Quantitative Easing Explained

Still talking about subprime

Occasionally, I like to poke my nose in and see what my old comrades are up to over on NP. It seems the infamous thread is still alive and kicking.

However, it appears they are still talking about subprime. When are they going to realize that subprime was merely the first symptom of a massive global credit/asset bubble to surface? In economic terms, the dollar amount involved in any Treasury Dept bailout will be insignificant. However, when you multiply that amount by the insane leverage financial institutions have in, mostly off balance sheet, exposure, then things make more sense. Don’t be fooled. No policy maker cares about subprime borrowers. They are desperately trying to keep one, if not several major banks, afloat. Sorry Citigroup. The music has stopped.

Financial markets have a long way to go down still. The US economy will get whacked in a historical fashion, but we won’t be knocked out by any means. There are still strong sectors in our economy that will benefit from the coming “onshoring“. Pain is a good teacher and I, for one, will welcome the exorcism of complacency that is eminent.

Giants: Hyman Minsky?

As one works their way through the academic jungles from undergraduate to graduate studies in any given field, one of the cultural side effects is the knowledge of who the “giants” in your field of study are. In mathematical physics, some of the giants include Einstein, Dirac, Cartan, Bohr, Heisenberg, Schrodinger, de Broglie, Maxwell, Newton, etc. Since I’ve only been thinking about finance and economics seriously for the past two years or so, there are still many giants I don’t know. Some of the giants I do know and have come to admire include Graham, Keynes, and von Neumann (who also counts as a giant in mathematical physics!). Not to mention some people from my previous place who I consider to be giants.

One person I’ve only recently learned of that I am tempted to elevate to the title of “giant” in my book is Hyman Minsky. I’ve only learned of him in the past couple weeks through references in a few blogs, e.g. here. I hope to spend some time leaning about his work and may purchase a couple of his books. I don’t have anything more to say for now, but my “gut” tells me I will like what he had to say.