Tag Archive for Economists

Happy Easter !

a real stoolie, worth readin
What Matters More: Debt-to-GDP, Or Supply?
There may be a flaw in the thinking our economists, financial leaders, the MSM and (even) the bloggers. Everyone is looking at the debt issue based on some ratio of total debt to GDP or debt service to GDP. This is the way it has always been done and is both right and appropriate. How much debt can be afforded is a ratio of the borrower’s income, whether it is an individual, a company, a State or a Sovereign. But there is (to me) evidence of a new metric developing. Supply is quickly becoming the determinant for the cost of borrowing, not debt to GDP levels.

Consider California. They have a monster GDP. Their debt to GDP is one of the best in the country. They have debt equal to only 6% of GDP. Massachusetts and Rhode Island are north of 20%.

But California is the official junk borrower. They just paid 5.8% for ten-year money. On a taxable equivalent yield that comes to 9%. Cali’s CDS spreads are also in the tank. Their spreads are trading even up to Bulgaria. It is not their GDP that is the problem it is their visible supply of paper.
http://seekingalpha.com/article/196671-what-matters-more-debt-to-gdp-or-supply

Fundamentals, News and the Market

We all hear from all possible stock market advisers and economists that the market discounts all news in advance, essentially validating the tradition to call news “newsnoise”. And I totally agree with that. However I also hear as many times that the market discounts  fundamentals well in advance. And here’s the problem. It turns out that many […]

Who Are The Others? What Are They Doing? – Professional Edition

The Case Shiller House Price Indexes (CSI) for July showed another uptick, which got all the economists crowing again that the bottom is in on house prices. They’re wrong. What else is new? The CSI is misleading them. Today’s report will show you why. I’m so glad I’m not an economist. What an embarrassment that…

The Real Unemployment Rate

Let’s stop kidding ourselves. The sugar coated headline unemployment rate reported by the government is completely bogus. The real unemployment rate buried in the Federal Government’s data tables, including discouraged workers and those who are considered marginally attached or working part-time because they cannot find full time work, is now 12.2%, the highest it has…