Steve.Loebs's blog
Will the real inflation please stand up?
Submitted by Steve.Loebs on Mon, 04/07/2008 - 3:32pm.I mentioned in previous posts that the official government economic statistics are dubious since they continue to breach a key principle of scientific practice. The idea of RELIABILITY.
For statistics in economics to be reliable over time, the method of measurement must be similar. If this practice is breached, then the measurements over time are not comparable. In order to make a time series comparable when the methods of measurement have changed non-trivially, one must make the proper adjustments.
Shadowstats.com has been making those adjustments. The chart below shows that the methods began to change during the early Reagan administration and then again during the early Clinton administration.
After the adjustments, it can be seen that the inflation levels reached in the Stagflation 70's and then the 80's, 90's and the current decade are a very different picture, indeed. We are at approximately 12% inflation, not the 4% reported by the government.
With the huge amounts of monetary and fiscal stimulus...
Comic relief... and a 2nd more serious video
Submitted by Steve.Loebs on Mon, 03/31/2008 - 12:01pm.Here is a funny video of Robert Reich expressing his views on the economy. He will be one of the guests on "Real Time with Bill Maher" next Friday.
Although he is a loyal Democrat (nobody is perfect), he is one of the brightest of the mainstream voices.
The next video is 3 years old next Saturday, but Reich describes the cause of the economic problem from another angle.
The "I" word before the "D" word...then comes the "F" word
Submitted by Steve.Loebs on Thu, 03/27/2008 - 3:08am.This Reuters article does a pretty good job explaining the likely scenario that will set off the rapid rise of inflation that I predict will be stage #1 of the economic melt down.
However, if I am wrong, then stage #1 will be skipped and we will likely experience stage #2 sooner. Stage #2 being rapidly deflating asset prices -- i.e., economic depression.
Economic update -- ignoring the value of Sustainability
Submitted by Steve.Loebs on Mon, 03/17/2008 - 12:45pm.The Fed is desperately trying to keep the house of cards (aka the derivatives market) from collapsing. Unique to this time in economic history, a great portion of the credit market exists in the complex and shadowy world of over-the-counter (OTC) derivatives writing. Shadowy in that even the best auditors and analysts have a difficult time discerning the facts from the banks' financial statements.
Although the exchange-traded proportion of the derivatives market is huge and precarious on its own, it pales in comparison to the top-heavy, high-center-of-gravity OTC market utilized by and between the banks and other firms in the financial sector. Their instrument of choice: credit default swaps.
The collapse of the credit market in the US and globally appears to be staring us in the face like our moment with the Grim Reaper.
Economy Forecast - Feb Update
Submitted by Steve.Loebs on Mon, 02/04/2008 - 2:27pm.Yesterday, Fortune Magazine published an article about the latest views from Jim Rogers. You may recall that I mentioned Rogers in an earlier blog post . His forecast for the US economy has become even gloomier. It, once again, explains why he chose to move his family out of the country to Singapore.
Improving "Green Commons"
Submitted by Steve.Loebs on Wed, 01/30/2008 - 4:35pm.The best web sites make visitors and authorized users want to come back. They know that they need lots of good content to fit the various interests of their users to drive repeat visits. Therefore, they are welcoming of content from a broad range of authors' preferred content.
Balanced Budget Amendment
Submitted by Steve.Loebs on Tue, 01/22/2008 - 1:24am.It has been suggested by some that the Green Party ought to support an amendment to the US Constitution requiring the federal government to balance the budget each fiscal year. Although I appreciate the application of fiscal responsibility and I can understand the appeal, forcing a balanced budget is not sound policy and precludes the use of Keynesian fiscal policy prescriptions.
The Paradox of Taxation?
Submitted by Steve.Loebs on Mon, 01/21/2008 - 11:46pm.In another blog installment today titled Corporate Tax Jujitsu I advocated a tax reform that would increase personal income taxation on the high-income earners in a progressive fashion.
The current orthodox economic view of increasing taxation on the wealthiest is that it will harm the economy and paradoxically lower total tax receipts. Their assertion is that growth solves all economic problems; savings provides the engine for growth; and that the wealthiest save the most of their incomes. They conclude that lowering the taxes of rich people actually enables the Treasury to collect more taxes from a larger economy.
