Posts Tagged ‘Financial Collapse’

“In Fed We Trust” Inspires No Trust

Sunday, April 25th, 2010

David Wessel is the Economics Editor of The Wall Street Journal. This is the most successful newspaper in the U.S. It is the leading financial publication in the world. Economics is to the Journal as algebra is to mathematics. And David Wessel is THE Economics Editor.
 That fact is at least as terrifying and depressing as his account of the financial crisis.
 AIG as “Casino”
Mr. Wessel has recently made the rounds of talk shows promoting his story of how the Federal Reserve and Chairman Ben Bernanke saved the world from the next Great Depression. In Fed We Trust is subtitled “Ben Bernanke’s [...]

Managing Retirement Withdrawals

Friday, April 2nd, 2010

Retirement finance has an accumulation stage and a decumulation stage. Accumulation gestates, hatches, and cooks your retirement nest egg; decumulation allows you to eat it. Accumulation commands the lion’s share of attention in popular finance, but decumulation, or distribution, is equally important. Understanding how to disburse wealth is just as important as understanding how to build it.
 The Basic Problem
On retirement day, you possess a store of wealth built up throughout your working life. Stretched out before you is the rest of your life, of uncertain duration. You want to withdraw a sufficient quantity of wealth to finance a comfortable lifestyle, [...]

Stocking Up On Food: Kooky, Clever, or Just Plain Clunky?

Monday, March 22nd, 2010

In the wake of 2008’s financial crisis and the ensuing recession, speculation about total financial collapse is rife in unofficial circles. Armageddon scenarios are familiar to most Americans. In our lifetimes, we have faced nuclear annihilation, attack by extraterrestrials, collision with asteroids, nuclear winter, global cooling, global warming, various other eco-catastrophes and killer viruses.
 Authorities invariably scoff at such predictions, but in this case they have only themselves to blame. In the fall of 2008, Treasury Secretary Paulson and Fed Chairman Bernanke cooked up their own doomsday scenario in order to terrify Congress into passing bailout legislation. Apparently, this kind of [...]

Coping With the Experts

Monday, December 14th, 2009

Getting hammered by the worst recession in at least 27 years is bad enough. Adding insult to injury is the fact that we have to listen to the pronouncements of countless experts – most of them self-anointed – on how we got here, where we’re going, how fast we’re traveling and what route will get us back on track.
The barrage of expert commentary completely demoralizes many people. They react with a mixture of bafflement and resignation, the way they do to changes in the weather. This is unnecessary and counterproductive. We are often forced to rely on the expertise of [...]

Issues of Interest to Ben Bernanke

Sunday, December 6th, 2009

Over the last year, the Federal Reserve has increased the monetary base by over 100%. This policy has artificially kept short-term interest rates at their lowest levels ever.
So many different explanations for this policy have been put forward that there seems to be a new one every month. The one undeniable brute fact is that money is the one overriding concern of the Federal Reserve and the one thing it directly controls. Like a small boy given a hammer, who suddenly finds that everything he encounters needs pounding, the Fed’s current solution to every problem is to drown it in [...]

Bailouts Destroy Market Efficiency

Thursday, November 12th, 2009

The hottest economic topic these days is the recession – or the recovery, if we can believe 80% of business economists who tell us that it is already underway. It vastly overshadows the importance of everything else. Will the recovery be V-shaped or U-shaped or J-shaped? Will it be fast or slow? Will it be throttled by unusually-high unemployment? The implication is that cyclical concerns are the only ones worth worrying about.
If you’re an investor, here’s something else you should worry about: the efficiency of financial markets. The following case history illustrates the basis for concern.
The Rise of Bill Miller
For [...]