What If, Equity Nightmare, Fed Blink, Anarchy in the UK, Big Is Best, Yes We Can - Maybe, Take Comfort, Making Room, Off Book

Barry Ritholtz author of Bailout Nation asks the counter-factual 'What would the US economy look like now if nothing had been done' in other words no bailouts just managed bankruptcies.

We are assuming no explanation is necessary with this image.

I was reminded over dinner when in Toronto last week that the real equity nightmare is not stomach churning drops in value but years and years and years when investors give up equities altogether, the last episode being 1974 to 2001. Hmmmmm. Maybe that's why the US is getting away with so much debt issuance. Thanks Pete.

The first 100 days of the CCC (Cameron-Clegg Coalition) seems to be putting the UK on a path of liberal anarchy. A neat chart detailing the size of the world's largest economies over the past 1000 years. More on the 9/11 Islamic cultural centre whose political heat has caused the newest great communicator to, um, miscommunicate. Looking for comfort from the sudden and accidental death of 6 year old. Japan making room for refugees.

And what makes Christopher Plummer great, attention to detail.

The irony that Japan trying not to become American in response to its economic downturn but becoming American anyway was commented on a few days ago. Now how about the irony that America trying not to become like Japan in response to the financial and economic downturn begun in 2008 is well becoming like Japan.

Earlier this month, I discussed a NYT OpEd by Treasury Secretary Tim Geithner (Welcome to My Job Security). Geithner pointed approvingly to the report released by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain. http://www.ritholtz.com/blog/2010/08/bailout-counter-factual/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

Henry Kissinger once famously remarked that his original conclusion that the great tides of history had little to do with the personalities of the times was wrong is borne out by this quote from Ritholtz about Bush, Paulson, and Bernanke.

1) A President who understood Capitalism requires insolvent firms to suffer failure (as opposed to a lame duck running out the clock)


2) A Treasury Secretary who was not a former Goldman Sachs CEO, with a misguided sympathy for Wall Street firms at risk of failure (as opposed to overseeing the greatest wealth transfer in human history);


3) A Federal Reserve Chairman who understood the limits of the Federal Reserve (versus a massive expansion of its power and balance sheet).

The markets are worried, is it justified?

2010  James Mackintosh, investment editor, assesses the fall in asset prices to levels seen in the panicky days of early 2009 and analyses whether markets are overreacting to bad economic data . http://video.ft.com/v/587277353001/Are-we-hanging-by-a-thread-again-

The US is churning out debt and non-Americans are buying it up hand over fist.

Want to reduce the interest rate on your debt?  http://www.ft.com/cms/s/3/0c3ccb62-a9db-11df-8eb1-00144feabdc0.html



It may seem strange, at a time when Germany has notched up its fastest quarterly growth since unification – about 9 per cent at an annual rate – to worry about growth.  http://www.ft.com/cms/s/0/b2e8f19c-aa31-11df-9367-00144feabdc0.html?ftcamp=rss

Paul Krugman argues that interest rates are low because the economy has not recovered because not enough has been done to support it. We are coming to the view that interest rates are low because the economy will not recover as long as an adjustment is being prevented by bailouts, government stimulus and zero bounded interest rates.

A brief revisiting of the issues I raised more than a year ago regarding alternative views of interest rates. http://krugman.blogs.nytimes.com/2010/08/17/liquidity-preference-and-loanable-funds-revisited/?nl=opinion&emc=tyb1

Quick. How could you lose more money than the great Tech Crash of 2000-2001? Buy a US 30 year bond at today's rate of 2.4% and watch the yield rise to 4% where it was last spring.

Ten years ago we experienced the biggest bubble in U.S. stock market history—the Internet and technology mania that saw high-flying tech stocks selling at an excess of 100 times earnings.  http://online.wsj.com/article/SB10001424052748704407804575425384002846058.html?mod=rss_opinion_main

The United Kingdom's Excellent Future.

The shift to Liberal Anarchy and the end of New Labour's attempt to summon 'all the power of the state to bear down on needs such as poverty, educational performance and hospital waiting lists.' Can the shift last? Probably not as democracy and vested interests will get in the way.

