For an amateur student of history, it is a moment that was perhaps overdue. However, after being lent All the President's Men by a good friend, it could not be put off any longer; I started to read the story of how President Nixon betrayed the American public and risked the reputation of the Office of the President of the United States. Somewhat poignantly I was able to do so in the Watergate complex itself, living as I currently do across the street from the infamous address on Virginia Avenue. From my vantage point, and probably to the detriment of my already flagging imagination, I was able to follow Woodward and Bernstein's descriptions of the no longer 'futuristic' complex and was able to look up at the 'serpent's-teeth concrete balustrades' with my own eyes. While doing so, it struck me that in nearly 40 years, not much had changed at the Watergate.
Of course many things have changed since that time, and of course many things have changed even in the past ten years. Computer and cell phone capabilities are merely some of the most obvious proofs of this statement. The presidency has changed hands many times since Nixon gave it up, the Cold War has ended, nations have been destroyed, reformed and reestablished.
However, even in a rapidly changing world, the Watergate is not the only remnant of the past that rears its head from time to time. Of course, like the Watergate, many buildings remain from the early 70's. But some of the more obvious similarities to the early 70's have more to do with human nature than concrete complexes in Northwest DC. For example, this week provided us with a James Bond-esque blast from the past that points to mistrust and reminded us all that, even when some things change, many others remain the same.
For those who didn't hear, the FBI allegedly busted a Russian spy ring and charged its members with various crimes in Manhattan this week. Though prosecutors couldn't come up with anything sexier than acting as unlawful agents of a foreign country, and though some of the evidence in the case would otherwise seem fairly innocuous (for example, there are no allegations of bribing officials or stealing information) it is nonetheless interesting to see a plot like this unravelled, despite all of the rehabilitation of a Cold-war torn relationship and soul-searching that has occurred in recent decades.
Of course America gathers intelligence on other nations, both friend and foe, as well. It is an important tool in foreign relations and military affairs. However the incidents of this week are nonetheless a sign that even in an ever-changing world the old maxim holds true, particularly when it comes to human nature; the more things change, they more they stay the same.
6.28.2010
Blaming Cramer Another Sign of Declining Self-Reliance
Jim Cramer is a former hedge fund manager and investment guru who currently hosts a very popular televised investing program on CNBC called Mad Money. Lenny Dykstra is a former ball player nicknamed 'Nails' who had an investment career as dramatic in its disgraceful fall as in its meteoric rise. Though this article goes to some length to claim that Cramer was probably in the dark about Lenny Dykstra's shady dealings during his ultimately doomed investment career, it does suggest that Cramer's endorsement of Dykstra and his methods makes him at least a bit culpable for the damage done by Dykstra. Others have used similar reasoning to blame Cramer for everything from the housing bubble to the flash crash.
However, this line of reasoning overlooks a key factor; though he is an investor by trade, it is important to remember that Cramer is far moreso a television personality at this point. You can call it Mad Money Fever, Dr. Phil Syndrome, or any number of similarly devised names, but it is the tendency of Americans to blindly follow advice, no matter how untimely, unspecific, or inappropriate it may be so long as it comes from a popular TV expert. Therefore, blaming Cramer et al, it is a great example of how America is becoming increasingly and detrimentally reliant upon others in nearly every facet of life.
I am a poor student. I don't have money to invest. However, the hope is that one day, being a poor student now will lead to being at a least a comfortable something-or-another later in life. At that point, I certainly will invest, most likely as a way to build wealth for other things, such as home purchases or retirement. One thing I won't do at that point is sit in front of the TV, laptop in hand, pulling the trigger on every recommendation made by a man who spends more time at book signings and speaking engagements than in front of stock charts. By analogy, next time I am feeling down about being a poor student, I am certainly not going to watch Dr. Phil's diagnosis of a depressed out-of-work alchoholic to help me work through how I should be handling my own problems. No offense to depressed out-of-work alchoholics, it is simply that this advice would (hopefully) not be appropriate for me. Neither should particular stocks from an afternoon TV program be to the average investor.
Jim Cramer may or may not have the cleanest hand in the world when it comes to investing. There have certainly been many allegations against him through the years. However, to blame him for the behavior of his viewers is juvenile finger pointing that does nothing but ignore the fact that one of the biggest problems America faces is a lack of the self-reliance that made this country great in the first place. This problem extends more broadly to other facets of everyday life, most notably government entitlement programs, many of which are of course necessary while at the same time exploited and over-utilized.
How can this be changed? There are clearly no easy solutions. However, it is clear that as long as people depend on the often inappropriate and inadequate advice of others whom they never have, nor never will meet, those others will end up as scapegoats. My sense is that Americans from our Founding Fathers right up until the Greatest Generation are rolling in their graves...
