The Politics of DebtThe Politics of DebtIn the Politics of Debt I try to explore how debt influences the American public and their political choices. From a broad perspective, you could say, for instance, that deeply indebted workers will see their chances for protest highly reduced, they Articles
Black Swans, Bell Curves and Stagflation
2007-12-19 07:37:00 This is not the promised article about the stupidity of black swans. This is an article about how we tend to focus our attention on the odd, rather than the mundane. I guess some talking head mentioned stagflation because the previous article on the subject received unusual attention. People are hitting the site searching for ... SHARETHIS.addEntry({ title: "Black Swans, Bell Curves and Stagflation", url: "http://thepoliticsofdebt.com/?p=299" }); More About: Economics , Finance , Wall Street
Mystery of Atlantis Solved
2007-12-17 17:14:00 Plato tells us in Timaeus about Atlantis : thebankruptcynewsdotcom Now in this island of Atlantis there was a great and wonderful empire which had rule over the whole island and several others, and over parts of the continent (…) and then, Solon, your country shone forth, in the excellence of her virtue and strength, among all ... SHARETHIS.addEntry({ title: "Mystery of Atlantis Solved", url: "http://thepoliticsofdebt.com/?p=294" });
Welcome LORENA
2007-12-17 13:50:00 My dear friend Lorena joined me in this adventure. She is a professional writer who writes her own blog and she most gracefully decided to help me with this blog. She will be editing (and writing when her “muse kicks her in the head”). I hope she stops the worst of my mistakes and the ... SHARETHIS.addEntry({ title: "Welcome LORENA", url: "http://thepoliticsofdebt.com/?p=295" });
Greenspan: Give Homeowners Financial Aid: Financial News - Yahoo! Finance
2007-12-17 04:59:00 Keynes to the rescue! thebankruptcynewsdotcom Greenspan did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program. From Keynes to Monetarism and back to Keynesian economics. Oh, ... SHARETHIS.addEntry({ title: "Greenspan: Give Homeowners Financial Aid: Financial News - Yahoo ! Finance ", url: "http://thepoliticsofdebt.com/?p=293" }); More About: Economics
Things That Go Bump in the Night
2007-12-15 20:12:00 Today I am republishing John Mauldin's Weekly Newsletter. If you find it interesting you will find subscription information at the bottom of the post. John Mauldin, who for years has been involved in private money management and alternative investments, is a much sought after financial strategist and consultant. He's the author of Bull's Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market, Just One Thing: Twelve of the World's Best Investors Reveal the One Strategy You Can't Overlook, and The Millennium Wave: Prosper (& Profit!) in a Future of Accelerating Change (which I haven't read yet). SHARETHIS.addEntry({ title: "Things That Go Bump in the Night ", url: "http://thepoliticsofdebt.com/?p=262" }); More About: Economy , Economics
Disposable Personal Income Shows Disturbing Historical Trend
2007-12-13 18:30:00 An observation of a disturbing trend on disposable personal income. Some possible causes and more questions. More About: Personal , Income , Historical , Trend
Universal Health Care: How Stupid Have They Figured Out We Are?
2007-12-12 04:29:00 Dispelling the common myths against Universal Health Care with data More About: Health Care , Stupid , Democracy
Oh. The unpredictability of the markets
2007-12-11 20:41:00 The Fed Acts Fairly Predictably More About: Markets
An Exercise In Market Timing
2007-12-09 22:43:00 Over the past two months (actually beginning October 1st) I conducted a documented experiment on this site. Although Reuters and other media republished some of the articles, my impression is that this exercise in market timing went completely unnoticed. Since I do not, neither do I want to, provide financial advice, I will not publish ... More About: Finance , Market , Exercise , Timing
How Your 401k And IRA Rob You
2007-12-08 22:06:00 “Don’t worry about a thing;” said my doctor, “I have an excellent risk management program for your health.” thebankruptcynewsdotcom “Great, that sounds great,” I said, “I like avoiding risk. What are the risks you see in the management of my health?” “Well, you know, the functioning of the human body is a mystery, it is ...
