malinvestment

By Sober Look Credit Suisse has made an important point with respect to the Fed's purchases of MBS. As we know, a mortgage borrower is long an option to prepay. That means a mortgage lender is short this same prepayment option. Therefore a…

Here's a good essay from the St. Louis Fed, examining how effective 'permanent zero' rates are. As you know, I think permanent zero is toxic. Let's see what the St. Louis Fed is saying though. Since the late 1980s the Federal Open Market…

I want to highlight the end of Fed Chairman Ben Bernanke's speech at Jackson Hole yesterday because he reiterated something he has been saying for a while now - that the Fed will do more but it won't be able to save the day by itself. I…

One thing Austrians harp on is the misallocation of resources caused by heavy handed and persistent interest rate market intervention. They are right that the industrial organization and the structure of investment capital priorities is…

I don’t want to be too glib here. I recognize that policymakers are in an extremely difficult position and that there is no longer any easy solution, but railing at the markets rather than trying to understand why they are doing what they…

Liberalizing interest rates means that those sectors of the economy who have benefitted from very low lending rates – SOEs, local and municipal governments, real estate developers, and other large borrowers – are likely to find many reasons…

Perceptions have certainly changed a lot in the last few months. As recently as three years ago there were so few analysts who were skeptical about the sustainability of Chinese growth that we rarely disagreed among ourselves. Now, however,…

In recent months, we have seen a precipitous drop in Chinese trade growth. This comes from both the export and the import side. What's happening? A large part of it is wages. As I indicated two years ago in a post on the Lewis Turning…

The video below is from On the Edge with Max Keiser. I speak to Max during this show from 31 March about the US economy, Federal Reserve policy, financial repression and more. On the issue of financial repression, I think my view is pretty…