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

Kash is En Fuego Today

Go. Read. US Bank Exposure to Greece, part 3. The FT lets someone from Nomura argue that Kash’s declaration of U.S. bank exposure to Greek default in Part 2 (referenced here, but just go to Kash’s link for the gist) was overstated. Nomura and The FT lose the argument, badly. “Disasters for an economy — […]

Financial Services Intermediation

Traditionally, non-commercial banking (i.e., everything except savings deposits and consumer loans) was about one of two things: Tax arbitrage or Regulatory arbitrage The rest is window dressing; that is, it was basic financial intermediation, usually for the purpose of helping Corporate and/or High Net Worth clients.* That was until the late 1990s and the Noughts, […]

Fixing the Fiscal Nightmare

I’d like to get back to a problem that I was writing about last week: the possibility of using a value-added tax (VAT) to fix the “on-budget” federal budget deficit. That deficit, which excludes the Social Security trust fund (which will run a modest but declining surplus), is likely to be in the neighborhood of […]

Onward and Upward

Interest rates continue their climb… and long rates have risen by enough in recent weeks (today they’re roughly at their highest levels since mid-2002) to shut down discussion of the “inverted yield curve”, at least temporarily. This raises a good question: is it more contractionary for the economy (or less expanionary, depending on how you […]

Immigration Summary

Well, I could have saved myself and all of you a lot of time and energy if I had just started off the week linking to Max Sawicky on the topic of immigration. The post would have been entitled “Immigration: Just See Max.” In one concise post, he made all of the points on immigration […]

Tax Progressivity and Income Inequality

In thinking about the merits and faults of the VAT, I came across some interesting data. The first source is a paper by Timothy Smeeding entitled “Public Policy and Economic Inequality: The United States in Comparative Perspective“. Professor Smeeding used a unique data set from a project called the Luxembourg Income Study to gain various […]

Corporate Profits in 2005

The BEA released its final estimate of GDP growth and the national income account for 2005. The figures on GDP show no surprises. But the news release also highlights corporate profits in 2005. The figures show that 2005 was a good year to be an owner of a corporation: Profits from current production increased 16.4 […]

The VAT as Solution to the Fiscal Nightmare

In my previous post, I suggest one possible rationale for levying a VAT: if you think that the US needs to raise more tax revenue, and if you think that political opposition to significant increases in income taxes is strong, then adding a new VAT on top of existing income taxes is one important option […]

Legal versus Illegal Immigration

Some of you have wondered why I haven’t yet made much of an effort to distinguish between legal and illegal immigration. It’s a fair question. Let me share my thoughts with you about the two, and explain why my sentiments about immigration in general mean that I don’t worry much about the distinction between the […]