The first 100 days of David Cameron’s government have suggested confidence in the handling of power. http://www.ft.com/cms/s/0/d95f02bc-aa31-11df-9367-00144feabdc0.html?ftcamp=rss


The Sex Pistols, Anarchy in the UK  http://www.youtube.com/watch?v=dAsWdUo7r4c

The global economy's biggest countries. editor's note - economies that are productive get bigger than others faster

CHINA has become the world's second biggest economy according to data released on Monday August 16th.  http://economist.com/node/16834943


Ever since we began to make the case that Canadian liberty promises that people can express themselves by wearing a burqa, I have been flooded with articles and videos making the opposite case.

So it is with the proposed Islamic Cultural Centre two blocks from where the World Trade Centre once stood.

Our view, let it be built with no conditions for a 9/11 apology room or minimum Islamic identification on the outside. No possible thing could be done to underline the difference between liberal democratic societies and all others.

So it was disappointing when President Obama backtracked. He really is a lawyer in training and temperament.

Last Friday, at the start of Ramadan, President Obama presided over the White House's annual iftar dinner and made some rather bland remarks about religious freedom. http://www.washingtonpost.com/wp-dyn/content/article/2010/08/16/AR2010081603169.html?wprss=rss_opinions


August tends to be an inauspicious month for elevated debate in American politics. http://www.telegraph.co.uk/news/worldnews/northamerica/usa/7949530/The-battle-over-the-mosque-at-Ground-Zero.html

If you ever wanted a text book example of sophistry, here it is. From the other side of the debate.

Pat Condell ably articulates everything that's wrong about the mosque at Ground Zero. http://www.jihadwatch.org/2010/06/pat-condell-on-ground-zero-mosque-is-it-possible-to-be-astonished-but-not-surprised.html

The Economist tells it plain. Build that mosque.

WHAT makes a Muslim in Britain or America wake up and decide that he is no longer a Briton or American but an Islamic “soldier” fighting a holy war against the infidel? http://economist.com/node/16743239

One comfort. Thanks to David of London for sending this in.

It is a hard heart that looks upon the elder and does not warm to its natural bounties.  http://www.independent.ie/opinion/columnists/kevin-myers/kevin-myers-little-angel-died-i-believe-in-an-ecstasy-of-achievement-2291736.html

Making refugee room in Japan. (editor's note - Japan accepted 26 refugees in 2006, Canada about 26,000)

Nail salons are ubiquitous, as are the intricate, artistic designs women sport after visiting them. Careerwise, being a manicurist is also popular. http://search.japantimes.co.jp/rss/nn20100818f1.html

Greatness is about many things but it is mostly about preparation. Christopher Plummer and the Tempest. If you can, do go.

When Christopher Plummer walked into a Stratford rehearsal hall in April with Shakespeare’s The Tempest memorized in its entirety, expectations among his fellow cast members skyrocketed. http://arts.nationalpost.com/2010/08/17/behind-the-scenes-christopher-plummer-in-the-words-of-his-colleagues/

A June CEF post http://www.excellentfuture.ca/paul-summerville/diverging-world-heads-roll-deflation-kids-wilsons-deceit-indias-maoist-mess-plummer

Last week I saw Christopher Plummer play Prospero in The Tempest at Stratford, Ontario. It is hard to overemphasise how precise Plummer was in his performance, and he was thankfully surrounded by great casting decisions, a well measured pace, and powerful special effects. If possible go see it, and take your teenaged children http://www.stratfordfestival.ca/onstage/productions.aspx?id=6050&prodid=31468.


He’s starring in a Stratford production of The Tempest – a Shakespeare play often linked with endings – but Christopher Plummer insists it’s not the final curtain on his career. http://www.theglobeandmail.com/news/arts/theatre/prospero-wont-be-plummers-last-role/article1615128/


Now my charms are all o'erthrown,
     and what strength I have's mine own,
     which is most faint: now, 'tis true,
     I must be here confined by you,
     or sent to Naples. Let me not,
     since I have my dukedom got
     and pardoned the deceiver, dwell
     in this bare island by your spell:
     but release me from my bands
     with the help of your good hands.
     Gentle breath of yours my sails
     must fill, or else my project fails,
     which was to please. Now I want
     spirits to enforce, art to enchant,
     and my ending is despair,
     unless I be relieved by prayer,
     which pierces so that it assaults
     mercy itself and frees all faults.
     As you from crimes would pardoned be,
     let your indulgence set me free.

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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.