‘Tis the Season

By |2014-09-04T17:59:14+00:00April 15th, 2009|Global Market Update|

For millions, April 15th is the worst day of the year. Taxpayers have dreaded this day since early January. From employer W-2s to investor 1099s to all those pesky receipts and notes, tax-day is usually a day we look forward to like we look forward to dental work or an appendectomy. Not only do we have to pay the government (or ask them, nicely, for our overpayment back), but we have to fill out endless forms and filings to prove that we have the [...]

Sealing Their Fate

By |2017-07-17T12:35:23+00:00April 14th, 2009|Global Market Update|

Of all the proposals to strengthen up the financial system, the most innovative to date is this: outsource the bank rescue to the U.S. Navy. Think of the advantages: efficient execution, elimination of moral hazard, and a disincentive for copycat transactions. Oh sure, there'd be some increase in bail out activity, but that's just a short-term problem. Once the banks are shored-up, there'd be little difficulty in getting them back afloat. With Seals as regulators, you could relax knowing that your deposits are safe. [...]

Too Big to Save

By |2014-09-04T17:57:01+00:00April 13th, 2009|Global Market Update|

In the US people are concerned about the too-big-to-fail banks. But compared to some, we have it easy. Deposits in our biggest banks total about $3 trillion-less than a quarter of the economy. But in the UK and Australia, big-bank deposits just about equal their economy, and in Belgium and Switzerland, deposits are double those countries' GDP. That's what's behind what the G-20 did last week. The IMF issued member countries new "Special Drawing Rights," IOU's from one country to another. This would allow [...]

Good Friday

By |2014-09-04T17:53:25+00:00April 10th, 2009|Global Market Update|

Rational economics and free markets are powerful forces, but they don't explain everything. Today is a great example of how heritage and history help shape us. It's Good Friday-the day set aside as a time to remember Jesus' execution. The stock and bond markets are closed, because when the New York Stock Exchange originally leased the property it now sits on the terms required that the market be closed for major Christian holidays like Christmas or today. A true market-devotee would chaff at restrictions [...]

Burn Out

By |2014-09-04T17:52:02+00:00April 8th, 2009|Global Market Update|

The IBM/Sun deal has broken up. Rumors are that IBM wanted to lower its price. Sun, once one of the "four horsemen of the internet," has been pummeled as recession-battered customers defer new tech purchases. Demand for servers has fallen for a year, and last quarter fell 14 percent. And Sun's servers, technologically advanced, are expensive. A Sparc Server costs over $30 grand, and that's without the software. Like any star past its prime, Sun has two choices: it can burn out or fade [...]

Tax Heaven

By |2017-07-17T12:35:23+00:00April 7th, 2009|Global Market Update|

At the G-20 meeting in London, the world's leaders took some time from the urgent business of saving the world's economies to complain about tax havens. I'm sure that low-tax states like Hong Kong are an irritant to countries like France. After all, the top personal tax rates are 60% lower in the Far East than they are in Europe. If France could go after the income of Hong Kong residents, that would allow them to collect a lot of money. Such tax harmonization [...]

Whose Ox?

By |2017-07-17T12:35:24+00:00April 6th, 2009|Global Market Update|

When you want to change something big, figuring out who decides is important. That's what floated through my mind as I read Secretary Geithner's statement about enhancing the regulation of "2-big-2-fail" institutions. Does he owe any big favors? Our financial crisis makes it clear that there will be a significant reform of the banks. It makes no sense for bankers who take insured deposits to play with that money in exotic markets and arcane structured securities. With my checking account? Puh-leese! But if you're [...]

A Bicycle Built For Who?

By |2014-09-04T17:49:20+00:00April 2nd, 2009|Global Market Update|

Watching the G-20 summit and listening to the gathered heads of state makes many wince. After all, the Europeans always complain about the U.S.-our markets, our politics-but they never seem to pick up the slack themselves. There's the German tight-fistedness about budgets, and French intransigence about the military. Never mind that when the government is already half your economy, it's hard to expand. The U.S. pays for the profits necessary to develop innovative drugs and consumer goods that Europeans are happy to consume. Now [...]