Dow, Alpert, Rupkey, Coy on Greece Debt Crisis – Bloomberg Video

  Feb. 8 (Bloomberg) — Mark Dow, portfolio manager at Pharo Management LLC, Daniel Alpert, managing partner at Westwood Capital LLC, Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ, and Bloomberg Businessweek’s Peter Coy talk about Greece’s sovereign-debt crisis. They speak with Carol Massar on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

Inflated Wishful Thinking – Why Reflation Isn’t Going to Happen Any Time Soon

There has been a lot of chatter coming out of this past weekend’s meet of the American Economics Association in Chicago.  Among the interesting reports is this one from Ryan Avent’s blog at The Economist. In his post, Avent discusses a talk given by Stanford economist Robert Hall. Ryan summarizes Hall’s argument as follows: “A little more […]

On Sticky Wages and What Happens when Inflation is No Longer an Alternative

Over the past weekend, on his blog on nytimes.com Paul Krugman published a piece entitled “Lessons from Europe” in which Paul approvingly cites a (Oxford economics professor) Kevin O’Rourke article on the EU summit, in which Prof. O’Rourke lays out a very correct argument as to why internal devaluation will not work in the Eurozone […]

The Bailout Trade Meets the Bernanke Put

After exhausting nearly every politically viable opportunity for restarting the economy and stabilizing financial and real asset values through recapitalizing financial institutions and auto makers, direct stimulus, cash for clunkers, and home buyer tax credits; and after pushing monetary policy making to the absolute edge of its efficacy, the U.S. government and the Fed (together with central banks in Japan and Europe) are about to christen QE2 (the second round of quantitative easing).

Credit Markets Don’t Lie, but They Do Confuse

Much has been made lately of a possible bubble in bonds.  The rapid decline in yields could certainly be taken for evidence of over-exuberance.  The fact that we are seeing bonds rally up and down the credit spectrum adds to concerns about the existence of a fear driven rally in fixed income. 

Market analysts are also fretting about (a) the level of investment capital inflows (much of it from domestic sources) to credit markets, relative to net withdrawals from equities and (b) the impact of the Fed’s announcement that it will be re-deploying run off from its existing positions to support the market and ensure low yields.

On China and the Yuan

China’s announcement of its intention to resume Yuan exchange rate flexibility is very good news for China, welcome news to President Obama and Treasury Secretary Geithner, and almost completely irrelevant to recovery of the U.S. economy.

To achieve equilibrium with emerging markets (over anything shorter than a generation’s growth timeline), sufficient for the developed nations to be competitive with the low cost BRIC countries – four times more populous – would require either massive appreciation in the value of the currencies of those nations (which the Chinese, at least, will not permit) or relative deflation in the wages, the prices of goods and services, and the real assets of the developed nations. The latter still appears more likely than the former, despite this past weekend’s announcement.     

Punting the Bill: Heading into Overtime in the Game of Financial Industry Regulatory Reform

Congressional proponents of necessary reregulation of our financial services industries received a break as the European credit crisis has sent the markets on another retreat from risk, and the zeitgeist is taking a break from the V-shaped recovery crowd. Accordingly, in May, the U.S. Senate was able to pass an omnibus bill that is significantly more far reaching than anything that could have emerged from the dysfunctional legislature only a few months before.

Another View: Looking Beyond the Volcker Rule

Notwithstanding all the riveting talk about political motivations, President Obama has finally decided to wrest control of financial reform efforts from his somewhat tone-deaf minions and the “too-hard-to-tackle” crowd in Congress. Better late than never. But in belatedly joining forces with Paul Volcker, the man who will ultimately go down in history as the wisest regulator of his generation (sorry, Maestro Greenspan), Mr. Obama has waded into an immeasurably complicated debate that is enormously difficult for the general public to comprehend.