’m indebted to reader Olivier Strauch, who wrote to us at RedState to express some reservations he has about the admittedly radical tax-holiday proposal that I made here. Mr. Strauch’s pithy but resonant rhetorical style defies summarization, so I’ll quote him literally (with one minor redaction; I changed a crude sexual reference to a crude gastronomic one): “Seriously. Your answer to the devastation caused by | Read More »
Barack Obama has been very consistent about several elements of his storyline. It has three basic parts: First, the financial system just needs a little confidence. Second, the economy just needs a huge dose of spending on left-wing priorities. Third, and key to the point here, tax cuts don’t work. Obama always frames the point about taxes in a political context, something like: “the last | Read More »
Yesterday was his boss’s turn. Today’s it’s Tim Geithner’s. There are two crises going on, a financial one and an economic one. Yesterday, Obama went to Indiana (a red state that he flipped and needs to suck up to, so they’ll keep going blue), and then to national television, to talk about the economic situation. His message was that the only way to make the | Read More »
We take for granted that the government of the United States will act with probity and restraint. Uniquely among nations, we have a government that is overshadowed by powerful ideas about the sources of its legitimacy. These are encoded in the Declaration of Independence, the Bill of Rights, key passages of the Gettysburg Address (“dedicated to the proposition…”, “of the people, by the people, for | Read More »
I live in New York City. I talk to a lot of businesspeople, investors, and Wall Streeters. I don’t talk to all that many ordinary people. But I enjoy being interviewed on live radio in other parts of the country. And when I do that, I get the chance to hear what local callers think about the economy, and more importantly, what they want. They | Read More »
Obama has been walking back his rhetoric on trade protectionism. Specifically, the “Buy American” clause in the fiscal stimulus bill now under debate in the Senate. Think about it. We’re getting ready to borrow trillions of dollars that our children will need to repay some day. We’re going to give it to the governors of the fifty states, to spend on teacher salaries, Medicare and | Read More »
Responding to the political scandal du jour, executive pay and outrageous Wall Street bonuses, Obama will announce today that anyone who works for a bailed-out company can’t make any more than $500,000 in cash compensation. As always, there’s far less here than meets the eye. And as always, there will be unintended consequences. According to the reporting on the issue, Obama isn’t going to make | Read More »
Ok, so Mitch McConnell, of all people, is talking about a new Federal program to offer 4% mortgages to anyone “credit-worthy.” (If something like this happens while Barney Frank is in power, “credit-worthy” will be defined as “has a pulse,” so Sen. McConnell probably ought to be careful what he wishes for.) What will happen if we do this? It’s basically the opposite of the | Read More »
Global stock markets are soft across the board as we swing into the first trading day of February. At first glance, this appears to be responsive to the constant drumbeat of terrible economic news, as economies and trade shrink in unison. The action in the bond markets appears to be somewhat healthier. For several weeks, the theme underneath the surface noise in corporate debt markets | Read More »
Remember when Nancy Pelosi became Speaker of the House? One of her first remarks was that she intended to trot up to the White House, and use her mommy voice on the President of the United States. Democrats do have a way of thinking they have parental responsibility for the rest of us. Yesterday, Obama got himself quoted in all the news outlets to the | Read More »
The landline provider in my neighborhood in New York City is Verizon. I’m in the middle of a support incident with Verizon that I’ll describe in a bit of detail, for a couple of reasons. First, because it happens on an infrequent but regular basis. Second, because it vividly illustrates how a government-protected industry deals with its customers. Why does this matter? Because we’re now | Read More »
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