debt

Leverage is the practice of holding a small amount of government currency in reserve against IOUs denominated in the state’s unit of account while promising to convert those IOUs to currency. This can lead to a “run” on private IOUs,…

It is high time politicians in Berlin to started to recognise that fiscal austerity is not the be all and end all of the policy issues they now face. Ireland is applying fiscal austerity, but this alone may well not be enough. A better…

Ed asked me to comment on hidden contingent sovereign liabilities of Danish mortgage bonds given the most recent Absolute Return Letter.

The adoption of the Constitution of the Kingdom of Denmark Act in 1849 provided the first regulatory framework and Danish mortgage financing has ever since been tightly regulated, ensuring an entirely unblemished track record with not a…

If real returns remain low, it will skew capital investment. When recession hits, debtors backing those losing investments will be caught out and forced to delever aggressively as resource misallocation becomes evident.

Comstock Partnrs writes that its fund is currently positioned to benefit from a declining stock market. This bearishness is mostly due to the enormous debt built up over the last few decades (total debt-including private debt-- was $11…

I doubt we are going to see wide scale debt forgiveness until defaults and debt deflation have taken center stage. But this is something to consider as it was an approach used during the Great Depression.

The ABC Radio National program Rear Vision is a current affairs program that presents “contemporary events and people in their historical context”. I was recently interviewed by Rear Vision for a retrospective on the crisis, entitled “Here…

Households are in far worse shape now than in the 1930s, with a peak debt level that is two and a half times as high as it was in 1930. That’s why the crisis now is manifesting itself in stagnant consumer demand. It doesn’t involve the same…