However, this line of reasoning overlooks a key factor; though he is an investor by trade, it is important to remember that Cramer is far moreso a television personality at this point. You can call it Mad Money Fever, Dr. Phil Syndrome, or any number of similarly devised names, but it is the tendency of Americans to blindly follow advice, no matter how untimely, unspecific, or inappropriate it may be so long as it comes from a popular TV expert. Therefore, blaming Cramer et al, it is a great example of how America is becoming increasingly and detrimentally reliant upon others in nearly every facet of life.
I am a poor student. I don't have money to invest. However, the hope is that one day, being a poor student now will lead to being at a least a comfortable something-or-another later in life. At that point, I certainly will invest, most likely as a way to build wealth for other things, such as home purchases or retirement. One thing I won't do at that point is sit in front of the TV, laptop in hand, pulling the trigger on every recommendation made by a man who spends more time at book signings and speaking engagements than in front of stock charts. By analogy, next time I am feeling down about being a poor student, I am certainly not going to watch Dr. Phil's diagnosis of a depressed out-of-work alchoholic to help me work through how I should be handling my own problems. No offense to depressed out-of-work alchoholics, it is simply that this advice would (hopefully) not be appropriate for me. Neither should particular stocks from an afternoon TV program be to the average investor.
Jim Cramer may or may not have the cleanest hand in the world when it comes to investing. There have certainly been many allegations against him through the years. However, to blame him for the behavior of his viewers is juvenile finger pointing that does nothing but ignore the fact that one of the biggest problems America faces is a lack of the self-reliance that made this country great in the first place. This problem extends more broadly to other facets of everyday life, most notably government entitlement programs, many of which are of course necessary while at the same time exploited and over-utilized.
How can this be changed? There are clearly no easy solutions. However, it is clear that as long as people depend on the often inappropriate and inadequate advice of others whom they never have, nor never will meet, those others will end up as scapegoats. My sense is that Americans from our Founding Fathers right up until the Greatest Generation are rolling in their graves...
6.25.2010
Taking the S-REIT to the Next Level
Though its a few months old at this point, I thought loyal readers would be interested in taking a look at this press release from The George Washington University’s Solar Institute Annual Symposium outlining its recommendation to lawmakers to allow solar developers to adopt the REIT structure.
The Holmesian among frequent readers might be able to deduce a connection between the 'GW Law Student' noted under the new research section on the Institute's home page and certain articles on Blawgconomics. Of course it is elementary, dear readers...
The Holmesian among frequent readers might be able to deduce a connection between the 'GW Law Student' noted under the new research section on the Institute's home page and certain articles on Blawgconomics. Of course it is elementary, dear readers...
Financial Regulation Reform Creates Uncertainty
Well, it looks like we have another 2,000 page effort out of Congress that promises to change the way Americans go about their lives, for better or worse. However one may view the bill, and despite potential benefits, there is undoubtedly a downside to its seemingly inevitable passage; it is yet another example of how the American political process produces results that don't reflect the will of the majority while creating uncertainty.
In any bill of this size, many provisions exist that could not pass on their own. Though some might view this as a good thing, many take the view that bills should not exist solely as vehicles to pass otherwise unpassable legislation. This same thing happened with the healthcare bill, and many famous examples have been provided by annual budget bills passed by both sides of the aisle through the years.
Perhaps this is just the price of getting things done however. The American political system remains one of the most representative in the world, and it is tough to see how anything would get done without the type of compromise which gets unpopular pieces tacked on to the whole.
However there is still the matter of uncertainty. Notably, when one of the authors of the bill claims that no one will actually know how it will work until everything is in place, it should be a strong indication that there will be surprises to come. Particularly in a poor jobs market, uncertainty will be a negative for those among the 10% of our population who are unemployed and whose hopes are pinned on the very companies who will move forward wearily in an uncertain world.
As noted above, this may simply be the price of democracy. And you certainly won't find anything so helpful as a suggested remedy on this page, at least not today. However, it would be nice to believe that someone on that hill in Washington knew what they were crafting, then passing, before it becomes an integral cog in our economic machine. Then again, maybe that is just too much to ask for on a summer Friday...
In any bill of this size, many provisions exist that could not pass on their own. Though some might view this as a good thing, many take the view that bills should not exist solely as vehicles to pass otherwise unpassable legislation. This same thing happened with the healthcare bill, and many famous examples have been provided by annual budget bills passed by both sides of the aisle through the years.
Perhaps this is just the price of getting things done however. The American political system remains one of the most representative in the world, and it is tough to see how anything would get done without the type of compromise which gets unpopular pieces tacked on to the whole.
