Is Dell Doomed? http://t.co/WNVoqMPmbl
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Category Archive: Finance & Markets
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Capitalize On The Crisis: How To Move Forward
It is no help to say ‘if you want to get there, you shouldn’t start from here’. We are where we are. And crises offer opportunities, not only to clever investors, but to reform-minded politicians. Political leaders can seize the day and lead the reforms, with academics providing ideas.
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Fallen Idol
Greenspan is not having an easy time in his retirement after almost 20 years at the helm of the Fed. The WSJ described his recent (October 23) testimony before Congress as “a painful spectacle to watch” (i.e. pathetic). Expressions like “the mess that Greenspan made” or “Greenspan´s folly” are frequently heard. To Jeffrey Sachs, among many others, “this crisis is mostly the Fed´s doing during the period of easy money…”
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Super-sizing the IMF is wrong
As the global financial crisis radiates out from the developed economies into emerging markets, it is ravaging not only governance-challenged economies such as Venezuela, Russia and Argentina, the crisis is also striking countries like Brazil, Korea, and South Africa, which appeared to have made substantial and lasting progress towards macroeconomic stability. -
A look at out future, 2009 – 2010 … and beyond
Professor Nouriel Roubini is a “Dr. Doom” (source: NY Times) for our time. His forecasts are both analytically clear and terrifying, as in “I fear the worst is yet to come” (The Times, 26 October 2008). As such he provides a clear reference point against which to compare other scenarios. How does my view contrast with his?The Professor sees this as a long, bad cycle. We both agree that the global economy suffered the equivalent of a cardiac arrest in October, the second phase of the global recession (which started in late 2007). Beyond that, however, the Professor is Dr. Pangloss compared with me (but not in any other sense). Our views differ in two respects.(A) In 2006 and 2007 I believed he was too early. The Battleship America (and even more so the world) turns very very slowly. This was not a typical post-WWII recession, a rapid slowdown caused by accumulation of excess inventory by businesses, or the Fed fighting inflation by increasing interest rates. This is something far larger, and hence was slower to develop.(B) Now he is IMO too optimistic. This is not a cyclical economic event. This is a historic cycle, the end of the post-WWII global geopolitical regime.
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Does a bigger boom imply a bigger bust?
For the US housing sector – and the financial firms that financed the boom – a bigger boom meant a bigger bust. Home prices rose higher than before — and now are falling fast.
Shipping too. The Baltic dry index rose high on the back of Chinese demand. And recently it has fallen even faster than it rose.
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The fed funds market is not new and improved until November 13
Prof. James Hamilton at Econbrowser suggests that the differential between the federal funds target and the effective federal funds rate – currently 0.77% – can be explained by two phenomenon: (1) the participation of government sponsored entities (GSEs) and other international banks that do not receive reserve interest from the Fed but participate in the federal funds market (overnight inter-bank lending) and (2) there is a new FDIC insurance fee equal to 0.75% attached to each fund traded.
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AIG’s New Plan: Restructuring is now $150 Billion
The original $85 billion dollar package is now 70% higher, at $150 billion, Bloomberg reports.The company also swung to a Q3 loss of $24.47 billion. -
AIG: The Looting Continues (Banana Republic Watch)
The Wall Street Journal reports, as was rumored on Friday, that AIG appears on the verge of approving a considerably enlarged and sweetened rescue package from the government. We were less than happy with the idea when it first surfaced (see our rant “The Black Hole Gets Bigger: AIG Back for Yet Another Bailout“).Let us [...]
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Start by Saving the Eurozone
The current global financial crisis has clearly underlined the need for more effective mechanisms of international cooperation. The stumbling initial response of the G7 risked prolonging the credit crunch. Today, while panic has eased somewhat in wealthy countries, the crisis is spilling into developing countries, with potentially devastating effects. Yet there is no coordinated effort to address the problems faced by emerging markets.
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The Mini Depression and the Maximum-Strength Remedy
This is not the Great Depression of the 1930s, but nor is it turning out to be merely a bad recession of the kind we’ve experienced periodically over the last half century. Call it a Mini Depression. The employment report last Friday shows job losses accelerating, along with the number of Americans working part time who’d rather be and need to be working full time. Retail sales have fallen off a cliff. Stock prices continue to drop. General Motors is on the brink of bankruptcy. The rate of home foreclosures is mounting.
