Attempting to ameliorate the immediate and adverse economic consequences of the rapidly spreading coronavirus, Congress is engaged in a pell-mell rush to force passage of $2 trillion in fiscal largess. Their actions are not without precedent.
Continue reading “Socializing Corporate Risk-taking: Moral hazard 2.0”Blog
Anatomy of Fear and Greed
As an eager plethora of pundits start writing the postmortem on the Fed-induced Ponzi bull market, it is being said that it ended just as it began—in chaos and out of the blue.
Continue reading “Anatomy of Fear and Greed”Market Corrosion and the Catalyst of COVID-19
This post will almost certainly be out of date by the time notice of it arrives in your inbox. That’s because the current volatility in the market is extraordinary. It’s not uncommon to see a 1% swing in as little as five minutes. After quietly and systematically marching to a succession of new highs in January and through February 19, the index has slipped into a highly indecisive phase.
Continue reading “Market Corrosion and the Catalyst of COVID-19”On Thriving: Overstating the State of the Union
If you’ve pretty much tuned out political spectacles, you may have missed the president’s State of the Union speech and his latest economic pronouncement: “Jobs are booming, incomes are soaring, poverty is plummeting, crime is falling, confidence is surging, and our country is thriving and highly respected again.”
Continue reading “On Thriving: Overstating the State of the Union”Technocracy: Will What We Love Ruin Us?
Two dystopian novelists, Aldous Huxley’s Brave New World (published in 1932) and George Orwell’s 1984 (published 17 years later in 1949), rocked the West by challenging foundational suppositions that are the bedrock of America’s liberal democracy. It was with some relief that 1984 came and went without an Orwellian nightmare. Fears that we would be overcome by externally imposed oppression, that books and printed media would be banned and we would be deprived of information and, ultimately, the truth, never manifested themselves.
Continue reading “Technocracy: Will What We Love Ruin Us?”Could It Be That a Minsky “Moment” Lurks in the Shadows?
Our previous post, “Risky Business,” warned that the global and domestic issuance of low-grade, corporate-debt obligations have become extreme and could be seriously destabilizing at the end of this cycle. This is not an unacknowledged risk, but the situation’s particulars—those that ought to be most concerning—do not always make the headlines.
Continue reading “Could It Be That a Minsky “Moment” Lurks in the Shadows?”Risky Business
Imperviously shielded by the S&P 500’s presumably impermeable umbrella, most investors appear blissfully oblivious of threatening storm clouds billowing up on the horizon. The collective consciousness has a vested interest in perpetually sunny skies. Consequently, its myopia is dangerously out of touch with the vicissitudes of weather, or for that matter, business cycles.
Continue reading “Risky Business”Past as Prologue
Our third-quarter report in October drew water from the intellectual well of Robert Shiller’s latest book, Narrative Economics: How Stories Go Viral and Create Major Economic Events. The Nobel laureate delved into various perennial-narrative continuums—panic vs. confidence, priority of capital or labor, techno-philia or -phobia. These continuums are deeply rooted psychological frameworks for interpreting social life, and shifts along them have important economic effects as they embed themselves in the collective subconscious.
Continue reading “Past as Prologue”Patience: An Undervalued Virtue
The most consequential truths are transcendent. Take, for example, the dynamics of personal consumption. The financial decisions we make today have consequences well beyond the present moment. The virtue of patience, and its alter ego, impatience, are central to the choices we make. As they determine our spending patterns, they are responsible for what options will be available to us in the future. These inter-temporal[1] choices are many, but a perennial truth is that by consuming less today, consumption levels could increase significantly in the future—and vice versa.[2]
Continue reading “Patience: An Undervalued Virtue”