Tag Archives: Money/Economy/Taxes

Peter Schiff on Dollar, credit ratings, China, short-term debt

* A Chinese rating agency rated US sovereign debt modestly, and Chinese debt higher. This makes a lot of sense as China is the world’s biggest creditor and we are the world’s biggest debtor, but US rating agencies are likely under a lot of political pressure.

* A lot of bank & corporate debt has lowest average maturity of last thirty years. The boom in short-term lending is a symptom of artificially low mortgages. Lenders do not want to be locked in a low rate. The maturity of all this debt will create problems if lenders don’t want to roll it over.

IMF warns against budget cuts

Very, very stupid.

The International Monetary Fund today called the government’s spending cuts into question, warning western countries that cutting budget deficits this year risked derailing economic recovery.

. . . .

“Most advanced economies do not need to tighten before 2011, because tightening sooner could undermine the fledgling recovery, but they should not add further stimulus,” the IMF said in an update to its twice-yearly world economic outlook. (Read more from guardian.co.uk)

facepalm bear

See also:

Critique of Stossel’s Ayn Rand / Atlas Shrugged episode

@ 5:30, the Chairman of BB&T talks about how they refused to participate in eminent domain endeavors, and “pick-a-payment” mortgages, even though such mortgages were sellable on secondary markets. He then offers a fantastic, insider look at TARP. Because the Fed didn’t want to let the public know which banks had gotten into trouble, they forced ALL big banks to accept TARP.

@ 24:30, A libertarian asks a question which points to the divide between Randian Objectivists and libertarians. The guy’s defence of Rand’s war on altruism is rather feeble.

FYI, I favor 95% of Rand’s Objectivism.

@ 27:00, there is a great discussion of fish pedicures, and a psychopathic, parasitic legislator who wants to outlaw the practice (unless you can sterilize the fish).

@ 36:30, I think there’s a good question about the state’s role in preventive legislation, like laws which regulate distracted driving, which poses threats to other people’s liberty. I guy from Reason Magazine who took the question answered well — as well as you can answer if you believe in the state. However, I think the correct response is the anarcho-capitalist line, that roads should be privatized, and regulated by their private owners.

@ 41:30, there is a wonderful chart correlating sales of Atlas Shrugged with expansions of the U.S. government.

Anti-Keynesian views in WSJ!?

Today’s G-20 meeting has been advertised as a showdown between the U.S. and Europe over more spending “stimulus,” and so it is. But the larger story is the end of the neo-Keynesian economic moment, and perhaps the start of a healthier policy turn.

For going on three years, the developed world’s economic policy has been dominated by the revival of the old idea that vast amounts of public spending could prevent deflation, cure a recession, and ignite a new era of government-led prosperity. It hasn’t turned out that way. (Read more from online.wsj.com)

Marc Faber: “I Buy Gold, I Don’t Know What Else To Buy”

People who tell me about the big deflation in Japan, why don’t they spend a day in Tokyo? It’s still the most expensive city in the world. At this level I’m not particularly interested in buying anything. I buy gold, I don’t know what else to buy.” Faber expects another worse crisis to happen in five to ten years, “when the whole financial system collapses” – the reason: the debt problem has been kicked down the road without actually being [solved]. (Read more from zerohedge.com)

Peter Schiff – Obama, Congress, hypocrisy, gold

* Obama Administration will use BP hype to push intrusive energy regulations.

* Congress hypocritical in grilling BP executives about making fishermans’ lives difficult (taxes, regulations, etc.)

* Freddie & Fannie NOT getting regulated, questioned before Congress.

* Government making ridiculous economic assumption in budget forecasting.

* Gold reflecting the fact that our economy is NOT recovering.

Peter Schiff on the Markets, sovereign debt

* China would never admit to being worried about currencies.
* US eager to bailout Greece b/c it is eager to reassure sovereign debt holders.
* US much worse off compared to EU as a whole.
* This is an ongoing depression which is currently interrupted by deficit spending (making things worse).
* Next crisis will be a flight FROM the dollar. Current anti-euro sentiment will be reversed. Carnage in bond markets.