However there is still the matter of uncertainty. Notably, when one of the authors of the bill claims that no one will actually know how it will work until everything is in place, it should be a strong indication that there will be surprises to come. Particularly in a poor jobs market, uncertainty will be a negative for those among the 10% of our population who are unemployed and whose hopes are pinned on the very companies who will move forward wearily in an uncertain world.
As noted above, this may simply be the price of democracy. And you certainly won't find anything so helpful as a suggested remedy on this page, at least not today. However, it would be nice to believe that someone on that hill in Washington knew what they were crafting, then passing, before it becomes an integral cog in our economic machine. Then again, maybe that is just too much to ask for on a summer Friday...
Credit Crunch the Greatest Foe the Greeks Have Ever Faced?
According to no less a source than Wikipedia, 'Classical Greece is generally considered to be the seminal culture which provided the foundation of Western civilization.' During that time, the city-states of what is now Greece were able to put internal squabbles aside and repel many threats to their collective soil, despite facing some of the greatest armies ever assembled, before or after.
Some may then find it ironic that the recent financial crisis has done something that even the mighty Persians couldn't do...at least in the long term; make the Greeks give up ground. Due to its credit crunch, the Greek government has put some of its island land up for sale in an attempt to generate some cash to cover soaring debts loads and general services.
The government likewise plans to put its rail system up for grabs with the Chinese thought to be probable bidders. Wealthy individuals are presumed to be the potential buyers for the island properties.
The move to sell infrastructure is not likely to cause much consternation; similar moves have occurred throughout the world in recent years. However, though the island situation could be a boon for the Richard Bransons and the Roman Abramovich's of the world, I am sure most Greek citizens would prefer not to not see the day Nafsika gains a -ski at the end...
Some may then find it ironic that the recent financial crisis has done something that even the mighty Persians couldn't do...at least in the long term; make the Greeks give up ground. Due to its credit crunch, the Greek government has put some of its island land up for sale in an attempt to generate some cash to cover soaring debts loads and general services.
The government likewise plans to put its rail system up for grabs with the Chinese thought to be probable bidders. Wealthy individuals are presumed to be the potential buyers for the island properties.
The move to sell infrastructure is not likely to cause much consternation; similar moves have occurred throughout the world in recent years. However, though the island situation could be a boon for the Richard Bransons and the Roman Abramovich's of the world, I am sure most Greek citizens would prefer not to not see the day Nafsika gains a -ski at the end...
6.23.2010
A Tardy Return and a Lesson for the Future
Well it certainly has been a while. We have managed to follow up one of the most fruitful months in Blawgconomics' relatively short history with what threatens to be the least, having not posted in about three weeks. It has been interesting to see that readership has not dropped too significantly during that time, mostly on strength of daily traffic to the Solar REIT series of articles. Based on what would otherwise be a reality-inducing lack of comments from the loyal readers of the site regarding a lack of posts, one can only imagine that the remainder of the recent traffic has come from old friends satisfied by re-examining old posts. However, one can only speculate...
Despite a lack of new content, the past few weeks have been relatively kind to our absence as many of the lead stories we covered in early June remain the stories of late June. The disaster in the Gulf of Mexico has still not been remedied. Europe continues to struggle with financial troubles and the best remedies and prophylactics for dealing with similar issues, past and future. Elena Kagan is still in the Supreme Court nomination-cum-mud-dodging phase of her career. Political pundits and opinion polls in the US continue to point to a fascinating fall. On a lighter note, the World Cup is in full swing and merits both front and back page positions in many of the world's newspapers.
One thing that has changed is the currency situation in China where the yuan, previously pegged to the dollar, has been switched to a basket peg (a situation explained at length here). However, it is unclear what the exact outcome of this will be. Though Washington has put varying amounts of pressure on the Chinese to change away from a straight dollar peg over the past few years, the world has not remained static during this time. For example, both the pound and the euro have declined in value compared to the dollar in the past year. Therefore, with its new revaluation at least in part based on these currencies, the yuan could paradoxically fall with respect to the dollar, an opposite outcome to that desired by US policymakers.
Though this could be considered a classic case of 'be careful what you wish for,' it is probably also still good in the long-run for revaluation to take place as it will help to even out the peaks and valleys of the trade roller coaster. Despite this long-term gain for the US, however, the greater value in the situation may lie in analysis of the Chinese process itself. The Chinese may have capitulated to global demands, but clearly did so at their own pace and on a timeline which proved highly beneficial to them. They also waited for the loudest cries to die down before making their move. As the nation grows more powerful politically, economically and militarily, it would be worthwhile for the diplomats and politicians of the world to take note of this worthy case study and go forward knowing that the future of Chinese relations will be nothing if not interesting.