Corporate Tax Jujitsu
Submitted by Steve.Loebs on Mon, 01/21/2008 - 8:37pm.The business conservatives are screaming for a corporate income tax cut. They claim that the tax rate that US corporations must pay is far higher than their overseas competitors. They are right...kind of. Some are screaming for the rate to be dropped to 25%. We should publicly agree and take it to the extreme by calling for the rate to be cut to 0%.
The Green Party ought to apply a surprising jujitsu move by coming out strongly in favor of the complete elimination of corporate income taxation. After you lift your jaw up off the floor, hear me out.
Uncle Sam or Uncle Warren?
Submitted by Steve.Loebs on Mon, 01/21/2008 - 7:13pm.As we know, Martin Luther King, Jr day is a holiday on Wall Street. However, it was no holiday, today, for overseas markets.
The world's stock market exchanges had a dark day today. Maybe not a 'black' day, but certainly dark grey. The German DAX index dropped 7.2%. The UK's FTSE 100 dropped 5.5%. The French CAC 40 dropped 6.8%. Same kinds of numbers all over the world.
The Asian and European markets will experience their Tuesday before we in the US open tomorrow morning. In fact, as I write this the Tuesday far east markets are down 2-4% already. If they have another big day on the downside, we could see a 7-12% plunge here on Tuesday.
If the DOW drops 7% tomorrow, that would be a drop of 847 points! If the DOW drops more than 1000 points tomorrow, hold you breath and your loved ones.
Technorati Tags: Green economicsShort-term Fiscal Stimulus Frenzy on the HIll
Submitted by Steve.Loebs on Thu, 01/17/2008 - 2:18pm.Washington is a buzz with the idea of providing a short-term fiscal policy stimulus. The rhetoric regards "concern for Americans" and "doing the right thing for America." The reality is that this gimmick is about vote buying.
This tiny demand-side stimulus is far too small to have any lasting impact, likely to be taken back via the inflationary effect, and fails to address the real problem at hand: long-term income distribution.
Collapse of Real Estate Values
Submitted by Steve.Loebs on Sun, 01/06/2008 - 5:29am.A couple of weeks ago, Alan Greenspan was on a Sunday morning TV talk show giving advice that was so bizarre for an Ayn Rand libertarian and two-decade Fed chairman that Larry Kudlow and his merry band of Wall Street pontificators on CNBC were calling Greenspan 'insane.' Greenspan was recommending that the US government provide cash payments to homeowners to bail them out of impending foreclosure. Kudlow and the other CNBC folk were beside themselves that Greenspan had overnight turned into what they viewed as some crazy leftwing lunatic.
What has caused Greenspan to fall from Wall Street demigod to lunatic in so short a time? What reason did Greenspan give for his unusual prescription? Simply, he recognizes the dire situation of the US real estate market and believes that his prescription is the only one that MAY solve the problem without worse unintended consequences.
Should we run for high office?
Submitted by Steve.Loebs on Thu, 01/03/2008 - 3:15pm.For as long as I have been with the Green Party the strategic and tactical prescription of running for high office has been asserted and refuted.
While nobody disagrees that we have a great need to get Greens elected to low partisan (and even nonpartisan) office, many believe that we need to also run candidates for the highest offices -- president, senator, and governor.
Economic History
Submitted by Steve.Loebs on Wed, 01/02/2008 - 3:20pm.NEWS BRIEF: Prices of oil and gold hit new records this morning. Commodities prices are soaring, the dollar is declining, Bush is stockpiling oil in the SPR, the stock market is falling and it would appear that the Fed and Treasury want to inflate the foreign debt away...
The Paradox of Thrift
Submitted by Steve.Loebs on Wed, 12/26/2007 - 7:54pm."Define for me what 'enough' means to you." During the initial financial planning interview I routinely had my clients define how much money they needed in order to retire. I liked the philosophical quality that would always accompany the answer. However, it is also a common sense question since it was necessary to determine how much capital needed to be saved to reach retirement and other savings goals. Before I left the financial services industry, I helped my clients to discover the answer to the question with some additional information. For example, I would inform them that the ultimate goal of financial planning for most is financial independence. I defined that as the point where one has enough capital that the earnings on her investments would make work voluntary.
