Title Fight

The case for and against bank nationalization from the RGE Monitor.

I'm leaning towards the for column.

No Grover

We're not going to pay for the stimulus with higher taxes. We're going to pay for it by increasing the money supply and inflating the debt away. What's an extra $3000 per person when we're all going to have 25% more dollars and a loaf of bread is $10?

Oh wait, haven't I said before that inflation is a tax. Please erase that from your memory.

New World Order

Fabius Maximus summarizes what I have been thinking, and sharing with a few, for the past month or so. Everthing that we know is going to change. Fiat/credit monetary system, consumer driven economy, America and its role as the hegemon in a unipolar world. Everything.

Cheers.

Everything You Need To Know

About government stimulus programs from our friends at the RGE Monitor.

Very well referenced and you gotta love the CBO.

~$500B or $.5T

I know you all know that $500B is half a trillion. I simply enjoy using a T after dollar signs is all.

So the President's 10-year budget is going to cut the deficit by more than half by 2013. And yet it will still be half a trillion $s!!.

Increasing taxes on those who make more than $250K a year and winding down the war in Iraq contribute the most to reducing the deficit. Let's hope the Afghanistan mission does not devolve into a destroy the Taliban mission.

2 Weeks

Prediction: The U.S. government is going to take over Bank of America and Citi within two weeks.

Nerves

Tax Changes

The Tax Policy Center breaks down how much each of our taxes are going down.

To find out which quintile you are in, click here.

Tax cuts and increasing the deficit. Sounds familiar.

Morality

I've argued for many years that the oft-heard phrase, "Everything happens for a reason" and its corollary that God's purposes are served by all things is a load of crap. I've said that sometimes suffering is just suffering without reason because we live in a fallen world.

After reading this post over at By Common Consent, I thought for the first time in more than a decade that I might be wrong about the purpose of suffering.

Divergence

Tim Duy compares the unemployment rates of the past two recessions based upon educational level. I find it difficult to imagine growth being entirely driven by government spending over the next decade (or two). This is not your father's recession.

And hysteresis? That's more than a little terrifying.

It's Ok

Go ahead and save. The NY Times makes the case for households saving and letting the government spend.

Sharing

I've removed my links to my favorite sites and replaced it with a widget from my reader. Articles that I like, but don't have time to comment on will appear there.

Different Voodoo

Robert Barro goes after the notion that a $1 spent by the government yields $1.50 worth of output. His conclusion is very Corporate Finance 101.

It's all about the basics.

Two-Faced

Does borrowing money to fund a recovery make the recovery less likely?

As you can tell by now, I am of two minds regarding the stimulus. I have serious reservations about the excessive use of debt (if only our debt to GDP ratio had been closer to 40% instead of +65% at the beginning of this crisis - thank you George!). I am also concerned about the U6 number of 15% (true unemployment - forget the ~7% number being thrown around). I don't know what the best answer is short term and I definitely don't know what the best answer is long term.

The problem is that I don't think anyone else knows either.

Nationalization

An interview with Professor Roubini:

"It is clear that the Anglo-Saxon model of supervision and regulation of the financial system has failed.

It relied on self-regulation that, in effect, meant no regulation; on market discipline that does not exist when there is euphoria and irrational exuberance; on internal risk management models that fail because – as a former chief executive of Citi put it – when the music is playing you gotta stand up and dance."

Post-Keynesians

Yves Smith and Steve Keen go after Marx's "Cavaliers of Credit". Warning: This is extremely long, but necessary if you want to truly understand what is going on.

"A sound model of how money and debt are created makes it obvious that we should never have fallen for the insane notion that the financial system should be self-regulating. All that did was give the Cavaliers a licence to run amok".

Credit money, then fiat money?? We don't operate under a fractional reserve system?? Someone needs to reprint all of those macro textbooks.

I suffered physical pain when Keen stated that the only way to inflate the economy (to get it kick started again) was to increase the money supply (i.e., M0) by 25x. No wonder everyone at the Fed and the Treasury is so scared. They know what they need to do, but pulling the trigger is gonna take a much bigger set than they or I have.

"With all due respect ..."

Cato coordinates a response to the President's claim that we are all Keynesians now.

Barro vs. Krugman

"This is probably the worst bill that has been put forward since the 1930s."

Despite Krugman's shrinking, but still extremely large, platform that is the NY Times, Barro is still beating him in the one place that matters, The Economist Rankings.

The Mormon Trump Card

I swear that I don't regularly read the BYU News. Scouts honor. I simply followed a link with a clever title. Let's see if you can resist The Mormon Trump Card link.

My summary of the article: Context is important.

Forebearance

"Dear God, let's just kiss the US economy goodbye."

Yves Smith, over at Naked Capitalism, is foaming at the mouth over the latest bank bailout plan being bandied about at the White House.

For all of the brainpower on his economic team, you'd think that President Obama could come up with something better than more of the same kowtowing to the banks. Due diligence would be a nice start.

Four

To paraphrase Niccolo yet again, there are three kinds of people in this world.

• Geniuses
• Those who appreciate genius
• Those who fail to comprehend and appreciate genius

Four years ago today I began this blog with the initial hope of escaping the pit that is Category 3 and quickly decided that I was better off not having such high aspirations and quickly switched gears to something that I did know a bit about (i.e., running).

So dear readers, let's hope that the next four years of little analysis and lots of linking bears more fruit than the past four.

Lapse of Serenity

I typically don't link to friends' blogs/sites. Not because I don't love them, but because the only traffic our sites see is the four or five of us who already read each other and posting a link to a post would be redundant in the worst way.

However, for this post over at Delicious Animals, I must make an exception.

I first met Mr. Delicious Animals when an old friend from the Japan Osaka Mission days (who happens to be Mrs. Delicious Animals) found out that I lived in Brooklyn (her family lived in Westchester) from the Osaka Mission site and reached out to me. Shortly thereafter, we moved to Westchester and ended up in the same ward with the Delicious Animals Family. The short of it is that I know Mr. Delicious Animals pretty well. I won't go into his curriculum vitae, but suffice it to say that the man is probably President of the East Coast Chapter of MENSA (if he would even deign to show up).

So read his educational and brief rant and ignore the bloviating of the talking heads for a day or two.

More Boredom

Or maybe not. Times and Seasons has another winner. An economist's thought experiment on the expected value of a fetus.