The Global Debt Bomb at Forbes
Updated and related topic: Niall Ferguson video interview discussing Debt
Appalled In Greenwich Connecticut
Clifford S. Asness, Ph.D.
AQR Capital Management, LLCPreliminary version last updated: January 24th, 2010
Comments welcome: comments@StumblingOnTruth.com
Related essays available at: www.StumblingOnTruth.comThe President, in these last few days following the second revolution against big government started in Massachusetts, has come out swinging savagely against “banks” in numerous ways in numerous speeches. Let’s be clear. There are legitimate issues and reforms to be discussed. But my first question is why this exact moment? The answer is simple. When a failing government with authoritarian impulses needs help, it’s pretty standard strategy to call down a pogrom against an unpopular class of citizens. The bankers are nothing if not unpopular. Unfortunately for this President, he will, I hope, find the financial community not cowering from his Cossacks on a shtetl in the Pale of Settlement (Greenwich, CT), but meeting his accusations with logic and patriotism.
This is a short but terrific description of the moral laxity in the boardroom on Wall Street and apparently in the air in Washington. Please read it all.A successful economy hinges on trust. Trade must be mutually advantageous the vast majority of the time, with buyer and seller both content. If we are cheated 1 per cent of the time, we are dismayed, but we write it off. If we are cheated 10 per cent of the time, we practise “defensive trade.” We draft contracts carefully, seeking to anticipate every possible abuse.Why poor moral ethics prove costly
By Rob Arnott
Published: January 24 2010 10:40 | Last updated: January 24 2010 10:40
In 2004, I wrote a piece in the Financial Analysts Journal on the distinction between moral ethics (doing only what is right) versus legal ethics (doing only what is allowed). In a very real sense, the credit bubble and its aftermath hinges on this conflict. Worse, we are going further down this path, at a prodigious pace.
This is the first two paragraphs from this editorial on IBD today. it isn't long but it is very good read the rest by following the link.Regulations: Apparently believing the best defense is a good offense, the president wasted no time after his jarring loss on medical overhaul in upping the ante on another of his signature issues — financial change.
Just as Speaker Nancy Pelosi confessed Thursday she lacked the votes to quickly move the Senate's sweeping health care bill through the House — foreclosing one way to keep hope alive on socialized medicine — President Obama approached the lectern at the Executive Office Building to drop a bombshell of his own. Training his sights back on Wall Street, he called for tougher regulations that would limit the size of banks and their ability to engage in propriety trading.
"Many economists say the four-week average of jobless claims would need to fall consistently below 425,000 to signal that the economy is close to generating net job gains." In sum, said Reuters, "employers are reluctant to hire."I happen to agree with Volcker that the separation of commercial banking from the invetment bank is a good thing but, this President believes profits are a crime agains the poor. He doesn't understand the profit incentive is what drives innovation and creativity in the economy. Obama believes in only one incentive, fear of the powerful. He finally listened to Volcker long enough to realize he can threaten and show the banks how tough he is by bullying them.To which we say: No kidding! Who in his right mind would be hiring in an environment like this, with the government taking control or clamping down on one industry after another?
American officials now believe Britain poses a major threat to Western security because of the large number of al-Qaeda supporters that are active in the country. Two years ago Jonathan Evans, the head of MI5, estimated that there were 2,000 al-Qaeda sympathisers based in Britain – the largest concentration of al-Qaeda activists in any Western country. But American officials, who regularly refer to “Londonistan” because of the high concentration of Islamic radicals in the capital, believe the figure is growing all the time. They point out that recent al-Qaeda terror attacks planned in Britain have been the work of British-based Muslims, many of whom have been trained in al-Qaeda camps in Afghanistan and Pakistan.The entire article is here and is worth your time.
Jan. 19 (Bloomberg) -- A case of trading-pit envy is rumbling in Chicago.
Been there done both and most of the time the eledtronic is better ( for the publi), but if there is crisis or panic the pit is better. A group of guys in a given pit make prices in that commodity. That is who they are and in a crazy market they still do it. Screen traders just change to a more manageable symbol or different commodity leaving a market vacant or very thin. A mixture of both is the best solution.“Floored,” a documentary that shows the fading of the city’s rough and rowdy open-outcry culture, is driving some of Chicago’s top electronic traders to defend the drama of their mouse-click world. The film is in the middle of a one-week run at the Gene Siskel Film Center.
As the clock ticks down to the final decisive vote in Congress on Obamacare, one question stands above all else: Is there one Senate Democrat with the political courage to stand with the American people and say no? Who among the 60 Senate Democrats will put the national interest above partisan politics and say to his or her colleagues that "We must start over and do this the right way"? Regardless whether one favors or opposes a government takeover of the American health care system, the reckless manner in which Obamacare has been brought to this final decisive moment offers five indisputable reasons for casting a vote for principle and against blind partisanship.
