Former Slave Had

Several of the ‘Capitalism in Crisis’ thinkers — even those who should have known better — thought the government needed to invest more money in education. Kenneth Rogoff, for example, concludes that “improved education alone will not resolve the flaws inherent in today’s capitalism, but it essential first step down any path to a solution.” Oh? We never quite figured out the connection. The problem in a nutshell is that developed countries have too much debt and not enough growth. And their debt is growing faster than their output. How then does spending more on non-productive behavior increase GDP output or decrease debt? Contemporary education is a dead end. The industry has been taken over by zombies. Huge amounts of money — public, private, charitable, debt, savings, earnings — are ...

First up, the market noise… Stocks worldwide were up big time yesterday, mostly buoyed by news that the politicos in Europe had “renewed their commitment to talk about trying to eventually come to an agreement” about how to fix a problem they themselves caused and did not see coming. Or something like that. Bravo. We’ll stick to our storyline on this one: “Bankrupt entities tend to go bankrupt,” as Eric Fry pointed out while in Europe last week. “Greece will default…eventually.” And with it, we would add, will follow a few other chain-linked lemmings. Maybe that list will “only” include an assortment of other PIIGS’ rinds. Maybe it will include the euro itself. Time will tell. Back in the US, there was also “less bad” news on the jobs front to pluck investors’ strings. The economy added ...

Yesterday’s EU/IMF $1 trillion reaction sent risky assets into orbit. Spain’s stock exchange rose 14.4%, Greece’s 2 yr debt dropped below 5% and the EURUSD briefly traded up to 1.3089. But like the morning after a long night of partying, investors seem to be regretting yesterday’s buying frenzy. The bailout package is being viewed today by the numbers and not emotions. As we suspected, investors are realizing the bailout is adequate to address the short-term problems of Greece & Co., but the long term implications remain unclear. Economists are highlighting the fact that the cost of the bailout is not only financial – the austerity measures must hinder EU growth in the future and in essence will further saddle debt-burdened nations with you guessed it, even more debt. In addition, the ...