Notes on the crisis
I’m standin’ in the shadows with an aching heart I’m lookin’ at the world, tear itself apart — Bob Dylan, “Mississippi” Here Dylan has given us a brilliant summation of the condition of the simple citizen in the face of the economic crisis that exploded in our faces in mid-September, and which may well prove more momentous than another calamity, another September, seven years earlier. | Read More »
At What Price A Domestic Auto Industry?
This week, Congress returns to the question of what to do with the domestic auto industry, Detroit’s humbled Big Three. And the options range from awful to unthinkable.Yesterday we got a reading of auto sales in November. The story was extremely bad. Continuing the trend from October, sales were down anywhere from a third to a half, across all the manufacturers who sell in North | Read More »
No More Windfall Profits Tax
Good on the President-elect for this decision:President-elect Barack Obama is not planning to implement a windfall profit tax on oil companies because prices have dropped below $80 a barrel, an aide said on Tuesday.”President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel,” an aide on Obama’s transition team said. “They are currently below that now and expected to | Read More »
Tax Havens: Myths v. Facts
It’s time to watch some educational TV. And it’s always worth tuning in with Dan Mitchell:
China Devalues Its Currency
It seems to me that focus has shifted away from China’s economic and financial doings during the acute financial crisis that began last September.The story in China for most of this year and last year has been extremely high inflation (particularly in prices for staple foods), and vigorous measures by the country’s banking and monetary authorities to reduce the formation of credit.Up till late 2007, | Read More »
Here’s Johnny: The Reemergence Of Keynesian Economics
John Maynard Keynes was born on 5 June 1883 in Cambridge into a well-to-do academic family. His father was an economist and a philosopher, his mother became the town’s first female mayor. Suitably stimulated, he excelled academically at Eton as well as Cambridge University, where he studied mathematics. He also became friends with members of the Bloomsbury group of intellectuals and artists.After graduating, Keynes went | Read More »
Mandatory Voluntary Service, Now With Compensation!
In the days following the Presidential election, the Obama team quickly made a transition from campaigning to running some terribly nebulous Office of the President-Elect. On this website, our Dear Leader-Elect proposed a term of mandatory civilian service for high school and college students, perhaps as some odd form of payment for their fervent support of him during his near half-term presidential campaign. The proceeding | Read More »
Last week was Citigroup’s turn. Citi is one of the world’s best-known banking brands, and was once America’s largest bank by market capitalization.Last week, investors knocked 60% off the value of Citi’s stock, in a nerve-rattling selloff that was too reminiscent of Bear Stearns and Lehman Brothers for comfort.Citigroup is too large to fail. It has about 200 million accounts in more than 100 countries. | Read More »
Barack Obama admits that tax increases–even on rich people–hurts the economy:President-elect Barack Obama may consider delaying a campaign promise – to roll back tax cuts on high-income Americans – as part of his economic recovery strategy, two aides said on Sunday.David Axelrod, the Obama campaign strategist who was chosen to be a senior White House adviser, was asked if the tax cuts could be allowed | Read More »
OPRenomics: Some predictions for the future.
With the DOW now having reached an absolutely abysmal 11 year low, it looks like the economy is continuously sliding further and further down the toilet. I have no doubt that the Democrats in congress will blame this on rich and greedy investors who refuse to shed away their hard-earned money. The clueless masses, unaware of how economies work, will be duped by a complicit | Read More »
The Week That Was For General Motors
So this week we witnessed the jarring spectacle of three wealthy, well-dressed CEOs flying from Detroit to Washington, DC, each in his individual private jet, to ask for anywhere from 25 to 50 billion dollars of your money.Instead, Congress turned them away. Democrats (if you take them at their word) said they wanted to give Detroit a big slug of money from the Treasury’s bank-bailout | Read More »
Extraordinary Doings in the Bond Market
To go along with the piece I wrote earlier today (here), the bond market appears to have picked up on the theme of deflation. The 30-year US Treasury bond rocketed upward in price to more than 118 and a half by today’s market close, and much of the move came late in the day.This price corresponds to an interest-rate of 3.49% for the long bond. | Read More »
What Lies Ahead For General Motors
The most urgent piece of economic news and policy over the next several weeks will be the fate of the General Motors Corporation. It will take precedence over the general policy response to the worsening recession.The problems in the auto industry go well beyond the Detroit Big Three. All eleven of the major automakers with operations in North America have come under severe stress, as | Read More »
Still Angry at Obama’s win?
I have a story to tell so please stay with me while we’re on this written journey as the circular nature of some of the statements do get closed at the end. Please also remember my motto: Life is not Linear which is why Pi is so important.That Obama won is not the issue that I’m upset about. At 52%/48% I’ve realized that during my | Read More »
Is Bureaucracy the Right Prescription?
This afternoon on Bloomberg Radio, Charlie Stein talked with Laurence Kotlikoff, professor at Boston University and President of Economic Security Planning Inc. The discussion was primarily framed around an article that Dr. Kotlikoff penned for Bloomberg yesterday, where he introduces his recommendation for a medium-term solution to ensuring “safe” assets make it to the markets, rather than the toxic ones that have gotten us where | Read More »