gdp's Comments

mitcho.com : Using Templates with YARPP 3

Fri, 23 Jan 2009 16:53:37 +0000

I have been using the caching feature and it works incredibly well. This is a great improvement. The initial caching took about 20 minutes for the 1500 posts. Afterward everything was as it had previously been. But now CPU usage is way down and it works marvelously. I have seen a good increase in my pageviews per user as a result. Thanks for the upgrade. I can't say enough about it.

Credit Writedowns : The case against the Euro

Thu, 22 Jan 2009 21:23:14 +0000

You may be right about the Euro, Gerb. It is not entirely clear where currencies are headed as much of it has to do with politics and the policy response to this banking crisis. I should add that my points regarding Ireland and Spain's desire for an accomodative policy response was well placed. On the whole, the post holds up quite well, actually given it was written in June when the Euro was soaring.

Credit Writedowns : Bailouts: catching a falling knife

Thu, 22 Jan 2009 00:17:05 +0000

I am not suggesting a Lehman-style approach is the way forward. I think a comprehensive review followed by an FDIC-style seizure or forced meger will be the best way in 90% of the cases. Sometimes, liquidation or nationalization will be best, but ultimately it needs to be a well-crafted and orderly process. Savers have been given guarantees and the FDIC-like process of letting another bank take over the deposits is the right approach so that there is no effect on large savings deposits. The banks fund the FDIC scheme in the U.S. In the U.K. the Lloyds-HBOS link up was botched because HBOS turned out to be in considerably worse shape than anticipated. Now, Lloyds customers and shareholders are feeling the pain. This is the kind of thing that needs to be avoided.

Credit Writedowns : Bailouts: catching a falling knife

Wed, 21 Jan 2009 20:41:24 +0000

That's a good question. My take: first the deflation and deleveraging and then the inflation. That means that for the foreseeable future the financial services sector will be in a shrinking mode -- shrinking assets and credit growth along with them. Inflation is not going to be a factor in that environment. So inflation cannot inflate away the real burden of banks' own problems. Down the line, it may help debtor consumers, but it won't help the banks. In my view, banks need to get a handle on how much they have coming in writedowns first and foremost. Then they need to find a way to get adequate capital to deal with those writedowns. On some level, who cares where this capital comes from, because when they have it: we can return to some sense of normalcy. However, if we keep propping up these zombie institutions, the writedowns are going to increase and that will put us further away from our goal.

Credit Writedowns : Is Obama really "Change we can believe in?"

Tue, 20 Jan 2009 23:03:18 +0000

Nathan, after hearing the things he has already said, I would tend to agree.

Credit Writedowns : Peter Schiff: "Government is a burden on the economy"

Sun, 18 Jan 2009 15:44:57 +0000

Good points all around from everyone. We may disagree on some of the specifics, but I must say that many of your sentiments are well-placed. I would say, however, a true Libertarian interpretation of events does not include a 'moral' component here. That is antithetical to Libertarianism. I have sympathy for those who got in over their heads. The true 'moral' problem rests with policy makers who created poor incentives, encouraging excess consumption and debt. As for Ron Paul, I like Ron Paul. He is on my blogroll and he speaks a truth many do not want to hear. I suspect some of his views may become more mainstream as the depth of contraction becomes apparent.

Credit Writedowns : Conoco Phillips' $34 billion writedown makes me bullish

Sat, 17 Jan 2009 22:38:56 +0000

Hi mL, I'm with you on oil prices dropping to the mid 20s (http://www.creditwritedowns.com/2008/12/top-ten-p...so I am not really saying that the oil patch is going to rise overnight per se. But I am saying that I see $25 as a cyclically low price. The $10 number is an extreme example of a cyclical low. I don't see oil falling to those levels again. (I didn't anticipate $35 either, so what the heck). Interestingly, my bogey for oil, $25, is the midpoint of the old OPEC $22-28 optimal range before oil started to go through the roof. Oil is very volatile, but I am a believer in the commodity bull market returning after the emerging economies work their way through this crisis. That includes all industrial commodities and oil as well.