Darkness Falls [Mark Steyn]
Those of us who think something's afoot in Europe have been much mocked by the complaceniks, including a few who should know better (such as Max Boot). Tony Blankley has a response to that in today's Washington Times. I like this aside:
continues hereMy contribution to the oeuvre of radical Islamist alarmism was my 2005 book, "The West's Last Chance," which, by the way, predicted the terrorist attack in London, Muslim riots in Paris, worldwide violent Muslim reaction to blasphemous Western artistic representations and the emergence of growing acquiescence to Shariah law in the West.
i believe the rest of this rather brief article is worth reading and remembering. A collapse of the Japanese monetary system will have a large impact on the global markets. Plus there are lessons for the US since Obama and Congress seem intent to follow the same path.I have felt rather lonely after suggesting in my New Year Predictions that Japan is dangerously close to blowing up on its sovereign debts, with consequences that will be felt across the world.
My intended point — overly condensed — was that 2010 will prove to be the year that Japan flips from deflation to something very different: the beginnings of debt monetization by a terrified central bank that will ultimately spin out of control, perhaps crossing into hyperinflation by the middle of the decade.
Mr. President:
read on recommendedGot $2 billion to spare if it has a chance to turn around the economy?
Predictions for 2010 – and the Next Decade -- by BlackRock’s Bob Doll:
BULL MARKET WILL CONTINUE IN ‘10,
BUT PACE OF GAINS WILL BE “MORE MUTED”
______________________________________
US Economy Grows Above Trend,
But at a Slower-Than-Normal Recovery Rate;
US GDP Grows By More than 3% in New Year
____________________________
Corporate Earnings and Recovery’s Pace,
Not Stimulus Measures, Will Be Key Market Drivers
_______________________________
The Outlook for the Next 10 Years:
Stocks Return 6 to 8% Annualized on Average;
Recessions Become More Common
___________________________
i could not agree more.45% would replace Congress with names drawn randomly from the telephone book
“More voters have greater confidence in the telephone book these days than in the current Congress, and most think their national legislators are paid too much to boot,” Rasmussen reported.
45% of voters would rather pick names randomly from the phone book to run Congress than to have Nancy Pelosi, et al, in charge, a Rasmussen Poll found.
Only 36% disagree.
What amazes me most of all is that politicians can be bought so cheaply. Public records show that combined labor, insurance, big pharma and related corporate interests spent just under $500 million last year on healthcare lobbying (not much of which went to politicians) for what is likely to be a $50-100 billion annual return. The fact is that American citizens have never been as divorced from their representatives – and if that description fits the Democratic Congress now in control – then it applies to Republicans as well – past and present. So you watch Fox, or is it MSNBC? O’Reilly or Olbermann? It doesn’t matter. You’re just being conned into rooting for a team that basically runs the same plays called by lookalike coaches on different sidelines. A “ballot box” pox on all their houses – Senators, Representatives and Presidents alike. There has been no change, there will be no change, until we the American people decide to publicly finance all national and local elections and ban the writing of even a $1 check for our favorite candidates. Undemocratic? Hardly. Get on the internet, use Facebook, YouTube, or Twitter to campaign for your choice. That’s the new democracy. When special interests, even singular citizens write a check, it represents a perversion of democracy not the exercise of the First Amendment.Bill Gross manges the largest fund in the world and has a long history of being ahead of everybody else to see what is coming. Plus I applaud him for saying much more eloquently than "Throw the bums out".
Emerging markets are attracting more money from initial public offerings than industrialized nations for the first time ever, a warning sign to Mark Mobius that the record rally in the shares may turn into a 20 percent decline.Mobius is a savvy value investor and recognizes a huge bullish consensus on Emerging Market Equities. Those are voltile markets and a big sell off would be a great opportunity. i believe I am going to place stops below the Dec lows to pull some money off the table forFaster economic growth may help China, India and Brazil produce the biggest increases in IPOs and almost double sales to $200 billion worldwide, according to Matthew Johnson, the New York-based head of the global-equities syndicate at Barclays Plc. Poland alone may offer more than $10 billion of state-owned companies, according to estimates by UniCredit SpA.
buying power on a setback. 
THE US DEBT CLOCK.ORG: Ok, lastMy advice; throw all the bastards out of office. Every representative and every Senator both parties. Vote against all incumbents and throw the bums out!
Thursday as the year and the decade were ending, the
sum total of the outstanding debt per taxpayer here in
the US was $111,290 and the total debt outstanding
was $12,130,035,400,000. Last evening it stood at
$111,597/taxpayer on a total debt of
$12,167,478,707,193. So, in the past week the nation
went another $3,744,330,000 in debt, So for you
taxpayers out there, what did you get for the additional
$307 more you owe, incurred in only five days? Our
guess is very little; but then again, what do we know?
The world’s tallest building opens for business this week
Read the entire article here.Tomorrow, though, Sheikh Mohammed bin Rashid al- Maktoum, the emirate’s ruler, will celebrate at least one global milestone he can be proud of when he opens the tallest building on the planet.
The £1 billion Burj Dubai is at least 2,683ft from its base to the tip of its spire — that’s more than half a mile, the equivalent of three-and-a-half Canary Wharf towers or two Empire State buildings stacked up. Its final height is being kept secret until tomorrow, but architects who have worked on the building have hinted it could break the 2,700ft mark.
The tower is more than 1,000ft higher than its nearest inhabited rival, Taiwan’s 1,671ft Taipei 101. It is also the tallest man-made structure in the world, surpassing the 2,063ft KVLY-TV mast in North Dakota, America.
