The Credit Crisis Financial Stocks Short Journal

I'd love to see Kyle Bass on w/Steve Liesman. I'm pretty sure "Fed/Treasury Stooge" Liesman would be reduced to a quivering ball of tears after having to go a couple of minutes w/Bass.

Even better, let Bass do the next interview w/Geithner.
 
Quote from Daal:

One thing that I believe is misunderstood in the economics community is the issue of whether tax cuts pay for themselves. In the short-run I agree that they dont pay for themselves(despite of what supply-siders might claim) but in the long-run if a certain economy wide tax rate gets an economy to growth by 3.5% instead of 3%, eventually the cuts will pay for themselves in the form of higher accumulated revenue growth(say, over the next 30 years)

Even mainstream economists(like Krugmans of the world) accept that too much in taxes wont yield extra revenue as people will find ways to cheat and hide income(plus growth will be hurt, maybe even a recession) and too little might hurt the economy by not allowing the government to run its basic critical functions of enforcing the rule of law, contracts, infrastructure and others. Somewhere between these 2 there is an optimal tax rate that allows both things to occur, so the issue of whether the cuts pay for themselves is WHERE is the optimal rate compared to todays rate, if its bellow, the cut will pay for itself on the long-run because the economy will growth faster over the next 50 years, if its above, a tax hike is actually healthy and necessary
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Cases in point - Western Europe vs USA, it seems pretty clear the last 20-30 years that the higher taxes in the EU have resulted in slower growth. And Singapore/Hong Kong vs USA/Japan/W Europe. With a flat tax in the mid-teens the Asian city states seem to have prospered more. Since there is so much government waste in places like USA and W Europe, it's hard to imagine one couldn't slash spending 10-20% without seeing any issues. You'd just be eliminating wealth-destroying, disincentivising pork.

It will be interesting to see what happens with Eastern Europe and Russia in 10-20 years, which introduced flat taxes on exactly these arguments.

Economic growth isn't everything, and Europeans like to point to the extra "security" you get from a welfare state. However, over the long-term, general wealth levels create more security than a welfare state does. A small government economy with a GDP per capita of 1 million dollars is better off for all strata of society then a cradle to grave welfare state with a GDP of $1k per capita.
 
Koo again
http://www.economist.com/economics/...ibutions/fed_should_ask_fiscal_policy_support

He claims "The only way to keep money supply from shrinking is for the public sector to borrow money. Indeed the US money supply grew after 1933, following the worst balance sheet recession in history, precisely because of government’s New Deal borrowings. Japan’s money supply never contracted after 1990 in spite of massive private sector deleveraging, also because of government borrowings."

I'm not sure how he reached this conclusion. If the primary buyer of the gov bond are banks(using bank reserves), then yes this will increase the money supply(reserves will turn to M2 as the government distributes the cash through wages, transfer payments,etc)
But no fiscal stimulus is necessary for this, banks can swap reserves to low risk assets at any time and they do on occasion

If banks are not financing the deficit, I dont see how that increases the money supply, M2 will be borrowed from the private sector and turned over to it again, leaving that static. It will help with the delevering and possibly bringing the date that delevering ends(making private M2 creating possible again) forward but that doesnt seem to be the argument he is making
 
Quote from ralph00:

And you find that comforting?
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Well, he is a Keynesian saying fiscal policy isnt the only game in town. That adds some credibility to his argument. Also he could have been a great economist if he didnt keep swinging between showing tons of rationality and intelligence with blindness and politically motivated excuse making
 
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