WSJ misleading headline of the hour

The WSJ has a short piece out on probable Obama Treasury Secretary Tim Geithner and the headline is extremely misleading. The headline is "Longtime Crisis Manager Pleases Wall Street, Mystifies Some Democrats".

The problem is that the article only quotes one person who questions the pick and that person, Andy Stern, is uninformed, as mentioned in the very next paragraph.

But Andy Stern, president of the Service Employees International Union, said recently: "I always worry about somebody who has spent his whole life at the Federal Reserve....I just don't know him."

Mr. Stern was exaggerating. Mr. Geithner, currently president of the New York Federal Reserve Bank, has been with the Fed just five years. Unlike most of his predecessors, he has little private-sector or political experience.

With the incoming administration being Democratic, I am expecting an increase in misleading headlines and editorials in the WSJ.

Why Republicans Should Love Community Organizers

From A VC:

"If McCain and Palin are the really the defender of conservative notions like citizen's right to make decisions for themselves, and the rights of community groups like churches and other non government entities to empower people, they'd be celebrating community organization. But they only have one strategy which is to stick the knife in Obama and twist it and draw enough blood so that they win again."

http://www.avc.com/a_vc/2008/09/community-organ.html

Palin = Bush

From the NY Times:

"Aides traveling with Ms. Palin have reported back to associates that she is a fast study -- asking few questions of her policy briefers but quickly repeating back their main points -- who already has considerable ease and experience before cameras.

“A former aide in Alaska who had helped prepare Ms. Palin for her campaign debates there said she had a talent for distilling information into digestible sound bites. The aide said she generally prefers light preparatory materials to heavy briefing books, and prefers walking through potential questions and answers with aides to holding mock sessions.”


Just what we need, another Republican politician who is intellectually lazy.

Typical Hypocritical Republicans - Jon Stewart exposes

With the nomination of Sarah Palin for vice president the hypocrisy has reached a new level. I didn't know that was possible.  Newt Gingrich is the guest.

Fox News Jokes About Killing Obama

Don't think much comment is needed other than to say this is despicable even for Fox News.

SNL - Suze Orman sketch

SNL has done several skits making fun of "financial guru" Suze Orman and they are quite good. Here is one of them:



Minsky Meltdown

I first read "The Plankton Theory Meets Minsky" by Paul McCulley last year after the credit problems we are dealing with now had already begun. It is required reading for anybody that wants to understand how the current situation evolved and be better prepared to recognize future bubbles before they burst.

Minsky, who passed away in 1996, was the father of the Financial Instability Hypothesis, providing a framework for distinguishing between stabilizing and
destabilizing capitalist debt structures. He first articulated the Hypothesis in 1974, and summarized it beautifully in his own hand in 1992:

“Three distinct income-debt relations for economic units, which are labeled as hedge, speculative, and Ponzi finance, can be identified. Hedge financing units are those which can fulfill all of their contractual payment obligations by their cash flows: the greater the weight of equity financing in the liability structure, the greater the likelihood that the unit is a hedge financing unit. Speculative finance units are units that can meet their payment commitments on ‘income account’ on their liabilities, even as they cannot repay the principal out of income cash flows. Such units need to ‘roll over’ their liabilities – issue new debt to meet commitments on maturing debt. For Ponzi units, the cash flows from operations are not sufficient to fill either the repayment of principal or the interest on outstanding debts by their cash flows from operations. Such units can sell assets or borrow. Borrowing to pay interest or selling assets to pay interest (and even dividends) on common stocks lowers the equity of a unit, even as it increases liabilities and the prior commitment of future incomes.

It can be shown that if hedge financing dominates, then the economy may well be an equilibrium-seeking and containing system. In contrast, the greater the weight of speculative and Ponzi finance, the greater the likelihood that the economy is a deviation-amplifying system. The first theorem of the financial instability hypothesis is that the economy has financing regimes under which it is stable, and financing regimes in which it is unstable. The second theorem of the financial instability hypothesis is that over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system.

In particular, over a protracted period of good times, capitalist economies tend to move to a financial structure in which there is a large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make positions by selling out positions. This is likely to lead to a collapse of asset values.”