The Potential Consequences of QE3

A few weeks ago QE3 (Quantitative Easing 3) was announced by the US Federal Reserve.  While the average citizen may have completely ignored the announcement based on the complexity of Fed operations, this decision is one that has the potential to profoundly impact lives in the US and worldwide.  From my point of view it is extremely disturbing short-term thinking. Continue reading

The Argument for Tax-Free Repatriation of MNC Overseas Earnings

An objection that people frequently have regarding multinational corporations is their “avoidance” of taxes associated with money they make over seas.  Consider corporations like GE that have significant portions of their company in foreign countries.  GE makes about two thirds of their revenues from those foreign operations, and as such never pay US corporate tax on those profits, despite that they are a US-based company.  Quite frankly, the idea that they should pay should be abandoned by anyone who takes a rational view of the situation.  In fact, attempting to gather those taxes is one of the very concepts that is helping to stagnate the US economy, and is playing a key part in keeping lower standards of living in the US.  We shoot ourselves in the foot because of some skewed vision of “fairness.” Continue reading

Jon Corzine Is Getting Away With It

The NY Times Dealbook reported that “A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives.”  There has been a lot of angst over Wall Street managers not being prosecuted for losses a few years back, but that is understandable for one reason: being stupid isn’t illegal.  Most of those guys didn’t violate any laws technically, and caused destruction by being cavalier and myopic.  The MF Global collapse of 2011, though, was no such lapse.  This was a case of brazen fraud and theft, and it’s apparently going to go without punishment. Continue reading

What Conditions Led to the US Housing Bubble?

Recently I discussed what a bubble (like the housing bubble) is, and how they behave.  One thing that I noted is that bubbles need a way to start; a way for the band wagon to get going.  To examine the genesis of the housing crisis in this post I will look at housing price data to see the first drastic upward movement in housing prices, examine the time period in which that first happened, and speculate on the origins of the crisis. Continue reading

What Was the Housing Bubble?

The “housing bubble” caused all sorts of chaos in our financial system over the last few years.  People tend to attribute it to villainous bankers, and incompetent president, a senile Fed Chairman, or whatever bogeyman they most like to assign blame to.  When it comes down to it, though, it was a product of runaway human emotion and ambition; frighteningly simple and intuitive.  In this post we will look at the basics of what a bubble is. Continue reading

The Truth Behind France’s Negative Interest Bonds

It was reported today that France has recently sold short-term debt for negative interest rates, which is quite shocking news (AP Link).  The concept is that investors are giving France money and letting them pay back a lesser amount at a later time.  It seems absolutely insane on its face.  It is also, I feel, being misrepresented in the media through blind applications of the most simple bond principles. Continue reading