Relevant and even prescient commentary on news, politics and the economy.

Stylized Facts

  1. Net Exports goes negative in 1973 and never recovers. One word: oil. Even the USD depreciation after the Plaza Accord (the one Martin Feldstein likes to pretend was inevitably going to happen then) can’t quite get it back to being positive. And once outsourcing industry to China hits full stride…
  2. Private Investment peaks in 2006. Dating the start of the current recession from December of 2007 still strikes me as being six months late.
  3. Consumption goes up fairly steadily from 1981, encompassing 8% more of total GDP—around a 12% increase over less than thirty years. Coincidentally, the Reagan Revolution moves taxes more heavily onto consumers at the same time. (Note that only about half of the appreciation in consumption is reflected in the change in Net Exports.)
  4. Government spending declines starting around 1991, when the Real George (H.W.) Bush breaks his “no nude Texans” pledge. The era of Big Government remains over until George “Dad’s Rolodex Got Me Another Job I Can Screw Up” (W.) Bush desperately needed people to be employed:

Those are my top-of-the-head ones. What are yours?

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Texas Again: Which Rick Does More Harm?

That Rick Perry is a clueless candidate and skilled campaigner is something for Barack Obama’s minions to suffer.* That Perry’s curiosity goes no further than “Where’s My Next Corndog?” cannot be held against him; he only became what they made him, just as his predecessor did, though with a poorer transcript and lack of his father’s Rolodex. A real Horatio Alger story.

So we need to pay attention to who tells him things. And that appears to be people such as Richard Fisher, who recently went to W’s “home town” and bragged about the local economy. He starts by making any sane human being worry:

I, along with the 11 other Federal Reserve Bank presidents, operate the business of the Federal Reserve as efficiently as any bank in the private sector.

I’m certain that is true. Then he spreads the Usual Lie:

[W]e make money for the U.S. taxpayer: We returned over $125 billion to the U.S. Treasury in 2009 and 2010. You are looking at one of the few public servants that make money from its operations, rather than just spending taxpayer money.

English translation: We took money from the Treasury, and our Accounting looks nice because we don’t count the overpaying for “assets” or the free money on “excess reserves” as part of our losses. We can even make a fool out of Allan Sloan.

Oh, and by the way, we don’t “just spend taxpayer money,” like those evil people who run police departments, fire departments, and schools; or make roads, or ensure food and water safety; or do fundamental scientific research, to name a few, do.

Then he tries to tell his constituents that Texas is great, and that he will put “a heavy focus on the data,” which is supposed to explain (“connect the dots”) on why he “dissented from the consensus at the last meeting of the Federal Open Market Committee (FOMC).”

So the data should, at least, show an “I got mine, Jack” aspect, no? Let’s see below the fold if it does.

First he presents a graphic showing non-Agricultural Employment Growth baselined at 1990. Now, I might consider this a bit of cheating: in 1990, Texas was in the midst of its self-created S&L crisis. If it didn’t recover from them compared to the rest of the United States, I would assume (contra Brad DeLong [link updated]) that people realised there was no water table and therefore no opportunity for long-term growth (as opposed to the already-well-developed Greater NYC area and the San Francisco Fed areas** to which he contrasts Dallas).

Suffice it to say, you don’t get quite so dominant a picture if you start in mid-1992.

But let’s ignore that it’s easier to build if there’s Nothing There, and easier to expand if there are natural resources even if the rest of the area is a Vast Wasteland or Lubbock (but I repeat myself***). And let’s just look at what good all those jobs have done, with a heavy focus on, well, FRB Dallas data (from the start of their data):

Hmmm, not exactly consistent manufacturing productivity, even before the (recent) recession. Indeed, I might suspect that Texas since around early 2006 has been dependent on moving Services jobs there, not growth in the local economy. But I’m not a Fed Governor:

Now, let’s look at job creation in Texas since June 2009, the date that the National Bureau of Economic Research (or NBER, the body that “officially” dates when a recession starts and ends) declared the recent economic recession to have ended….[I]t is reasonable to assume Texas has accounted for a significant amount of the nation’s employment growth both over the past 20 years and since the recession officially ended.

Let us give him credit for admitting that the 49.9% number is major b*llsh*t. And half-credit for admitting that, if you drop the states that are still heavily negative, the number is below 30%. So things must be looking up in Texas, right?

