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

Moving Gradually to a National Debt Solution

As I’ve noted in other posts, the national debt may be a very troubling issue but we do have time to address it.  I’ve also noted that shocks to government spending or taxes are a risk to do significant damage to the economy.  That led me to the question: at what constant rates could we change the major variables and still avoid the debt reckoning that appears to be on the horizon. Continue reading

What were the “Bush Tax Cuts”?

My last post tangentially referenced the debate over the extension of the “Bush Tax Cuts”, and there has been one thing bugging me since those tax cuts were adopted: the perception that the cuts were for the wealthy only.  In fact, they are often referenced as “the Bush Tax Cuts for the Wealthy”.  The cuts were enacted in 2001 and 2003.  Taking a look at the data from before and after they took affect may give us some idea of their actual effect on the payment structure. 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

Stimulus, the Anti-Stimulus, and Getting Out of this Mess

The concept of government stimulus is generally assumed to be a purely Keynesian concept, but I don’t know that other legitimate schools of economics would deny that a sudden increase in government spending would have an impact on the economy under ideal conditions.  The problem is that those ideal conditions seldom occur.  I think it’s pretty safe at this point to say that the previous US stimulus plan didn’t work in the manner that was anticipated, and I would argue that the consequences of this tremendous, poorly-executed spending increase do not justify the results, but that doesn’t mean that nothing happens.  What I’d like to consider for now, though, is what the opposite of a stimulus is. Continue reading