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How Paul Krugman Broke a Wikipedia Page on Economics

There’s a lockdown on the Wikipedia page for Austrian economics and wouldn’t you know it, one or way or another, it all seems to be Paul Krugman’s fault.

Broadly speaking, Austrian economics, for those who have not yet had the pleasure of being introduced, are characterized by an extreme distrust of state intervention in markets, a distaste for statistical modeling and a general confidence that markets, left to their own devices, will avoid booms and busts and nasty things like inflation. From a political perspective, Austrian economics tends to lurk to the right of even such conservative icons as Milton Friedman.

For more detail, you can go, of course, to the Wikipedia page for Austrian economics. But until at least Feb. 28, if you do so, you will find that the page “is currently protected from editing.” An “edit war” has been raging behind the scenes. Two factions were repeatedly deleting and replacing a section of text that had to do with a description of a critique of Austrian economics made by economist Paul Krugman.

The closer you look, the more the whole affair appears at first to be a demonstration of Sayre’s Law, which holds that “in any dispute the intensity of feeling is inversely proportional to the value of the issues at stake.” One side, which seems from the Talk page chronicling the argument to  be just one very stubborn person, is objecting to the inclusion of Krugman’s critique on the grounds that what Krugman describes as Austrian economics doesn’t actually represent the reality of Austrian economics. In other words, it’s as if Krugman was saying “the problem with blue is that it is red.” Therefore, his views should not be included as an example of a valid critique. The other side is basically saying that Krugman is Nobel Prize-winning economist whose opinion is well worth including according to the standards of Wikipedia. So there. And back and forth the argument went, with lots of torturous discursions into the process weeds of Wikipedia editing policies, until it got too heated and provoked a lockdown.

http://www.salon.com…e_on_economics/

Japan’s wild hedge fund ride – Doug Noland

CREDIT BUBBLE BULLETIN From the WSJ (Gregory Zuckerman and Juliet Chung’s “US Funds Score Big by Betting Against the Yen”): “Some of the biggest US hedge-fund investors have made billions betting against the yen, exploiting Japan’s determination to weaken its currency and boost its economy. Wagering against the yen has emerged as the hottest trade…

U.S. Homeowners Are Repeating Their Mistakes

If there’s one thing Americans should have learned from the recession, it’s the importance of diversifying risk. Middle-class households had too much of their net worth tied up in their homes and were too exposed to stocks through 401(k)s and other investments.

Despite the hit many Americans took, there’s little sign they’ve changed their dependence on homes as the mainstay of their wealth. Last year, Christian Weller, a professor at the University of Massachusetts, looked at Federal Reserve data for households run by those over 50. The number of families with what Weller calls “very high risk exposure”—a low wealth-to-income ratio, more than three-quarters of their assets in housing or stocks, and debt greater than a quarter of their assets—had almost doubled between 1989 and 2010, to 18 percent. That number didn’t decline during the deleveraging years from 2007 to 2010; its growth just slowed to a crawl.

The Fed will conduct a new wealth survey in 2013, but don’t look for a rational rebalancing. The same pressures that drove families to save less before the recession are still in place: low income growth, low interest rates, and high costs for health care, energy, and education. Families have been borrowing less since 2007, but the rate of the decline has slowed. As soon as banks start lending again, Weller says, people will put their money back into housing. “The trends look like they’re on autopilot,” he says. “They don’t suggest that people properly manage their risk.”

http://www.businessw…-mistakes#r=rss

Joseph Stiglitz called austerity plans a "suicide pact."

US can fix budget woes By Ellen Brown As the US Congress struggles through one budget crisis after another, it is becoming increasingly evident that austerity doesn’t work. We cannot possibly pay off a US$16 trillion debt by tightening our belts, slashing public services, and raising taxes. Historically, when the deficit has been reduced, the…

Art Cashin: A Dormant US Inflation Indicator Just Spiked

And get this: Art is now thinking about Weimar and Zimbabwe.

A couple of his comments from the article linked below:

“If the velocity of money begins to accelerate and M2 begins to move up, then you will begin to hear people talking about or at least worrying about inflation again…”

Cashin notes that this isn’t just theory.  Indeed, we’ve seen it before in history.  Most people know the of the most notorious experiences: Weimar Germany and Zimbabwe.

“Somebody once asked a famous literary character (who lived through the Weimar hyperinflation) how did he go broke?  He said, ‘Slowly and then suddenly.’  The Weimar Republic saw inflation develop very slowly, and then suddenly.  Once it developed it was almost like Zimbabwe except it was in a major nation, and destroyed the moral values of a whole civilization and basically led to the underpinnings of World War II.”

Read more: http://www.businessi…2#ixzz2KmelYfNf

The Growing Corporate Cash Hoard

Last week, the investor David Einhorn sued Apple, in which his hedge fund has a large stake, over how the company can issue preferred stock. At the heart of the dispute is the $137 billion pile of cash that Apple has accumulated, and whether it could be used to better reward shareholders.

Mr. Einhorn’s action highlights a growing problem: many corporations are holding vast amounts of cash and other liquid assets, using them neither for investment nor to benefit shareholders. These assets are largely earned and held overseas, and not subject to American taxes until the money is brought home.

Such tax-avoidance techniques, while legal, have come under increasing political attack. On Thursday, Senator Bernie Sanders of Vermont introduced legislation to end deferral and force multinational companies to pay taxes on their foreign-source income.

According to the Federal Reserve, as of the third quarter of 2012 nonfinancial corporations in the United States held $1.7 trillion of liquid assets – cash and securities that could easily be converted to cash.

By any measure, corporate cash holdings appear to be high and rising.

http://economix.blog…ate-cash-hoard/