Hmmm, a nice recovery—rather similar to the 1991-1992 gain—followed by some drop-off, water-treading, and another peak early this year that suggests seasonality, even though the data is Seasonally Adjusted.**** Difficult to argue an upward trend (see most recent footnote), but maybe stable.

Then again, I’m still not a Fed Governor. But let’s give him some credit for admitting this self-inconsistent point:

The most jobs have been created in the educational and health services sector, which accounts for 13.5 percent of Texas’ employment.

The education sector? Really? Can you say “stimulus monies“? People in Dallas sure can. Who is “just spending taxpayer money” now?

And credit Fisher for being fair enough to note the elephant in the Texas room:

I should point out that in 2010, 9.5 percent of hourly workers in Texas earned at or below the federal minimum wage, a share that exceeds the national average of 6 percent. California’s share was 2 percent and New York’s was 6.5 percent.

And for not thinking that the Fed’s dual mandate needs to prioritize nonexistent “inflation threats.”

It might be noted by the press here today that although I am constantly preoccupied with price stability―in the aviary of central bankers, I am known as a “hawk” on inflation―I did not voice concern for the prospect of inflationary pressures in the foreseeable future….My concern is not with immediate inflationary pressures.

Well, that’s good. And since the other half of the dual mandate is full employment, you’ll be expecting something positive from businesses, then, eh?

Importantly, from a business operator’s perspective, nothing was clarified, except that there will be undefined change in taxes, spending and subsidies and other fiscal incentives or disincentives. The message was simply that some combination of revenue enhancement and spending growth cutbacks will take place. The particulars are left to one’s imagination and the outcome of deliberations among 12 members of the Legislature.

Ma nishta ha-laili ha-zeh? But Fisher digs deeper:

On the revenue side, you have yet to see a robust recovery in demand; growing your top-line revenue is vexing. You have been driving profits or just maintaining your margins through cost reduction and achieving maximum operating efficiency. You have money in your pocket or a banker increasingly willing to give you credit if and when you decide to expand. But you have no idea where the government will be cutting back on spending, what measures will be taken on the taxation front and how all this will affect your cost structure or customer base.

Huh? I thought government was mean and evil and just spends taxpayer money. Shows what I know; I listened to a Fed Governor, one who tells me that businesses “have been driving profits or just maintaining your margins through cost reduction and achieving maximum operating efficiency.” Really should see some nice Production numbers in the past six months, then, no?

No. So when Richard Fisher later says:

[The business owner] might now say to yourself, “I understand from the Federal Reserve that I don’t have to worry about the cost of borrowing for another two years. Given that I don’t know how I am going to be hit by whatever new initiatives the Congress will come up with, but I do know that credit will remain cheap through the next election, what incentive do I have to invest and expand now? Why shouldn’t I wait until the sky is clear?”

There are two answers. The first is the obvious: the Fed only controls short-term rates for risk-free investment. They don’t control lending rates, and they don’t control long-term rates, which are what I’m interested in if I’m “going to hire new workers or build a new plant.” Now, QE2 made it marginally easier for me to borrow in the long-term, but that’s gone now. So unless I’m stupid enough to pretend I’m a bank—if I borrow short-term and create long-term liabilities, I better be damned sure someone will refinance me until the project is finished—the Fed guaranteeing that the short-term Government borrowing rate is going to stay low for a while doesn’t mean much to me.

The second is more interesting: if I believe in competitive advantage, I want my new products on the shelf before my competitor has hers there. I cannot sell what you cannot see. So I want my plant started now—while I can still get the best available workers before my competitor does, while I can still pick a prime location (less of an issue in a Vast Wasteland, but not insignificant if you’re Dallas- or Houston-area), and while I can negotiate a deal with someone who needs me in their space more than I need to be there.

But that is only true if Richard Fisher has been telling the truth about how well I’m running my Texas-based business. And that, not to put too fine a point on it, appears to be—to coin a Texas phrase—bullshit.

I know the reality of Rick Pery: it’s a hermetic, incurious one in which women are property, you read what they tell you, and you get to take credit for a win, even if it’s your handlers doing all the work, including telling you what to do later. It’s not a world of which I approve, but my lack of approval doesn’t mean I believe it doesn’t exist.

I don’t know what reality Richard Fisher inhabits; it is certainly not one in which there is “a heavy focus on the data.” At least not data that is related to the Fed’s dual mandate, or how nonfinancial businesses make long-term decisions, or how to attain a competitive advantage.

