(email exchange)
>
> On Tue, May 12, 2009 at 11:22 AM, J A Kregel wrote:
>
> And you can add to this the undeclared policy (confirmed to me last week) that
> Chinese reserve diversification to hedge dollar exposure will be primarily in
> stockpiling natural resources, not currency diversification
>
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(email exchange)
This will drive up prices of food and energy longer term.
Still no plan to quickly bring down crude demand to offset declines in supply side incentives.
>
> Obama doesn’t buy the idea that US tax credits encourage oil and
> gas production. His FY-2010 budget would delete eight such tax
> breaks – start importing Brazilian ethanol.
>
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(email exchange)
Yes, thanks.
I just saw a replay of the Obama comedy routine of a few days ago.
It wasn’t at all clever or funny, but sarcastic, mean spirited, cheap shots and arrogant self glorification, etc. and delivered as such. The shots against Clinton, Summers, and Biden- who I criticize perhaps more than anyone- were particularly cruel and tasteless, and unthinkable that their ‘boss’ would publicly humiliate them like that unless he intended to fire them. And the hostile undertone was similar to that of his attacks on the Chrysler secured lenders and corporations with legal untaxed offshore earnings.
The progression is getting worse. Wouldn’t surprise me if he starts losing support from some of the more intellectual Democrats before the end of the year.
>
> More on the theme of who could have predicted that a mainstream Canadian
> newspaper could be on this side of the debate ?
>
Amid the rhetoric, a profound threat to capitalism
by Avner Mandelman
May 9 (Globe and Mail) —
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>
> On Sat, May 2 and 3:48 PM, Bill wrote:
>
> I want to amplify a couple of Warren’s points that the media that I’ve seen has
> missed. To me the key is the internal inconsistency of the Obama
> administration’s reasoning. Contracts were sacred (AIG bonuses). Now, secured
> creditors, who negotiated for a lower yield in return for priority (i.e., the prudent
> lenders), are attacked by the administration as morally evil for not giving up their
> rights.
>
> It’s one thing to use bankruptcy powers against unsecured creditors (and that
> includes secured creditors to the extent they are undersecured). That’s an
> inherent risk of being an unsecured creditor, particulary in a nation like the U.S.
> that allows Chapter 11 reorganizations. (Reorgs may be the interest of unsecured
> creditors as a class, but they can be hell on particular unsecured creditors.)
>
> Secured creditors are not the same, particularly where they are fully secured. The
> Supreme Court has emphasized that the bankruptcy laws cannot be used to
> commit a “taking” without just compensation.
>
> But the point I want to emphasize is this — why is the same administration
> refusing to wipe out risk capital (equity and subdebt) in favored banks and instead
> providing them with myriad federal subsidies while demanding that fully secured
> auto creditors take a deep haircut? To state the obvious, risk capital has the
> lowest priority — none. Moreover, it is supposed to be wiped out to create the
> proper incentives. Conversely, senior debt is not supposed to be wiped out (or
> extorted into serious haircuts) — that creates perverse incentives. Does anyone
> seriously believe that if Goldman or Pimco held the large senior debt positions in
> Chrysler the administration would have extorted and demonized them?
>
> Best,
>
> Bill
>
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>
> Sounds like the IMF & misguided bankers everywhere are systematically
> degrading everyone’s economy.
>
Yes!
>
> Do enough people anywhere understand national currency systems?
>
No!
>
> Are ALL financial service industries more trouble than they’re worth?
>
Best i can tell. There probably are a few that are OK, just haven’t identified them.
We need our banks only to:
In 1972 the US had 2.6 million housing starts with a population of only 200 million people, all financed by a bunch of boring savings and loans staffed by VERY modestly paid loan officers who left at 3:30 every day to play golf. (I was one of them.)
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(email exchange)
>
> On Thu, Mar 19, 2009 at 6:15 PM, Mauer wrote:
>
> Just to clarify: are there any circumstances in which the Federal Reserve
> could “create” inflation or hyperinflation a la the Bank of Zimbabwe?
>
Yes, if they raised rates high enough.
Seriously!
That would mean a large jump in government deficit spending on interest and a hike in the marginal cost of production. This is what happened after Volcker raised rates to over 20%. That inflation broke only because deregulation of natural gas in 1978 brought out enough supply to replace 15 million barrels per day of crude that was being burned for power, which broke the Saudi monopoly.