HuffPo “experts” to Abolish Scarcity

In a recent article at the Huffington Post, Lynn Parramore assembled a team of economists to refute nine “myths” about the deficit. On the one hand, it was refreshing to see these economists discuss with such candor the fact that our financial system is backed up by nothing but green pieces of paper. On the other hand, it was shocking to see these economists laud the fact.

Believe it or not, the theme of the article is that all the handwringing over the federal budget deficit is misplaced, because Uncle Sam can print all the money he needs.

. . . .

HuffPo Myth #1: The Federal Government Should Balance Its Books
HuffPo Myth #2: Social Security Is in Crisis
HuffPo Myth #3: Government Deficits Burden Our Children
HuffPo Myth #6: Government Deficits Deplete Savings
(Read more from mises.org)

Can’t decide if this is funny or sad or deliberate propaganda.

Leading economist James Galbraith says danger posed by U.S. deficit “is zero”

EK: You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.

JG: No, I think the danger is zero. It’s not overstated. It’s completely misstated.

EK: Why?

JG: What is the nature of the danger? The only possible answer is that this larger deficit would cause a rise in the interest rate. Well, if the markets thought that was a serious risk, the rate on 20-year treasury bonds wouldn’t be 4 percent and change now. If the markets thought that the interest rate would be forced up by funding difficulties 10 year from now, it would show up in the 20-year rate. That rate has actually been coming down in the wake of the European crisis. (Read more from voices.washingtonpost.com)

Here, he goes toe to toe with Peter Schiff:

Ludwig Von Mises wrote about several categories of professional economists in Human Action:
“The development of a profession of economists is an offshoot of interventionism. The professional economist is the specialist who is instrumental in designing various measures of government interference with business. He is an expert in the filed of economic legislation.”

and

“Tax-supported universities are under the sway of the party in power. The authorities try to appoint only professors who are ready to advance ideas of which they themselves approve.”

Paul Krugman has no understanding of libertarianism

In a New York Times opinion piece last Friday, Nobel Prize economist, Paul Krugman took a shot at libertarianism and free markets.

He points to an interview with the late Milton Friedman where he said that product safety regulation is not truly necessary because of the fear of law suits that could put companies found negligent out of business.

I agree with Friedman that the answer for issues like product liability and the oil spill is the courts.

Let me go on.

Krugman then goes on to point out the bill blocked by Sen. Lisa Murkowski that would have raised the maximum liability for oil companies after a spill from a paltry $75 million to $10 billion.

Mr. Krugman, what exactly does that have to do with libertarianism? So you are saying that liability caps like the example you used, which is very un-libertarian, as an example of the failures of libertarianism? (Read more from deskofbrian.com)

32 States Have Borrowed from the Treasury to Make Unemployment Payments; California Has Borrowed $7 Billion

Alabama $ 283 million
Arkansas 330 million
California 6.9 billion
Colorado 253 million
Connecticut 498 million
Delaware 12 million
Florida 1.6 billion
Georgia 416 million
Idaho 202 million
Illinois 2.2 billion
Indiana 1.7 billion
Kansas 88 million
Kentucky 795 million
Maryland 133 million
Mass. 387 million
Michigan 3.9 billion
Minnesota 477 million
Missouri 722 million
Nevada 397 million
New Jersey 1.7 billion
New York 3.2 billion
N.C. 2.1 billion
Ohio 2.3 billion
Penn. 3.0 billion
R.I. 225 million
S.C. 886 million
S.D. 24 million
Tennessee 21 million
Texas 1.0 billion
Vermont 33 million
Virginia 346 million
Virgin Islands 13 million
Wisconsin 1.4 billion
Total $37.8 billion

(Read more from economicpolicyjournal.com)