Rick Perry speaks to his true believers. Richard Fisher expects you to believe him. Currently, only one of them is trying to do national harm to the economy, and it’s not the (soon-to-be) 45th President of the United States.

*And the rest of the United States when Bachmann-Perry Overdrive starts on 20 January 2013, but that’s tangential.

**Fairness requires me to note that much of the state of California is a desert, though not so bad a one as most of West Texas. Accordingly, growth in those areas would, pari passu be similar to that of Texas, save that there is no not enough***** oil in Central California. But never let it be said that we would expect an FRB official to understand geography.

***And let us always remember that Lubbock gave us the greatest white rock musician of all time.

****Good thing I left out the pre-2006 data, so we don’t have to note that the peaks post-Great Recession are close to the ca. 2006 troughs.

*****Correction by dilbert dogbert in comments noted.

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Game for the Weekend

Find a set of Mortgage-Backed Securities that are (1) still rated AAA by S&P, (2) have a WAL the same as (close to) an on-the-rin US Treasury, and (3) still have a Factor within 5% of the expectation of a generic MBS of that maturity  (that is, are not clearly impaired).

Post the CUSIP(s) in comments, along with that of the reference UST, and let’s track relative values on a regular basis for the next several months.

Anyone betting on where the relative value will be?

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You Want to Invest in This?

So I use Pandora on my Droid, and it’s pretty reasonable. I haven’t done anything complicated, or even created any mixes. And when I pick Bruce Cockburn Radio or Stevie Wonder Radio or Don Henley Radio or any of the other stations that are perfectly safe to play while at work, there will occasionally be tracks by other artists, but they’re fairly similar: Stevie gets followed by Aretha, Cockburn gets followed by an instrumentalist or a McGarrigle sister, Henley gets followed by mellow Genesis or Peter Gabriel (“In Your Eyes”) or Phil Collins solo.*

So I was very surprised when I launched Pandora from my laptop’s browser today, still on the Don Henley station. Here are the first four songs it chose:

  1. Led Balloon, “Stairway to Heaven” (live, no less)
  2. Bon Jovi, “Wanted Dead or Alive”
  3. Lynyrd Skynyrd, “Sweet Home Alabama,” and
  4. Queen, “We Will Rock You”

If I wanted to listen to a set list like that, I would just tune in one of the local mediocre commercial stations. At least their commercials are more interesting.

(Hint to investors: if a company only has one advert that it uses when the app is first used—even after the user clicked through and signed up—they have more of a problem with their business model than Patch.)

From what I can tell, we’re back in the Built-to-Flip model of Internet investing.

The “Don Henley” station is now playing The Rolling Stones’s “Paint It Black.” Love the song, own the Decca collection they’re linking it to. Not what I would expect to hear between Coldplay and Steeler’s Wheel, though.

Paying $36/year to upgrade my account seems much more unlikely than it did even this morning. The next two songs were “Another One Bites the Dust” and this:

which was the second track by that band in an hour—matching the actual number of Henley/Eagles tracks played.

Either their algorithm is really dumb, or they assume all their listeners obsess over Axl’s vocals on “I Will Not Go Quietly.” Not the way to bet in the mass market.

*I have some standards: the latter would be an immediate thumb down, but I know why I’m getting it: after you let the Genesis-recorded Ode to Adultery [“In Too Deep”] play, Collins’s sententious solve-hunger song [“Another Day in Paradise’] or the insufferable “Take Me Home” probably will be suggested sooner rather than later.)

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A Billion Here, A Billion There…

This is why Andrew Leonard (h/t Yves Smith) gets paid for blogging and I don’t. He tries to do the impossible: make sense out of Michelle Bachmann’s “economics“:

1) The interest can easily be paid for …

Bachmann is making the argument here that the U.S. can choose to pay its creditors — the various holders of government-issued debt — first, and thus not technically be in default. It’s an open question whether credit rating agencies and bond investors will accept that technicality. China might get paid in full, but millions of Americans would immediate get stiffed. Of course, Bachmann doesn’t mention that choosing such a strategy would require extraordinarily severe and immediate spending cuts — around $4.5 billion a day — in programs such as Social Security, Medicare, defense, unemployment benefits, et cetera. Economists generally agree — the negative economic impacts of such drastic short-term cuts in government spending would almost surely drive the U.S. straight back into recession.

