A Dying Paradigm
One popular delusion that won’t seem to go away is the notion that policy makers can stimulate robust economic growth by setting interest rates artificially low. The general theory is that cheap credit compels individuals and businesses to borrow more and consume more. Before you know it, the good times are here again.
San Joaquin Valley view at sunset – plenty of agriculture in a place that seemed not exactly ideal for the purpose.
Photo credit: WRIR4 Photo Gallery
A “Major Concern”
The European Banking Authority EBA, which (we guess) is fighting for its survival after the ECB has become the sole supervisor of Europe’s “systemically relevant” banks, has recently issued a comprehensive report on the European banking system (this included the unintended revelation that its employees have yet to master the intricacies of Exel).
As an aside, we have little doubt that this bureaucracy will survive. Has there ever been a case of an EU bureaucracy not surviving and thriving? We don’t recall one off the cuff, but perhaps we are mistaken. We’re sure some reason will be found to preserve this particular zombie sinecure as well.
Hey guys! We’re still issuing reports! See how important it is to keep us well-funded?
“Muslims Are Evil”
BALTIMORE – Manuel Valls, the prime minister of France, says the risk of terrorism will hang over the country for many years. Whether this is prophecy or wishful thinking, we don’t know.
But it seems at odds with the recent promise to “annihilate” ISIS made by French president François Hollande. But the fight against terrorism is full of contradictions and paradoxes.
Cartoon via spectator.co.uk
$29 billion Vaporized
As is well-known, Spain is one of the countries in the euro area’s periphery that has been thoroughly bankrupted by its decision to join the euro area and enjoy an artificial credit expansion-induced boom as its interest rates initially collapsed. This was aided and abetted by the ECB, which sat idly by as the euro area’s true money supply exploded into the blue yonder with annualized growth rates ranging from 6% to 18% during the boom years.
Tower at Abengoa solar plant in Sanlúcar la Mayor, near Seville in Spain.
Photo credit: Marcelo Del Pozo / Reuters
War Stories – Richard Russell, RIP
Richard Russell died on Monday.
He was the author of Dow Theory Letters for over half a century and the source of many of the “old-timer” remarks we have referenced over the last 15 years in our daily e-letters.
Richard was a follower of Dow theory. This is a form a technical analysis named after the founder of the Wall Street Journal, Charles Henry Dow. And it reflects his beliefs about the market… which he laid out in a series of editorial columns at the turn of the 20th century.
Richard Russell, the legendary author and publisher of the Dow Theory Letters. His career took off in the 1950s, after Barron’s printed several of his articles. His letter has been the oldest in the entire business that was written continuously by the same person. He has been an indispensable companion of several generations of investors. He has made a number of truly spectacular market calls in the course of his career (such as the 1966-68 market peak and the 1974 low, to name two especially great ones). Richard Russell, RIP.
Photo source: Family photo
Who is Best Qualified to Decide how How Your Wealth Should be Used?
I have noted before that my fellow citizens and I are the best wealth redistributors one can find. We know quite well, with only rare exceptions, where the wealth we obtained should go – how we should spend or invest or save our earnings, etc.
But vast numbers of political thinkers and players disagree. They hold that our resources must be taken from us and they, not we, should be the ones who decide what to do with them. Why? Who are these folks to butt in and remove us from the driver’s seat and place themselves and their chosen few in there instead?
Spooner had the right idea. As Joseph Schumpeter remarks in Capitalism, Socialism and Democracy: “… the state has been living on a revenue which was being produced in the private sphere for private purposes and had to be deflected from these purposes by political force. The theory which construes taxes on the analogy of club dues or of the purchase of the services of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind.”
A Strange Event
The topic of the SU-24 Russian plane shot down by Turkey over the weekend in Syria has been discussed all over the media ad nauseam by now, but we want to add a few observations and suggestions of our own. Some have perhaps not received the attention they possibly deserve.
Image of Russian jet shortly after it was hit by a Turkish missile. Luckily someone was promptly at hand to make a qualitatively acceptable video of the incident. As is well known, cameramen just waiting to film every remotely interesting activity are standing by all over Syria, which is why we get so much material about what is really happening there.
Photo credit: DPA
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