“Collateral Damage & Unintended Consequences” Pimco’s Mohamed El-Erian is to today’s financial establishment what Walter Cronkite was to the American mainstream, a generation (or two) ago: an unofficial spokesman whose views distill and encapsulate the broad consensus. So, his dispatches these days — including his latest, ‘Central Banks’ “Responsible Irresponsibility?”‘ — automatically command attention. Half-Time at The Crash of...Read More
That’s the question I fielded the other week from a client on behalf of their friend, who was leaving town imminently, and was (deeply) underwater on their North Minneapolis home. The short answer: ‘no.’ The more detailed answer: “no, for about 18 different reasons,” starting with the fact that what the underwater homeowner is essentially “donating” is a...Read More
Punishing the Whistle Blowers “I saw the crisis coming; why didn’t The Federal Reserve?” –Dr. Michael Burry, 2012 UCLA Economics Dept. Commencement Address If you read Michael Lewis’ “The Big Short,” you doubtless remember Michael Burry: the brilliant, one-eyed medical doctor/investment savant with borderline Asperger’s who predicted — and cashed in on — the looming financial...Read More
“1 Picture = 1,000 Words” Department If you can’t make out the labels in the chart above, the three time periods (shown in gray) correspond to the Federal Reserve’s QE I, QE II, and Operation Twist (QE stands for “Quantitative Easing”). So, is the Fed supporting stock prices? You tell me . . .Read More
If the Federal Reserve and U.S. Treasury were coordinating the response to the cruise ship disaster off the coast of Italy, here’s what they would be doing: –the Captain and senior officers would all be given multi-million dollar bonuses (actually, their regular, annual multi-million dollar bonuses). –Carnival Cruises, the ship’s owner, would transfer title to the...Read More
“The Liquidity Interest Rate Trap” Well I don’t know why I came here tonight, I got the feeling that something ain’t right, I’m so scared in case I fall off my chair, And I’m wondering how I’ll get down the stairs, Clowns to the left of me, Jokers to the right, here I am, Stuck...Read More