The Rags To Riches Trap
2007-12-07 21:58:00 We are impressionable animals. Our biology evolved to help us pay attention to the unusual in the pattern. thebankruptcynewsdotcom In the natural world, this is indeed helpful, because the opportunities and dangers usually show as a rupture of the background pattern. However important for us, those out-of-the-ordinary occurrences are just that, things that may not ... More About: Rags to Riches , Trap , Riches
Retailers post disappointing November sales - MarketWatch
2007-12-06 15:18:00 On November 15 I wrote regarding the November retail numbers: thebankruptcynewsdotcom If the news is bad, the Fed will feel justified in declaring that the risk of a recession is higher than the risk of inflation, and lower the rates a little bit more. Either way, at this , the end will be the same. ... More About: Economics , Sales , Post , War , Vietnam War
Is Gold a Hedge Against Excess Liquidity?
2007-12-05 05:27:00 No. thebankruptcynewsdotcom Short article today. In the above chart, an ascending line shows gold acting as a hedge against the mad emission of currency by the fed. A descending line show gold losing value against the “currency inflation.” As you can see, gold is not a particularly apt instrument to hedge against liquidity injections by the ... More About: Economics , Gold , Hedge
Is Gold a Hedge Against Excess Liquidity?
2007-12-05 05:27:00 No. thebankruptcynewsdotcom Short article today. In the above chart, an ascending line shows gold acting as a hedge against the mad emission of currency by the fed. A descending line show gold losing value against the "currency inflation." As you can see, gold is not a particularly apt instrument to hedge against liquidity injections by the Federal Reserve (which eventually produce inflation). The flat line at the left of the chart is the period during which the US used the gold standard (the fed could not print more money than the gold it had in its reserves and the price of gold was regulated). The periods of accelerated injection of currency are marked by steep down lines. If the current conditions persist, and history can provide any lessons, we shall be in a period of high inflation in the next 2 to 5 years. The following chart shows the same data (adjusted for scale), where you can see how the price of gold does not correlate to the injection of money by the... More About: Gold , Hedge
Dow Jones, 2 to 5 day pull-back and long term buy signals
2007-12-03 02:51:00 Two days ago, I wrote Dow Jones 13,252. Not All Clear Yet. I said “the surprise move is non-existent, so this 300 points rally may reverse by Friday. Second, if this move does not continue tomorrow with a close above 13,260, it will reverse by Friday or Monday, and the next move will continue to be down to below 12,500.” Bernanke read the article and yesterday he reinforced the idea that the Fed will cut interest rates (the surprise move). Besides, the Dow never closed below 13,260, which erased the bad vibes for a violent pull back. thebankruptcynewsdotcom Today the Dow is pulling back a little, and this pull back may last between 2 and 8 days, but the window of opportunity for the bears is closing fast. I do not see the Dow going now to 12,500 in a violent fashion. The Short Term Bear Feast I announced in October is coming to an end, and the Christmas rally is approaching. The Fed meeting in December 18 should consolidate the rally. The Dow gave a technical long-term... More About: Back , Long
The Myth Of Gold as Inflation Hedge
2007-12-03 00:41:00 Gold sellers like to write long articles and develop interesting theories to provide rational justification for their business. If you have read my previous articles on gold, you already know my opinion (it is just another commodity with an interesting history). The myth of gold as an inflation hedge comes from a rather primitive observation, when the value of money decreases, the value of gold rises. The myth goes like this: if you bought 100 ounces of gold at the yearly average for 1969, you spent $4109, if you sold it today, you would have $79,400. That’s a gain of 1832%, or 48%, a year. thebankruptcynewsdotcom On the other hand, if you spent the same amount on the Dow Jones you had bought 4.7 shares of the Dow at the yearly average for 1969. Those 4.7 share would now be worth $73.825 (reinvesting dividends). A gain of just 1700%, or 45% , a year. Gold sounds like a an excellent investment, right? Wrong. And here is why. First, the $79,400 you have now, are enough to buy&... More About: Gold , Inflation , Hedge , Myth
The Myth Of Gold as Inflation Hedge