Furthermore, a failure to reach agreement on the debt limit would guarantee bond market jitters, pushing up interest rates and raising the cost at which the U.S. government can borrow funds — and thus end up increasing the deficit.

So what happened today? There was a seven-year Treasury auction:

Today the 7 yr saw a yield of 2.43%, 3 bps above the when issued

The WI is where that same note was trading even as it was being auctioned. Which works out to be about a 19.2 cent reduction per $100 of security.

19.2 cents doesn’t sound like much, but there was almost $30 Billion in securities issued. So that’s $55,642,171
that didn’t get paid to the U.S. Treasury (or $57,433,536 if you’re counting the Open Market Activities).

Even if you want to be generous and assume—it’s crazy optimistic, but let’s be really generous—that half a basis point of that is just a long tail (not entirely unreasonable, but rather generous), there are still $46,376,844 (or $47,869,918) that just got left on the table out of fear of near-term deficit issues.

Not incidentally, that’s $46-57+ million dollars that isn’t available for maneuvering to avoid an official default (as opposed to the practical default that has been in effect for almost two months now). From just one of the nearly 300 auctions that are held every year.

But not raising the debt ceiling won’t mean anything. Michelle Bachmann assures us that just because Social Security/Disability/Medicare etc. payments won’t be made for August 3rd, it’s not a problem.

Sooner or later, we’ll be talking about really money. Right now, it’s just your mother’s livelihood. But at least that money has been saved by those who are investing in seven-year Treasuries. Maybe they’ll loan her some of that savings. Oh, right:

At least we know where they got the money to buy the notes.

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I Hate It When My Cynicism is the OPTIMISTIC Version

I wisecracked yesterday chez DeLong that, given the current political climate, I wouldn’t invest in a company without political connections using his money, let alone my own.

What I didn’t realize at the time was that the Supreme Court already had decided earlier yesterday that investing in mutual funds should be a hazardous activity:

Janus Capital Group Inc (JNS.N) and a subsidiary cannot be held liable in a lawsuit by shareholders over allegedly false statements in prospectuses for several Janus mutual funds, the U.S. Supreme Court ruled on Monday….

Janus, in appealing to the Supreme Court, argued that the funds were separate legal entities and that neither the parent company nor its subsidiary was responsible for the prospectuses and could not be held liable.

Janus, being the two-faced G-d of Theatre, would approve of his namesake’s claim: “Well, we own the company, we paid for the prospectus, we marketed the prospectus, we made assurances to investors based on our Due Diligence about the prospectus—why would you blame us if something goes wrong?”

Or, for the positive spin,

Mark Perry, the attorney who represented Janus, said he was delighted the Supreme Court agreed with the company’s position that only the party ultimately responsible for a statement can be sued for fraud in such private investor lawsuits.

“The court’s clarification of the scope of primary liability under the securities laws is important not just for the parties to this case, but for all participants in the securities markets, including bankers, lawyers, accountants, and investment advisers,” he said.

We knew nothing. We always Know Nothing. You are paying us for our “expertise,” but We Know Nothing.

Gresham’s Law will follow:

William Birdthistle, an associate professor at the Chicago-Kent College of Law who had written an amicus brief on behalf of First Derivative Traders…said the ruling’s most dramatic impact could be to encourage other industries to adopt the split management structure of the mutual funds sector as a way to avoid liability.

“What this ruling says is that as long as there are separate legal entities, even if management totally dominates all aspects, there’s no liability,” Birdthistle said. “This is going to open the eyes of those not in the funds industry who are going to say: ‘Wow, those guys are bulletproof’,” he said.

“Bulletproof” is not something you want in someone who is supposedly representing your interest.

Anyone stupid enough to invest in the U.S. mutual fund industry after this ruling must be someone who believes they’re “managing my 401(k) to take control of my future,” even though the company only offers three options, one of which is Company Stock.

The next time someone tells you about the evils of Moral Hazard, assure them that the Supreme Court doesn’t believe in it.

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Everything Old is New Again, The "Value" of Active Investment Managers Edition

First, there was Fred Schwed’s Where are the Customer’s Yachts?, which is still the standard bearer for why Money Managers are overpaid.

Now (via the NYT) there is The Investment Answer (preface here [PDF]).

