4 Fin. Stress Indexes Stable - No Cause for Concern
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Tuesday, August 02, 2011
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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11 Comments:
Well, I hope these stress indicators are right.
Still, some commentators posture as if they would prefer to have AIDS than endure moderate inflation. I don't get it. Was anybody ever killed by 4 percent inflation a year?
I keep thinking something sinister is afoot. Does the right-wing just want Obama out? And they will then accede to a more growth-oriented Fed?
Where does all this pompous pettifogging and zeal for the purported virtues of low inflation come from?
Right now Bernanke-san is leading us to Tokyo.
Go long bonds. Lower interest rates than ever are headed this way. Without QE, deflation will settle in--don't worry, only for a few decades. It will crush your stock and real estate portfolios.
Build your house in bonds--or in the East.
"Was anybody ever killed by 4 percent inflation a year?"
If that's the way you feel, please mail me a check for 4 percent of your income annually.
It won't kill you.
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I dunno about the conclusion there. So, financial institutions switched out bad mortgage-backed debt on balance sheets for sovereign-backed debt.
But, who thinks the "risk-free" assumptions behind sovereign debt are going to hold up for the next two years?
Also, there's an even greater moral hazard holding sovereign debt. It'll probably lead to even less risk discipline and over leveraging.
Someone forgot to tell DJIA on Tuesday!!
The same could have been said 3/4 of the way through 2006. There were still other warning signs that the fundamentals were pretty eff'd prior to these indexes saying things are bad. I hope I am wrong now.
Wow... all of those financial stress indexes look like they're making a rounded bottom.
American Delight-
That I will happily do, if in the bargain I prosper, as opposed to languishing.
American Delight-
That I will happily do, if in the bargain I prosper, as opposed to languishing.
these indexes are based predominantly on rates spreads.
if you get large external interference in those markets from governments (as you have had lately) and government driven flight to safety issues, they will lose whatever predictive power they had.
They all have a positive first derivative though...
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