Three Views of an Economy

When the summer livin’ is easy, I enjoy sitting out on the porch with a few tunes.  Today’s lazing soundtrack was “Three Views of a Secret” by Jaco Pastorius as I went over some old posts to see if anything needed revisiting.  And this piece from July 2011 popped out as a debate that is still raging – but with some resolution.  It seemed to fit the tension that always builds in a Jaco piece.

Economists, as noted before, have widely divergent views about the economic situation and what should be done about it.  But the experiments that have been running through various economies are teaching us all a little bit along the way as to who may be right.  It’s worth revisiting.

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Cleaning Up Wall Street?

What charges can be brought against the biggest rogue traders out there?  The answer, apparently, is just about anything the SEC can get to stick.  After being humiliated in the US Senate and severely beaten to the punch by an aggressive NY District Attorney, they’re ready for action.  But they can be forgiven if the actual charge is a bit less than impressive – it comes with a lifetime ban on trading, if not a jail sentence.

It’s a start.  It comes about 5 years too late and may be a bit short of a landmark conviction, but it appears that a cadre of prosecutors and regulators are getting serious about doing their jobs.  Is it in time to save Wall Street?

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Risk and Reset – Who Pays?

Two news stories highlight the precarious nature of the restructuring that has laid the foundations for the next economy. They don’t seem to be related at all, but they highlight the twisted nature of “risk” and what it means when interest rates are low but investors are developing a renewed appetite for risk.

The first is the bankruptcy of Detroit, a long time coming, which was filed today.   The city has $18B in liabilities that they’d like to cut to $2B – hence a Chapter 9 liquidation filing, a declaration of surrender.  The city is beyond broken and needs to start again.  The second story is the rise of collateralized loan obligations (CLOs) and how our old friend Captain Morgain, er, JP Morgan is making a big bet on sketchy loans.

How are they related?  Both stories show risk laid bare, and both stories have a backstory of pushing the ol’ red button with RESET in big letters on it.

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White Privilege

The news of George Zimmerman’s acquittal on all charges related to the death of Trayvon Martin bubbled through the sultry summer air.  Millions were angry and took to venting themselves on social media, but thankfully not with violence in the streets.  Millions were angry at those who were angry, generally claiming that racism works both ways.

There were so many things that fed into how it all went down on Trayvon’s last night on earth.  Florida’s horrible gun laws certainly made conviction nearly impossible.  They were born of a cultural PTSD endemic in a land wracked by violence that crackles with fight-or-flight adrenaline at the first sign of trouble – a biochemical instinct that sometimes becomes addictive.  I’m also sure that once the Sanford cops learned Trayvon was from Miami they were ready to assume the worst about him.  But all of that only amplifies and distorts the core problem, that of White Privilege.

White Privilege is generally little more than the benefit of the doubt.  But when the volume is turned up and the noise is deafening, only baser senses remain.  The simple benefit of the doubt often adrenalizes into violent, destructive action.

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Summertime Party! (For Now)

The US government ran a surplus in June!  Stocks are at all-time highs!  The party is starting in a big way in the normally lazy daze of summer.  Are you ready to join it?

Not so fast.  Barataria has been a source for positive economic news for at least a year now, but it’s always been tempered with caution.  Things are turning around, yes, but the headlines hide the work that still needs to be done to make this into something much bigger.   It’s up to all of us, really, to find a way to make it happen.

But we do have a party, at least as long as Ben Bernanke is buying.  He’s a fun guy, really.

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