>
> Or does the unique privilege accorded to the central bank having the
> reserve currency always preclude that?
>
Just the way any non convertible currency works. Inflation isn’t all that much of a function of interest rates.
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Hi Ron,
Add this?
But let me add that it’s our fault. We make the laws and the regulations. If anyone violates the laws there are prisons waiting for them.
If they acted within our laws, however flawed, it’s our responsibility to alter those laws to serve public purpose as we can best determine.
Therefore, while addressing the current injustices will be pursued with the full force of the law, I will be moving just as forcefully to alter existing law to remove the incentives that encouraged this outrageous behavior, and put in additional safe guards, along with appropriate supervision, to ensure public purpose is served by our corporate structures.
All the best!
Warren
Statement of Congressman Ron Klein, as prepared for delivery
Hearing of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
“American International Group’s Impact on the Global Economy: Before, During, and After Federal Intervention” Wednesday, March 18, 2009
Thank you, Chairman Kanjorski, for holding this important hearing.
I am disgusted by the deplorable saga of AIG, and I join my constituents in their unfettered outrage about the millions of dollars in bonuses that are being awarded to AIG employees.
The American people understand that we are going through a difficult time, and are prepared to sacrifice and work together to get our country back on track. But they will not stand for taxpayer dollars being lavished on bonuses for people who bear responsibility for this crisis, and neither will I.
When I am back in my district in South Florida, I talk to people who have lost their jobs. Who have closed the doors to their small business because they can’t get a loan on reasonable terms. Who have lost their health care, or their home, or their pension and retirement savings.
Yet here I am sitting across from the AIG Chairman and CEO who is distributing million dollar bonuses to those who drove company in the ground. There is a tremendous disconnect between South Florida and the executive offices of AIG.
I just want to know one thing. What were you thinking?
I look forward to the testimony, and a frank discussion today.
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>
> On Tue, Mar 17, 2009 at 11:19 AM, James wrote:
>
> Warren
>
> It has been a while since we’ve spoken; I hope you are doing well.
> As you can imagine we have had a busy and interesting year. The
> University, like many others, is dealing with budget issues. It looks
> like we will not get hit too hard this year.
>
Well done!
>
> We finally have a chancellor and provost who work with us much more
> cooperatively. The governor has pledged no cuts to the university in
> exchange for no tuition increases and we hope the legislature agrees.
>
> Our program is prospering. A New York Times articles ranked us as
> one of the top three heterodox programs in the US. We now have 48
> Ph.D. students, the largest program in the region, and have received
> several applications for next year.
>
Excellent!
>
> Several students are writing dissertations and will graduate
> in the next year.
>
Are they ready for my pop quiz??? :)
>
> I might add that this year we have reached another goal for the
> program. When we started we knew we would have to go slowly
> and hoped we could attract good students. We wanted to attract
> international students, but we also wanted to build the program
> around students from the US. This year our applications are
> more than half from American students and of very high quality.
>
Good to hear it!
>
> We will soon be renewing assistantships for those now being
> supported and making offers to new students. We have
> selected four for new offers and there are seven more to
> whom we would make offers, but presently lack the funding.
> I have been seeking additional funding from the university
> and there are hopeful prospects in that quarter Âwe should
> know in the next few days. We have also received funds
> from grants and contracts that should support two or three more.
>
Very good!
>
> In light of the more uncertain budget for the upcoming year
> we have been asked to secure funding before we make offers.
> We seek your continued support, at last year’s level of $116,000,
> in order to move on these offers. If you would be willing to raise
> your support to fund two additional students it would be most
> helpful both to those students and in our effort to garner more
> support from the university-Âthey like matches. Funding two
> more would require an additional $33,000 for stipends and
> waivers; a total of $149,000.
>
CC’d to AVM to if they want to help again and the rest of my list, and posted on my blog.
>
> Another issue we face is that our stipend level has not changed
> in over ten years and is now below that of almost all Ph.D. programs.
> For example, Middle Tennessee State, a program not known as an
> intellectual powerhouse, offers stipends the economics Ph.D. students
> of $14,000, ours are $10,000. Further, international students must
> have a minimum level of financial support before they qualify for a
> student visa. Our total support to them, including stipend and all
> tuition waivers, is about $2,800 below the threshold for a visa.