Credit Writedowns : Peter Schiff: "Government is a burden on the economy"

Sat, 17 Jan 2009 22:28:09 +0000

steven, I like the example. It does demonstrate the opportunity cost of government spending. Steven, don't get me wrong, government stimulus comes at a price. I am no Keynesian. However, tell me that we are going to see a downturn without a systemic collapse and I'll recommend your solution. I don't think you can say that. One other thought: Austrian Economics is very concerned with efficiency. As a result, I think many miss the very real human need for fairness both in the short and in the long-term. An efficient outcome does not always seem fair and is thus sometimes inherently unstable. An example might be a monopoly in operating systems for Microsoft. A situation like this will always be seen as unfair and will be resisted regardless of efficiency. I guarantee you that if you gave a Myers-Briggs test to a random sample of Austrian school devotees, there would be a massive skew toward rationals: NTs. (http://www.wischik.com/damon/Texts/myersbriggs.ht...We rationals (I am clearly a rational) are too fixated on efficiency at the expense of other factors. That often makes proposed remedies unrealistic: think the efficient market hypothesis here. hbl, thanks for your kind words.

Credit Writedowns : Peter Schiff: "Government is a burden on the economy"

Fri, 16 Jan 2009 20:03:05 +0000

"TARP." But, seriously, Jim, find me one time when the government sat on its hands when the economy was imploding. 1921 in the U.S. might qualify. But, my point is that intervention is going to happen. It's axiomatic when it comes to crisis. Basic human psychology would predict this. The question is what should/could the government do. You have to remember, absent the need for intervention that I am making, there also is the need to be re-elected. It is not a politically viable decision to sit on your hands. Even the Germans are waking up to this. So again: 1. Economic pain leads to calls for government action 2. Inaction means no re-election 3. Therefore, government action in crisis (economic or otherwise) is always going to be a factor 4. Therefore, the real question is: what can a government do that is likely to do the least harm, temporarily alleviate economic distress, and allow politicians to keep their jobs. I live in Washington. I was born here. I know how government works and I understand that the Peter Schiff solution is both improbable because of the politics of crisis and ineffective because of the realities of systemic risk.

Credit Writedowns : Peter Schiff: "Government is a burden on the economy"

Fri, 16 Jan 2009 17:28:03 +0000

hbl, I agreed with Schiff 100% in July of 2008. I was reading through my posts to see what I was saying before the market implosion. And I was as categorical regarding no government stimulus as Schiff. But, the market meltdown taught me that a systemic collapse was much more likely than I had thought. There is no way to get out of this mess without a total collapse in the banking system and in the economy without some measure of government intervention and stimulus. SO you could say that my views have been tempered by events while Schiff's have not.

Credit Writedowns : Ireland nationalizes Anglo Irish bank

Fri, 16 Jan 2009 14:48:53 +0000

Right, sorry, that was a Freudian slip. They are also on my mind. http://uk.finance.yahoo.com/echarts?s=AIB#chart1:...

Credit Writedowns : Tendencies of irrational behavior

Fri, 16 Jan 2009 12:55:06 +0000

Interesting application of Ariely's theories and also great examples!

It does seem that deflation in asset prices and in consumer goods has a whole psychology of its own that is quite perverse. But what about an item that was one $50, moved down to $15 and then up to $25? Isn't that what we have now? It suggests that the $25 selling point is not a sustainable one from a psychological perspective. We are a long way from understanding investor psychology but all of this should definitely dispell the notion that markets are efficient.