2007-12-03 00:41:00 Gold sellers like to write long articles and develop interesting theories to provide rational justification for their business. If you have read my previous articles on gold, you already know my opinion (it is just another commodity with an interesting history). The myth of gold as an inflation hedge comes from a rather primitive observation, when the value of money decreases, the value of gold rises. The myth goes like this: if you bought 100 ounces of gold at the yearly average for 1969, you spent $4109, if you sold it today, you would have $79,400. That’s a gain of 1832%, or 48%, a year. thebankruptcynewsdotcom On the other hand, if you spent the same amount on the Dow Jones you had bought 4.7 shares of the Dow at the yearly average for 1969. Those 4.7 share would now be worth $73.825 (reinvesting dividends). A gain of just 1700%, or 45% , a year. Gold sounds like a an excellent investment, right? Wrong. And here is why. First, the $79,400 you have now, are enough to buy&... More About: Gold , Inflation , Hedge , Myth
US Businesses in Recession-Like Mode
2007-12-02 16:56:00 thebankruptcynewsdotcom This chart shows Undistributed Corporate Profits (corporate profits that are neither paid as corporate profits taxes nor paid to shareholders as dividends) as percentage of GDP based on official data. Official recessions are marked in red as per NBER data. The chart shows that, as business cycles contract, corporations are able to retain less of their profits (the curve goes down). During expansions, the corporations retain more of their profits (the curve goes up). As you can see, corporations have not been able to retain profits at the level of the peak since the first quarter of 2006. The fourth quarter of 2006 looks like the normal bottom of a recession (as compared to 2001, 1990, 1980, etc.). The following chart is a detailed view of the 2000-2007 period. As you can see, regardless of any official announcement of recessions, US businesses have been behaving as they normally do during recessions. It is beyond of the scope of this analysis to accoun... More About: Mode , Recession , Businesses , Sine
Dow Jones, 2 to 5 day pull-back and long term buy signals
2007-11-30 22:01:00 Two days ago, I wrote Dow Jones 13,252. Not All Clear Yet. I said "the surprise move is non-existent, so this 300 points rally may reverse by Friday. Second, if this move does not continue tomorrow with a close above 13,260, it will reverse by Friday or Monday, and the next move will continue to ... More About: Back , Long , Term
The Myth of Republican Fiscal Conservatism
2007-11-30 18:58:00 Seeing Rudy Giuliani and Mitt Romney fight over who is more of a fiscal conservative made me think that they are actually barking up the wrong tree. You see, although the Republican Party claims to be the party of "small government", and many fiscal conservatives vote Republican for that reason, the record shows that the last Republican fiscal conservative president was Richard Nixon. What? Not even Reagan? No. Reagan was no more fiscally conservative than the so much maligned Jimmy Carter. thebankruptcynewsdotcom The following set of charts shows Government expenditures as a percentage of GDP, quarter by quarter since 1947. This method allows us to really know how much money our government is spending, not in dollar terms, which are meaningless, but in relationship to the wealth of the nation. There are three presidencies during which government expenditures declined significantly: Dwight D. Eisenhower’s, Richard Nixon’s and Bill Clinton’s. Maybe it is ... More About: Conservatism , Fiscal , Myth
The Myth of Republican Fiscal Conservatism
2007-11-30 18:58:00 Seeing Rudy Giuliani and Mitt Romney fight over who is more of a fiscal conservative made me think that they are actually barking up the wrong tree. You see, although the Republican Party claims to be the party of "small government", and many fiscal conservatives vote Republican for that reason, the record shows that the ... More About: Economics , Iraq War , War , Democracy
Dow Jones 13,252. Not All Clear Yet
2007-11-28 20:03:00 Last Friday I wrote that the Dow Jones was Ready for Next Leg Down. I said that “baring a surprise move from the Federal Reserve next week, the next meaningful movement for the Dow should be below 12,5000“. Today we had the surprise move and the Dow rallied almost 300 points. thebankruptcynewsdotcom I will add ... More About: Clear
Dow Jones 13,252. Not All Clear Yet
