It appears that all the improvements in the housing market have not been due to market corrections, but are from government stimulus, and the numbers are fake. Such actions will only delay a recovery and housing prices will continue to fall.
Foreign Policy magazine has just come out with its list, “The FP Top 100 Global Thinkers." They rate the intellectual giants, the Big Thinkers, the Big Brains of our current world. It is the most pompous fluff piece that I have seen in, well, quite a while. It just brims with a lack of intellectual rigor, reason, and good scholarship. It is a kind of Parade magazine feel-good fluff that we see in many of these types of lists. And it is grist for my vitriolic mill. You will be sadly disappointed.
I've been meaning to write a piece on Ludwig von Mises, the greatest economist who ever lived, and, if you will, a hero of mine. This is a piece on Mises from the Op-Ed page of the Wall Street Journal by Mark Spitznagel. Spitznagel is the head of Universa Investments and is a protege and partner of Nassim Taleb of Black Swan fame. Those of you who have been following my blog know of my admiration of Mr. Taleb. He and Mr. Spitznagel were also "right," and Universa made a lot of money for their investors from our economic crisis.
In order to understand the present state of the U.S. economy you have to understand that there are two things happening at once. For the most part they are in conflict with each other, in that one track can negatively impact the other. Lest I be accused of putting out conflicting information, there is evidence that the economy is recovering in some fashion, but not because of the reasons most economists and politicians think. There are still substantial prevailing winds blowing against the kind of recovery most commentators are hailing as fact. But economies have a tendency to repair themselves unless the feds derail the process.
The Obama Administration knows it didn't "create or save" 640,000 jobs but they use the Big Lie to justify the huge waste of taxpayer dollars through the $787 billion American Reinvestment and Recovery Act of 2009. They are desperate to justify the huge expenditure of taxpayer money. A day before they announced the 640,000 report, two AP reporters looked into the data of a previous report and found massive errors in reporting "created or saved" jobs.
Check out this report on the Obama Administration's latest gift: free golf cart! This is from the Wall Street Journal. I really can't add much to this. Other than: Get one!
The GDP results for Q3 are a triumph of government stimulus, which is to say they are a mirage, destined to vanish when the money runs out. There is really very little good news from the BEA report when you consider most of the economic activity was the result of Cash for Clunkers, the $8,000 housing tax credit, and federal spending. But like everything else in life, it's a bit more complicated than that.
My criticism of the "public option" proposal urged by MoveOn spokesperson Heather Graham drew some jeers from the pack, so I thought I'd expound on the topic of national health care. This first article is about the experience of other countries. To come up with the best system possible, why not take a look at systems around the world that are run or sponsored by governments. Do some research and find out what works and what doesn’t. Also, we should be very skeptical of cost estimates for the proposed system.
MoveOn.org is not one of my favorite institutions. What really irks me about them are the lies and economic falsehoods they promote. Now they are agitating for the public option in the regressive health care bill as good old American "healthy competition." It's a lie and they know it. They've produced a silly video starring that well known expert on health care policy, Heather "I've-seen-you-naked" Graham. It's probably her best performance since Boogie Nights. The public option will kill health care in America.
If you moved music stands at Carnegie Hall for a living, you might think you were lucky to get the job. You get to work with the some of the greatest musical talents of our time. And, the work isn't that hard. Maybe even fun to be around all that genius. But what if you made $530,000 a year doing it. Now, THAT would be fun. Maybe board president Sandy Weill doesn't think that's so much. After all, it is the Big Apple.
Nassim Taleb, author of The Black Swan and Fooled By Randomness, writes brilliantly on investment risk, but his proposed solution to the economic crisis, converting defaulting mortgages to equity by banks, will result in America catching the Japanese Disease. We can't keep debt lingering on the books of banks like they did in Japan. And you can't magically turn stone into bread. Read this and tell me what you think. Perhaps he is creating another black swan.
We have forgotten what money is. Here is a fable for your weekend entertainment that explains what it is. You've had a hard week, enjoy some light reading. Lots of pictures, no big words. Have fun.
The FDIC is proposing new rules that will allow banks to lower underwriting standards and capital requirements in order to encourage them to rewrite commercial real estate loans. This will cause more deflation, stagnation, and tightening of credit and will lengthen the recession/depression.
Since we are already in a deflation, the argument over inflation or deflation is moot. The real question is: how long will we remain in a deflation? And, if deflation ends, will we then see inflation, hyperinflation, or real growth?
Many deflationists assume that since we are following the Japanese path that we will have the same economic results as Japan. That is, a stagnant economy with generally falling prices as has been seen for the last 19 years in Japan.
While it depends mostly on what the government's responses will be, our experience will more likely be stagnation with long-term inflation rather than long-term deflation. The economic differences are significant.
Germany is the biggest test for Keynesian stimulation versus a hands off approach. The German election clinches their turn away from fiscal stimulus. Germany has done the least Keynesian spending gimmicks of any major economy and the new financial team headed by incoming Minister of Finance, Hermann Otto Solms will turn to free market friendly policies. You won't believe what they have to say about economics and their economy. I predict they will recover from the re/depression long before the U.S.