Despite a lack of new content, the past few weeks have been relatively kind to our absence as many of the lead stories we covered in early June remain the stories of late June. The disaster in the Gulf of Mexico has still not been remedied. Europe continues to struggle with financial troubles and the best remedies and prophylactics for dealing with similar issues, past and future. Elena Kagan is still in the Supreme Court nomination-cum-mud-dodging phase of her career. Political pundits and opinion polls in the US continue to point to a fascinating fall. On a lighter note, the World Cup is in full swing and merits both front and back page positions in many of the world's newspapers.
One thing that has changed is the currency situation in China where the yuan, previously pegged to the dollar, has been switched to a basket peg (a situation explained at length here). However, it is unclear what the exact outcome of this will be. Though Washington has put varying amounts of pressure on the Chinese to change away from a straight dollar peg over the past few years, the world has not remained static during this time. For example, both the pound and the euro have declined in value compared to the dollar in the past year. Therefore, with its new revaluation at least in part based on these currencies, the yuan could paradoxically fall with respect to the dollar, an opposite outcome to that desired by US policymakers.
Though this could be considered a classic case of 'be careful what you wish for,' it is probably also still good in the long-run for revaluation to take place as it will help to even out the peaks and valleys of the trade roller coaster. Despite this long-term gain for the US, however, the greater value in the situation may lie in analysis of the Chinese process itself. The Chinese may have capitulated to global demands, but clearly did so at their own pace and on a timeline which proved highly beneficial to them. They also waited for the loudest cries to die down before making their move. As the nation grows more powerful politically, economically and militarily, it would be worthwhile for the diplomats and politicians of the world to take note of this worthy case study and go forward knowing that the future of Chinese relations will be nothing if not interesting.
6.03.2010
Someone Finally Gets It...
Atlanta Fed President Dennis Lockhart became the latest member of the Federal Reserve Bank system to note that keeping interest rates at 0% is not a sustainable economic stimulation policy in a speech today.
The dollar is often shielded from textbook supply/demand issues due to its position as the global currency of exchange. More recently, debt distress in Europe and political concerns in England have further solidified the buck's position as the World's safety valve in problematic times. Because of this, the American government has been able to print money over the past few years to fund multiple military actions and in attempts stimulate the economy.
However, even the dollar is not completely immune from economic reality. Elsewhere, with a non-supported currency, history has shown us that this type of behavior inevitably leads to high inflation. The dollar is strong, however it is not outside the realm of economic reality. Coupled with current unemployment levels, continuing to run the printing presses at the Fed banks could make the current economic crisis look like a mini-boom.
It is true that America has, to some extent, been able to spend in the face of declining demand and unemployment. But such a course is not indefinitely sustainable. In one scenario, such behavior could lead to future asset bubbles similar to that which caused the housing crisis. In the worst-cased scenario, it could ultimately lead to economic collapse. A decision by the Chinese or OPEC states to unwind their dollar-denominated debt holdings or additional stimulus plans at 0% funding rates would bring this day of reckoning even closer.
Raising rates may be painful in the short-term. However, economic theory and common sense point to an increase in interest rates, even before recovery is safely underway.
UPDATE: Lockhart is not the only one: Thomas Hoenig is on the same page.
The dollar is often shielded from textbook supply/demand issues due to its position as the global currency of exchange. More recently, debt distress in Europe and political concerns in England have further solidified the buck's position as the World's safety valve in problematic times. Because of this, the American government has been able to print money over the past few years to fund multiple military actions and in attempts stimulate the economy.
However, even the dollar is not completely immune from economic reality. Elsewhere, with a non-supported currency, history has shown us that this type of behavior inevitably leads to high inflation. The dollar is strong, however it is not outside the realm of economic reality. Coupled with current unemployment levels, continuing to run the printing presses at the Fed banks could make the current economic crisis look like a mini-boom.
It is true that America has, to some extent, been able to spend in the face of declining demand and unemployment. But such a course is not indefinitely sustainable. In one scenario, such behavior could lead to future asset bubbles similar to that which caused the housing crisis. In the worst-cased scenario, it could ultimately lead to economic collapse. A decision by the Chinese or OPEC states to unwind their dollar-denominated debt holdings or additional stimulus plans at 0% funding rates would bring this day of reckoning even closer.
Raising rates may be painful in the short-term. However, economic theory and common sense point to an increase in interest rates, even before recovery is safely underway.
UPDATE: Lockhart is not the only one: Thomas Hoenig is on the same page.
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