Simon Johnson

Tyler Durden's picture

"What's Next?": Simon Johnson Explains The Doomsday Cycle





There is a common problem underlying the economic troubles of Europe, Japan, and the US: the symbiotic relationship between politicians who heed narrow interests and the growth of a financial sector that has become increasingly opaque (Igan and Mishra 2011). Bailouts have encouraged reckless behaviour in the financial sector, which builds up further risks – and will lead to another round of shocks, collapses, and bailouts. This is what Simon Johnson and Peter Boone have called the ‘doomsday cycle’. The continuing crisis in the Eurozone merely buys time for Japan and the US. Investors are seeking refuge in these two countries only because the dangers are most imminent in the Eurozone. Will these countries take this time to fix their underlying fiscal and financial problems? That seems unlikely. The nature of ‘irresponsible growth’ is different in each country and region – but it is similarly unsustainable and it is still growing. There are more crises to come and they are likely to be worse than the last one.

 
Tyler Durden's picture

Frontrunning: September 21





  • Europe’s crisis will be followed by a more devastating one, likely beginning in Japan. (Simon Johnson)
  • Porsche, Daimler Indicate Europe’s Car Crisis Spreading (Bloomberg)
  • No progress in Catalonia-Madrid talks (FT)
  • Hilsenrath speaks: Fed's Kocherlakota Shifts on Unemployment (WSJ) - luckily QEternity made both obsolete
  • Lenders Reportedly Consider New Greek Haircut (Spiegel)
  • Fed Officials Highlight Benefits of Bond-Buying (WSJ)
  • ESM to Launch without Leverage Vehicle Options (WSJ)
  • Japanese companies report China delays (FT)
  • Borg Says Swedish Taxes Can’t Go Into Ill-Managed European Banks (Bloomberg)
  • Greek Leaders Struggle With Spending Reductions (Bloomberg)
  • Asian Stocks Rise as iPhone 5 Debut Boosts Tech Shares (Bloomberg)
  • China government's hand seen in anti-Japan protests (LA Times)
 
George Washington's picture

Debate: Do We Need More Regulation … Or Less?





The Issue Is Not Really Regulation ... It is a Malignant, Symbiotic Relationship Between Government and Wall Street

 
Tyler Durden's picture

Krugman Rebutts (sic) Spitznagel, Says Bankers Are "The True Victims Of QE", Princeton-Grade Hilarity Ensues





At first we were going to comment on this "response" by the high priest of Keynesian shamanic tautology to Mark Spitznagel's latest WSJ opinion piece, but then we just started laughing, and kept on laughing, and kept on laughing...

 
Reggie Middleton's picture

The Goldman Grift Shows How Greece Got Got





Not many websites, analysts or authors have both the balls/temerity & the analytical honesty to take Goldman on. Well, I say.... Let's dance! This isn't a collection of soundbites from the MSM. This is truly meaty, hard hitting analysis for the big boys and girls. If you're easily offended or need the 6 second preview I suggest you move on.

 
Tyler Durden's picture

Guest Post: What If We're Beyond Mere Policy Tweaks?





The mainstream view uniting the entire political spectrum is that all our financial problems can be fixed by what amounts to top-down, centralized policy tweaks and regulation: for example, tweaking policies to "tax the rich," limit the size of "too big to fail" financial institutions, regulate credit default swaps, lower the cost of healthcare (a.k.a. sickcare), limit the abuses of student loans to pay for online diploma mills, and on and on and on. But what if the rot is already beyond the reach of more top-down policy tweaks? Consider the recent healthcare legislation: thousands of pages of obtuse regulations that require a veritable army of regulators staffing a sprawling fiefdom with the net result of uncertain savings based on a board somewhere in the labyrinth establishing "best practices" that will magically cut costs in a system that expands by 9% a year, each and every year, a system so bloated with fraud, embezzlement and waste that the total sum squandered is incalculable, but estimated at around 40%, minimum....The painful truth is that we are far beyond the point where policy/legalist regulatory tweaks will actually fix what's wrong with America. The rot isn't just financial or political; those are real enough, but they are mere reflections of a profound social, cultural, yes, spiritual rot. This is the great illusion: that our financial and political crises can be resolved with top-down, centralized financial reforms of one ideological flavor or another. It is abundantly clear that our crises extend far beyond a lack of regulation or policy tweaks. We cling to this illusion because it is easy and comforting; the problems can all be solved without any work or sacrifice on our part.

 
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