Professor Krugman is at it again - conjuring fairy tales about a benign long-term fiscal outlook. Notwithstanding that the public debt has surged from 40% to 75% of GDP during the six short years since 2008, he claims there is no reason to fret and that there is no debt spiral anywhere in the future. In part that’s because the Keynesian priesthood has declared that interest rates have down-shifted on a permanent basis. Under a regime of even modest monetary normalization over the next quarter century, current fiscal policy will lead to interest rates that are far higher, not lower, than the growth rate of nominal income. So its time to put Greece right back into the front and center of the US fiscal picture.
Depending on blowing the next bubble to temporarily prop up the economy is the height of foolhardy shortsightedness.
Here's a two-word summary of why the American healthcare system is fundamentally broken and cannot be fixed with policy tweaks: perverse incentives.
Vested interests are threatened by the losses generated by small financial fires, so these are systemically suppressed. As a result, the fallen deadwood piles ever higher, creating more fuel for the next random lightning strike to ignite. Once the deadwood piles high enough, the random lightning strike ignites a fire so fast-moving and so hot that it cannot be suppressed, and the entire financial system burns to the ground. So go ahead and keep defending the Status Quo as the best system possible, or believe Elites will keep suppressing fires forever because they're so powerful, or whatever excuse, rationalization or justification you prefer. It won't matter, because the firestorm won't respond to words, beliefs, ideological certainties, reassurances or official pronouncements. It will do what fires do, which is burn all available fuel until there's no fuel left to consume.
- Xi Says China Conflict With U.S. Would Be Disaster (BBG)
- Short selling drops to lowest level since Lehman (FT)
- Scoping the new subprime as watchdogs cry 'bubble' (Reuters)
- Carlos Slim to break up América Móvil empire (FT)
- Jury Acquits Rengan Rajaratnam in Insider-Trading Case (WSJ)
- Hamas rockets land deep in Israel as it bombards Gaza Strip (Reuters)
- Hong Kong Buyers Queue for New Homes After Prices Plunge (BBG)
- Rebel Stronghold in Ukraine Braces for Its Showdown (WSJ)
- Tiny Houses Big With U.S. Owners Seeking Economic Freedom (BBG)
- Chinese Cash-Bearing Buyers Drive U.S. Foreign Sales Jump (BBG)
Many seem to believe that if we worked our way out of debt problems in the past, we can do the same thing again. The same assets may have new owners, but everything will work together in the long run. Businesses will continue operating, and people will continue to have jobs. We may have to adjust monetary policy, or perhaps regulation of financial institutions, but that is about all. I think this is where the story goes wrong. The situation we have now is very different, and far worse, than what happened in the past. We live in a much more tightly networked economy. This time, our problems are tied to the need for cheap, high quality energy products. The comfort we get from everything eventually working out in the past is false comfort.
The biggest congressional leakage scandal in the past year is the most recent one to cross the rabit hole of all-out absurdity: According to Reuters, the Ways and Means panel said on Friday it should not have to comply with a federal regulator's demand for documents sought for an insider-trading probe involving the staff director of a subcommittee and a lobbyist. The House Ways and Means Committee argued in a court filing that U.S. District Judge Paul Gardephe in New York should deny the Securities and Exchange Commission's attempt to subpoena documents from the committee and its healthcare subcommittee staff director Brian Sutter.
All sorts of promises, explicit and implicit, were issued to win votes. All the promises are now empty, and we might as deal with this reality head-on... if we can muster up the almost-lost ability to deal with reality rather than rely on fantasy/wishful thinking.
The conventional view of the Baby Boomers' retirement is a happy story: since we're living longer and remaining productive longer, Boomers will not be as much of a burden on Gen-X and Gen-Y as doom-and-gloomers assume. Not only are Boomers staying productive longer, they will draw upon their vast generational wealth as they age, limiting the financial burden on younger generations. This happy story is wrong on multiple counts.
As the global election cycle begins to slow down we turn our attention back home to give investors a working roadmap for the Midterm Elections in the US.
Senior NSA Executive: NSA Started Spying On Journalists in 2002 … In Order to Make Sure They Didn’t Report On Mass SurveillanceSubmitted by George Washington on 06/14/2014 01:46 -0400
He also DEMOLISHES Intelligence Agencies’ Excuse for 9/11, Confirms They're Recording Our CONTENT, Explains They've Got "Dataddiction" ... and Confirms We're Living In a Police State
It's possible to describe Rep.Eric Cantor as a serial sell-out. But that would be giving an unprincipled politician driven by an unalloyed ambition to climb the greasy pole of Washington power too much credit. In truth, Cantor never campaigned for any recognizable principle; he merely maneuvered his way to the top of the House GOP hierarchy by following in the tawdry footsteps of modern GOP bagmen like Tom DeLay and Roy Blunt. Eric Cantor made a career of milking the Warfare State and pandering to Wall Street. This brought him nearly to the top of the Washington heap. But in the end, it did not fool his constituents. And most certainly it set back the conservative cause immeasurably.
- Ukraine, Russia Fail to Reach Deal in Natural-Gas Talks (WSJ)
- Boko Haram Kidnaps More Girls in Nigeria (WSJ)
- Déjà vu: echoes of pre-crisis world mount (FT)
- Money market rates hit new low as ECB moves gain traction (Reuters)
- 'Dark Pools' Face New SEC Probe (WSJ)
- Buffett Ready to Double $15 Billion Solar, Wind Bet (BBG)
- White House-Congress rift over Bergdahl deal deepens (Reuters)
- Taxpayers Face Big Medicare Tab for Unusual Doctor Billings (WSJ)
- Lean Retirement Faces U.S. Generation X as Wealth Trails (BBG)
- Employers’ skills gap claim does not show up in US wage data (FT)
- He is holding out for the Zuckerberg overbid: Donald Sterling says LA Clippers not for sale (WSJ)
Four years after its passage, Obamacare has now been largely implemented, and millions have had their coverage disrupted. For years, the administration has propagated a number of myths about Obamacare. Some have already crumbled, and others will fall as Obamacare continues to change the American health system.