Go to Top

June 2010

Indignant About BP? What About Fannie & Freddie?

On June 17, British Petroleum Chief Executive Tony Hayward was grilled on his company’s role in the ongoing oil spill disaster in the Gulf of Mexico.  Those hearings dominated business TV all day.  Some lawmakers asked insightful and excellent questions, while some resigned themselves to emotional populist rants. At one point in the discussion, U.S. House Energy and Commerce Committee Chairman Henry Waxman (D, Calif.) told Mr. Hayward “There is …Read More

Robust Growth? Don’t Count on the Consumer

I recently attended a conference at which the speaker indicated that, since roughly 70% of GDP is consumption, the stimulation of consumption is necessary for full economic recovery and the resumption of robust growth.  The logic was as follows:  Rising consumption means more goods and services are consumed making it necessary for businesses to produce more.  This implies the need for more labor, and therefore an expansion in the number …Read More

Waiting for inflation? It’s already here.

The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. – John Maynard Keynes Much of the western world is mired in debt.  American consumers are walking away from their suffocating mortgage payments in droves, and consumer credit outstanding has barely declined.  To make matters worse, the …Read More

Will Build America Bonds save the States from default?

There has been a lot of talk recently about whether Build America Bonds (BABs) will be able save the state and local governments from possible default.   The BABs market recently broke a sales milestone of $100 billion, this done amazingly within in 13 months of the first bond issuance. The Build America program was created in the American Recovery and Reinvestment Act of 2009.  Designed to spark investment in state …Read More

The Symbiotic Washington-Wall Street Alliance

Despite all of the political rhetoric surrounding financial reform legislation, “Too Big To Fail”, over leverage in the banking system, and high risk bets at proprietary Wall Street trading desks will not be resolved in the pending legislation because Washington and Wall Street have a symbiotic relationship held together by the realization on both sides that they need each other for survival. Recently, The Wall Street Journal (‘Banks Trim Debt, …Read More