> We can raise the stipend for international students to overcome
> this, but the consequence is that make fewer offers and would
> discriminate unfairly against American students. The university
> is aware of the problem, but budget restraints stand in the way
> of a solution in the near term. The official position of the
> administration at this point is that we should offer support
> to fewer students in order to raise the stipend for others.
> We have resisted this as harmful to the long term interests
> of the program, but some change will be needed before much
> longer. I would like to discuss this with you sometime soon
> to get your ideas.
>
Ok, no immediate ideas but will think about it.
>
> As I’m sure you know the people in our department have invested
> a great deal of sweat equity over the years to build what we consider
> a highly successful program. UMKC was recognized this year as one
> of the top six universities in the US engaged in community and urban
> affairs progress. With your support, intellectual commitment, and
> good spirit our department occupies an important spot in this activity.
> For this I am deeply grateful and hope you feel our efforts have
> warranted your support.
>
Glad to have been able to help!
>
> To summarize our request we ask for $116,000 for continuing
> support and if you agree $33,000 to support two additional
> students; a total of $149,000 for nine students.
>
I’m good with the $116,000.
Sending this to my list to see if it fits anyone else to support the world’s only ‘in paradigm’ grad program.
I know a lot of them are supporting schools that teach it backwards so maybe they would feel good directing some of that this way.
Best!
Warren
>
> Warmest regards
>
> Jim
>
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(email exchange)
Yes, thanks, as expected!
>
> On Tue, Mar 17, 2009, at 8:47, wrote:
>
> Looks like China is interested in prosperity as well, just leaving the Europeans behind!
>
Last November China announced a CNY4trn stimulus package. The first part of the money started to be spent at the end of February on a high speed rail network forming a triangle between Shanghai, Hangzhou and Nanjing, cutting travel times between the cities of up to 8 hours down to just 1 hour. Trains will run at upto 350km an hour – (do you realise the fastest train in the States is between New York and Boston, that for a 5 minute period only gets up to 80mph).
Overall the country will invest CNY600bn in railways this year, and a minimum of CNY600bn a year until 2012.
When you look at infrastructure projects on the ground like this, and combine it with the development in the local bond market (both local authority and corporate bonds), and the major international development with ASEAN +3 (free trade area next year plus the trial renminbi bloc), the economic and financial development with most of the former USSR in terms of the Shanghai Cooperation Organisation, and the push towards a free trade agreement with the Gulf Cooperation Council, is it really that difficult to see China achieving the 8% GDP growth target that it is aiming for?
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>
> On Thu, Mar 12, 2009 at 9:10 AM, EDWARD wrote:
>
> In conjunction with lowering rates to 0.25% (3m libor target- this is important- its NOT
> the overnight or refi rate) and maintaining a 0-75bp range they also announced the following:
>
> *SNB PLANS TO BUY WISS FRANC BONDS
> *SNB SAYS TO BUY CURRENCIES TO AVOID FRANC APPRECIATION
>
Beggar thy neighbor export driven policy here too- yet another player trying to drive down their currency!
Failing to see the advantages of increasing domestic demand, seems most are turning to policies to drive exports.
Too bad we don’t have the leadership to take advantage of this once in a lifetime opportunity ratchet up our real standard of living.
>
> *SNB TO BUY SWISS FRANC BONDS BY PRIVATE SECTOR
>
> With the following statements:
>
> *SNB SAYS RISING FRANC COMMENTS TIGHTENS MONETARY CONDITIONS
> *SNB TO COUNTERACT RISK OF DEFLATION, ECONOMIC WORSENING
> *SNB SAYS SWISS FRANC APPRECIATED SUBSTANTIALLY SINCE AUGUST 07
> *SNB SEES ANNUAL INFLATION AT CLOSE TO ZERO FOR NEXT TWO YEARS
> *SNB EXPECTS INCREASED CONTRACTION IN 1Q
> *SNB SAYS SWISS EXPORT SECTOR PARTICULARLY HIT
> *SNB SAYS ECON WORSENING HAS CONTINUED IN PAST TWO MONTHS
> *SNB: SWISS AVG 2009 INFLATION SEEN -0.5%, 2010 INFLATION 0%
> *SNB SAYS MAGNITUDE OF ECONOMIC CONTRACTION IN 4Q UNEXPECTED
>
> They are deploying all weapons, rightly perceiving the vast threat to their economy
> and stepping up to the front lines- unlike the ECB who would still prefer to discuss
> targeted limits to easing rates and inflationary threats which do not exist.
>
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