2007-11-28 20:03:00 Last Friday I wrote that the Dow Jones was Ready for Next Leg Down. I said that “baring a surprise move from the Federal Reserve next week, the next meaningful movement for the Dow should be below 12,5000“. Today we had the surprise move and the Dow rallied almost 300 points. thebankruptcynewsdotcom I will add here two notes of warning. First, the surprise move is non-existent, so this 300 points rally may reverse by Friday. Second, if this move does not continue tomorrow with a close above 13,260 it will reverse by Friday or Monday and the next move will continue to be down to below 12,500. Hopefully, the Short Term Bear Fest that I announced in October 12th was starting, is coming to an end. Unfortunately, if it is already coming to an end, it is because of speculative hopes and increased liquidity, which will bring us tons of problems two years from now. Tags: debt, dow, dow jones, dow jones industrial avera ge, fed, Federal Reserve, l... More About: Clear
Dow Jones Ready for Next Leg Down
2007-11-23 18:19:00 Two weeks ago, when the Dow had fallen about 1000 points, I said that the Dow Jones at 13,099 should see a rest. I expected at least two flat weeks and we had them within less than 1%. As I write this the Dow is at 12,930.24 (0.98% lower than the 13,099 I detected as ... More About: Economy , Finance , War
Dow Jones Ready for Next Leg Down
2007-11-23 18:19:00 Two weeks ago, when the Dow had fallen about 1000 points, I said that the Dow Jones at 13,099 should see a rest. I expected at least two flat weeks and we had them within less than 1%. As I write this the Dow is at 12,930.24 (0.98% lower than the 13,099 I detected as a possible stop for the fall). thebankruptcynewsdotcom Baring a surprise move from the Federal Reserve next week, the next meaningful movement for the Dow should be below 12,5000 (about 4% down from here). The Federal Reserve will intervene to protect America’s economy in times of war. As I mentioned in October 1st, I am expecting the Dow to double its price in dollars in the next 2 years. I also expect that to be an inflationary move, not sustainable and based on the feedback mechanism that feeds all inflationary human activities. Basically, a bubble. After that bubble, we should see real economic trouble. Theoretically, as the value of the dollar tends to 0, the amount of dollars needed to sustain economic ac... More About: Ready
US Businesses in Recession-Like Mode
2007-11-23 16:26:00 thebankruptcynewsdotcom This chart shows Undistributed Corporate Profits (corporate profits that are neither paid as corporate profits taxes nor paid to shareholders as dividends) as percentage of GDP based on official data. Official recessions are marked in red as per NBER data. The chart shows that, as business cycles contract, corporations are able to retain ... More About: Economics , Mode , Recession , Businesses , Sine
First Thanksgiving Grace in History
2007-11-23 15:05:00 "…and we thank ye Lord that the natives have no concept of the private property of the land." thebankruptcynewsdotcom Happy Thanksgiving Tags: history, natives, private property, thanksgiving Related posts No related posts. More About: History , Grace
First Thanksgiving Grace in History
2007-11-23 15:05:00 "…and we thank ye Lord that the natives have no concept of the private property of the land." thebankruptcynewsdotcom Happy Thanksgiving Share This Tags: history, natives, private property, thanksgiving Related posts No related posts. More About: Economics , History , Grace , Hank
Transfer of Wealth from Individuals to Corporations
2007-11-21 18:35:00 If Money is Power, the official data shows that the Bush administration has transferred power from the people to corporations at an alarming rate. thebankruptcynewsdotcom The above chart shows the widening gap between corporate profits and salaries. If you want to see how dramatic this widening gap is, take a look at the following chart. The curve represents the differential between Compensation of employees paid and Corporate Profits (before and after tax), which shows the transfer of wealth from employees to corporations. As you can see, the Bush administration shows a dramatic change in the transfer of wealth from workers to corporations. Another notable trait of this chart is that after the tax cuts the gap between after taxes and pre-taxes transfer of wealth widens, which indicates that the tax cuts do not help corporations at all, actually it seems to hurt them. The reasons for this enormous transfer of wealth are increases in productivity (exploitation of labor, or in cor... More About: Wealth , Transfer , Corporations , Individuals , Tran
Transfer of Wealth from Individuals to Corporations
More articles from this author:2007-11-21 18:35:00 If Money is Power, the official data shows that the Bush administration has transferred power from the people to corporations at an alarming rate. thebankruptcynewsdotcom The above chart shows the widening gap between corporate profits and salaries. If you want to see how dramatic this widening gap is, take a look at the following chart. The ... More About: Wealth , Democracy , Transfer , Corporations , Individuals 1, 2, 3, 4 |
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