Credit Writedowns : Ireland nationalizes Anglo Irish bank

Fri, 16 Jan 2009 12:50:04 +0000

mL, it is looking very bleak today. The speed of all this is absolutely stunning. Ireland could not have picked a worse time to nationalize AIB because sovereign spreads are increasing and sovereign CDS spreads are at records. It means traders are increasingly thinking along your lines: some nation will go bust. Take your choice: Switzerland, Austria, the UK. All of these countries have outsized financial sectors. Foreign sovereign wealth funds are not going to help unfortunately. You probably saw that Abu Dhabi lost $125 billion. These people have their own problems. I am mentally searching for a way out here and I don't see one.

mitcho.com : Using Templates with YARPP 3

Thu, 15 Jan 2009 15:42:11 +0000

Mitcho, thanks for explaining this. I have been testing a number of related post plugins on my blog and I like yours the best because I can tweak the algorithm to suite my needs. I have been having problems with CPU usage, however, as I have 1500 posts and 250 tag names. I look forward to seeing how the caching feature improves things. For others looking to test this, you might try using a plugin called WP-Tuner. It has been helpful in identifying which plugins are creating difficulties or conflicts. One question I have is whether Simple Tags, with the related tag feature turned off will conflict with YARPP. Let me know, Mitcho, because I like Simple Tags for its tag management and mass editing capabilities.

Credit Writedowns : Defined benefit, defined contribution and the hierarchy of needs

Wed, 14 Jan 2009 19:50:29 +0000

I take a fairly conservative view on the Coming Generational Storm and social security. I think it is indeed a ticking time bomb. Moreover, Japan's malaise may have much to do with the same generational issues that they got to fist and we are now getting to. In my view, this requires two things: 1. a promotion of mental and physical health amongst younger workers so that they are healthy when they get older. 2. a lengthening of the working years. This view is very much in contrast to Dean Baker, someone I respect, but who sees the generational and social security issues very differently.

Credit Writedowns : Defined benefit, defined contribution and the hierarchy of needs

Wed, 14 Jan 2009 15:19:26 +0000

Nick, that last part was an interesting bit I hadn't really considered: the transfer of security from younger to older workers leading to unions' demise. At the Big Three automakers that is exactly what is happening, older workers have good benefits that will end up killing the proverbial goose and screwing the younger employees. So, how does a younger person react? By leaving the union, you suggest. It does make sense. And you're right, shareholders and taxpayers were fleeced even more here.

Credit Writedowns : Crony capitalism in U.S. banking bailout should end

Tue, 13 Jan 2009 19:43:52 +0000

In saying that I am assuming that the company receiving TARP funds is not insolvent and that the TARP funds represent liquidity capital more, no money thrown down a rat hole -- as we are seeing right now.

Credit Writedowns : Defined benefit, defined contribution and the hierarchy of needs

Tue, 13 Jan 2009 16:35:18 +0000

Hi Nick, I understand from your comments, you see the corporation as a collection of individuals (trough the shareholders). Fair enough. However, I am making a different point. To be clear, what I am saying is that corporations have gotten rid of DB plans because they viewed this as a burden which decrease earnings, thus decreasing executive compensation. In order to increase earnings, companies decided to slough off the retirement responsibility onto individuals. This disproportionately benefits the executives of those companies, making the switch to DC another issue directly-related to executive compensation. So, I do not see this as merely an issue of transferring risk between individuals (employees, customers shareholders) but a transfer of risk from corporations, which have over the preceding period been used to enrich insiders, to their employees. The point your making is that society as a whole, i.e. individuals bear the burden of saving for retirement, so under-savings is a burden we all share. In the future, increased savings and decreased consumption will be a collective burden. I agree with this. However, I am also suggesting that there was a permanent transfer of wealth from employees to corporate insiders due to the change from DB to DC. Had the switch occurred during a bear market, insiders may not have profited and individuals would have saved more money.

Credit Writedowns : Paul Davidson: Reforming the world's international money

Mon, 12 Jan 2009 02:08:08 +0000

smoody, I hope you found it useful. Davidson really believes in this subject and has used a tremendous amount of his intellectual energy to put together something special here. I hope it gets more attention.

Credit Writedowns : GM finding no takers on Saab?

Mon, 12 Jan 2009 02:06:19 +0000

I happen to love Saab. I remember the 900 series very fondly. It seems that Saab is looking to get state ad through Sweden or the EU. Any wayyou look at it, they are one of the weaker players given their low volumes. Sadly, it may be the end of the line for the brand soon.