The Freedom Factory

China and Argentina strike currency swap deal to reduce reliance on U.S. dollar, the tax man cometh…be prepared, Obama plans to ‘ease’ GM into bankruptcy, California able to raise more money than expected in debt market; $44 billion a year, trillions over decades, and tens of thousands killed to fight drugs…worth it? Mexican police convoy ambushed-4 dead, U.S. home prices crash over 19% in January… Continue Reading

In a speech to the European Parliament, British Conservative MEP Daniel Hannan confronts Prime Minister Gordon Brown:

In the last 12 months a 100,000 private sector jobs have been lost and yet you’ve created 30000 public sector jobs. pm, you cannot carry on forever squeezing the productive bit of the economy in order to fund an unprecedented engorgement of the unproductive bit. You cannot spend your way out of recession or borrow your way out of debt.

Hannan is furious with Britain’s response to the financial downturn, decrying the borrowing, spending, currency devaluation, and increased Socialization of the economy as destructive. It turns out that everything Britain is doing wrong is being done in the U.S.

Check out Daniel Hannan’s book, The Plan: Twelve Months To Renew Britain.

Today in the Wall Street Journal, Peter Wallison of the American Enterprise Institute proposes the Treasury purchase bank’s troubled assets at their net realizable values. Currently, these assets are priced at market value, which is below their net realizable value. (See diagram below.) Although there is a risk that the taxpayer might pay too much for these assets by buying them at net realizable value, the benefit is that these purchases would help to boost bank’s depleted capital. This in turn, should “eliminate doubts about banks’ solvency and free up their ability and willingness to lend again”. Continue Reading

Health care is a problem in America. Costs have been growing out of control over the last several decades, and large segments of the population do not have health insurance. America was once touted as a beacon of innovation, and a pioneer for prescription drugs, medical procedures, devices, and other life saving developments that have been exported to the rest of the world. Now the world looks at our health system as costsly, inegalitarian, and unsustainable. What went wrong and how can we improve? Continue Reading

To fully appreciate what is occurring in the financial markets, I recommend reading two articles: Deleveraging: A Fate Worse than Debt from The Economist and The Question of Our Age by Tony Crescenzi.

The theme of both articles is the same- cheap credit for the past 20 years has fueled economic growth. Now that credit has dried up, can the system deleverage without causing economic contraction? The coordinated effort of the U.S and other governments is meant to prevent (or at least slow) this deleveraging process. So far the governments have added liquidity to credit markets and injected capital to expand lending and revive economic growth. Continue Reading

According to the statistics it seems so! In an article written by economist Jeremy Siegel, it appears that over the last 120 year period stock markets have risen 10.85% under Democratic presidencies, compared to 8.25% under Republican administrations. This trend has only accelerated in the last 60 years, with Democrat returns averaging 15.26% per year versus 9.01% Republican returns. What is it about Democratic presidencies that drive markets nuts?

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