The Prologue opens more Matt Taibbi than Jason Zweig:

Wall Street brokers and active money managers use your relative lack of investment expertise to their benefit…not yours

Of course, they have a method That Will Work to solve this, which looks suspicuously like what those Active Money Managers say they do. And what you would think Economic Theory would tell you to do, which may be why they have the endorsement of Eugene (“the markets are too efficient”) Fama among many others.

Perhaps it’s time for economists to model why economic theory doesn’t work?

The last time people realized their money managers were taking them for a ride, the market basically sat still for a generation. Whether this dying text is a leading indicator is left as an exercise, though not an academic one.

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Taxes and Private Sector Investment – Evidence from the Real World

by Mike Kimel
Cross-posted on the Presimetrics blog.

Taxes and Private Sector Investment – Evidence from the Real World
Last week I had a post (which appeared both here and at Angry Bear). The post included the following graph:

Figure 1

The graph looks at every eight year period since 1929 (the first year for which National Accounts data is available from the Bureau of Economic Analysis) that can be thought of as a complete “administration.” It notes that there is a very strong negative correlation between the tax burden in the first two years of an administration and the economic growth that follows in the remaining six years of the administration. In plain English – the more the tax burden was reduced during the first two years of an administration, the slower the economic growth in the following six years. Conversely, the more the tax burden was raised during the first two years of each administration, the faster economic growth was during the following six years.

At this point I note… this is not my opinion, it is what the data shows. And there is no cherry picking – I went back as far as there was data and included every eight year stretch for which a single President occupied the Oval Office or in which a VP took over from a President in the middle of a term. And these real world results contradict just about everything that standard economic theory (Classical, Austrian, you name it) tells you.

So I tried providing an explanation:

Michael Kanell and I advanced several theories in Presimetrics but the one I think makes the most sense is that changes in the tax burden are a sign of the degree to which an administration enforces laws and regulations.

The logic is simple – (1) collectively, Americans cheat on their taxes and (2) whether the tax burden, the percentage of GDP that the government collects in taxes, rises or falls seems to have nothing whatsoever to do with whether marginal income tax rates rise or fall. Thus, one way for tax burdens to go up is increased enforcement, and one way for tax burdens to fall is decreased enforcement.

Now, to me that’s self-evident. But I’m starting to realize not everyone sees it this way, so let’s run a simple test. If a regime tolerates corruption or encourages companies to game the system rather than to be productive, we should expect growth in the private sector to be minimal at best. All else being equal, we should expect faster growth in the private sector the less rot there is in the system. I assume this is not remotely controversial. And it implies that if tax collections are indeed an indicator of an administration’s intolerance for shenanigans, then growing tax burdens should be followed by rapidly increasing private sector activity and falling tax burdens should be followed by relatively slow growth in private sector activity.

Crazy, right? Lower taxes leading to less private sector activity! Insanity! It defies economic theory. And common sense. But how does it fit with what happened in the real world? Extremely well, actually.

The graph below shows the change in the tax burden in the first two years of each 8 year administration on the horizontal axis, and the annualized change in real private investment per capita in the remaining six years along the vertical axis.

Figure 2.

Notice… administrations that cut the tax burden early saw mediocre increases in private investment later. On the other hand, administrations that started out by increasing the tax burden enjoyed big increases in private investment in the remainder of their term. This is yet another instance where real world results contradict just about everything that standard economic theory teaches, particularly the Chicago School, Austrian, and Libertarian variety. And sadly, that theory has so permeated our collective thought processes that it has come to be referred to as “common sense.” Just as it was common sense at one point that the earth was flat, and the center of the universe.

It’s worth pointing out, by the way, that the relationship between the tax burden and real private consumption is similar; administrations that raised the tax burden saw greater increases in real private consumption per capita than administrations that reduced the tax burden. The relationship, albeit a strong one, is slightly weaker than the relationship between tax burdens and investment. By contrast, the relationship between changes in the tax burden in years 1 and 2 and changes in real Federal Government spending per capita are much, much weaker.

So let me revisit once more the explanation that Michael Kanell and I put forward in Presimetrics and which is consistent with the data presented in both graphs above. Administrations that cut the tax burden tended to do so mostly by reducing enforcement of tax laws and regulations. But people who don’t believe in enforcing tax laws are also not particularly fond of most other forms of rules and regulations, preferring a laissez faire “pro-business” government in all walks of life. Sure, there may well be many private sector winners when the government allows a free-for-all. However, as the costs of exploiting loopholes, breaking laws and creating externalities falls relative to the costs of doing productive things, fewer truly useful productive activities take place, and that kills growth.

If you have a better explanation, let me know.

Data sources and comments.

The definition of the tax burden used in this post is Federal government current receipts from line 1 of NIPA Table 3.2divided by GDP from NIPA Table 1.1.5, line 1. Real economic growth was measured as the change in real GDP per capita, which was obtained from NIPA Table 7.1, line 10. Population came from the last row in the same table.

Real private investment came from line 7 of NIPA Table 1.1.6.

As always, the change in any series over the length of an administration is measured from the year before the administration took office (the “baseline” from which it starts) to its last year in office.

I intend to look at the relationships described in this post in a bit more detail going forward. However, expect the next post to cover another issue which seems to come up a lot – whether the results I’ve been posting are statistically valid or not.

Note also… if it’s not obvious, this post deals with the tax burden, the share of GDP going to the Federal government, and not marginal tax rates. Please do not insist on commenting on a topic unrelated to this post.

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Finding $20 Bills on fhe Street

I gave a guest lecture in Intermediate Macro last year. Normally, I try not to do such things, but I was staring at some data and the offer came at the same time the data started making sense, so I said yes.

I gave them a presentation on the similarities and differences between Economics and Finance. How Economics is the Best of All Possible Worlds while Finance never is; how tax and regulatory arbitrage drives structures and products; how transaction costs are never minor; how intermediation drives investment in specific areas of finance in ways that don’t really get dealt with in Economics.*

One of the things we know in Economics is that there are not $20 bills on the street. (Ted Gayer of the Brookings Institute made this argument twice recently. If this were true, “first mover advantage” would also have to be nonexistent.)

Investment managers talk about finding $20 on the street all of the time. Most of the time, they can prove this.

Sometimes, they can’t. If you invest in a retirement fund of any sort, this is the one post you should read for the new year. Especially for this:

However there is a way of proving that a fund is not a Ponzi – and that is to “show us the money”. If the assets are really there then it should be possible to convince regulators of that fact by showing them the assets. If Bernie Madoff had been asked to prove the existence of all the money he supposedly managed then he would have been caught because he could not comply. An honest fund should be able to comply fairly quickly – sometimes within 20 minutes – but almost certainly within a week.

and this

I have heard lots of criticism of the Australian Securities regulator. However on this important matter their actions were exemplary. They did what the SEC could not do and act on a “Markopolos letter” within weeks. They did what the SEC should have done when they investigated Madoff – and attempted to confirm the existence and value of the assets.

Three weeks later ASIC put a stop on all Astarra funds – prohibiting new money going in or any moneys going out. They acted to protect investors. This showed responsiveness that Mary Schapiro and American regulators can only aspire too.

This is one of the reasons we pay transaction costs. That “SEC fee” when you sell shares of a stock are intended to ensure that the market remains “rational.” Which is why the greatest evil of economic modeling, imnvho, is that it often treats the very things that might make its premises viable as irrelevant to its model.

UPDATE: According to Blogger, this is the 5,000th Published Post at AB.

*If you’re really curious—and probably no one is—the presentation is here.

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The Drug War Saved the System?

Charlie Stross talks about liquidity:

What we’ve just seen, hidden in the euphemism here, is a confession that drug cartels and other organized criminals have gone on a $352Bn asset-buying spree — and the banks and regulators, world-wide, turned a blind eye to this because the alternative was to allow the banks to collapse. And the corollary is that these investments are now in the system, laundered, whitewashed, and legit. These narcodollars aren’t neatly bundled up inside the mattress any more; they’re in the system, doing their owners’ bidding.

A third of a trillion dollars is a lot of money; it’s enough to fund the US military invading another country halfway around the world, or a manned Mars exploration program. Obviously, there’s no single Mr Big here, no Blofeld investing SPECTREs ill-gotten billions in an ambitious bid to go legit.

But one wonders whether the “organised criminals” have been investing in anything innovative. (Politicians, if they’re smart.) And what the long-term consequences are going to be …

It won’t be Stross’s next novel, but it might be Ben Bernanke’s. Or Larry Summers, whose latest foray into fiction is here.

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