InquiryLabs » Economy

Auditing is the First Step

Duane Johnson — Thu, 12 Mar 2009 22:27:55 +0000

I like the idea of auditing the Federal Reserve: there’s nothing wrong with transparency and we have everything to gain by taking a count of where our (U.S.) money has gone during this flurry of bailout and rescue activity.

If you agree, then maybe you’d also like to sign the Audit the Fed petition and see some good come of this momentum. In an age of instantaneous communication, sometimes it still feels like it takes a long, long time to find out the truth.

Posted via email from Duane’s Quick Posts

Canada is Doing Some Things Right

Duane Johnson — Tue, 10 Feb 2009 16:19:19 +0000

I haven’t lived in Canada for over 7 years, but I still feel a close tie to my “home”. Friends and fellow programmers might know me as “canadaduane”. So it’s with a little bit of quiet pride that I learned Canada has done remarkably well during this time of financial upheaval: none of its banks have gone belly-up, and in fact the World Economic Forum ranked Canada’s financial system first in the world.

Its health-care system, which does more than its American counterpart, actually spends less per capita by almost half. This has attracted companies with unions such as in the auto industry because some of the cost responsibilities for workers can be offloaded. In addition, Canada’s immigration policy allows well-educated and qualified people to work in the country without requiring a sponsor company. This has, apparently, resulted in not a few American-educated professionals moving to Canada after being disqualified from living in the USA.

There is an article in Newsweek published recently that highlights the good decisions that have been made. Bear in mind that this intentionally focuses on the good parts of Canadian government–there are many unsatisfactory things as well. Nevertheless, I’m glad to see there is an example of restraint in the financial system that we can look to while we (the West) rebuild.

Posted via email from Duane’s Quick Posts

The Real Cause of the Financial Crisis

Duane Johnson — Wed, 14 Jan 2009 22:28:47 +0000

This former MIT Blackjack Team member’s perspective is the best synopsis of the underpinnings of the crisis that I’ve read to date. Read the article here.

Posted via email from Duane’s Quick Posts

Patrick Byrne Vindicated?

Duane Johnson — Mon, 06 Oct 2008 05:59:43 +0000

Overstock CEO Patrick Byrne has led a campaign to reveal some dangers in the practice of “naked short” selling. In his view, it was a part of the cause of the failure of Fannie Mae, Freddie Mac, AIG, and Lehman Brothers. Now, a very interesting article has been published at The Register that ties pieces of the story together: it seems that one Mr. Gary Weiss—who has deep connections with the Depository Trust and Clearing Corporation (the institution that would be in a position to know how bad the naked shorting situation is)—has been actively keeping Byrne’s view of naked shorts out of the picture on Wikipedia. Sounds rotten to me. Here’s the full Register article.

Related: My article a little over a year ago on Fractional Reserve Brokeraging

Peter Schiff, Economist

Duane Johnson — Mon, 29 Sep 2008 22:43:28 +0000

For about 6 years now, Peter Schiff has been the guy that the financial news anchors haul onto the stage to make fun of. He’s been predicting a systemic failure of the banking system for that long, and has made some remarkable predictions along the way. Here he is last May (2008), before this crisis. It sure looks like Mr. Schiff was on the money. Let’s get him in on the drawing board when Congress meets this week to plan a fixer-upper for the economy!

Here he is back in 2006 when “Mr. Laffer” was laughing at him:

Be Happy, Things Will Get Better

Duane Johnson — Mon, 29 Sep 2008 21:12:27 +0000

I’m proud of the U.S. House of Representatives saying “no” to a bailout of the big banks on Wall Street. Make no mistake, it will be a difficult time ahead… but this was a monumental change in the right direction. There is hope in a trustworthy system after all.

Meanwhile, the following combination on finance.yahoo.com gave me a laugh:

Posted by email from Duane’s Quick Posts (posterous)

Gold Soars

Duane Johnson — Wed, 17 Sep 2008 18:16:19 +0000

Gold hasn’t been doing very well this year… until today. It looks like it’s up $83 / oz as of right now. Some insights into the surge at Bloomberg.

Posted by email from Duane’s Quick Posts (posterous)

Fannie and Freddie: Ron Paul Was Right

Duane Johnson — Wed, 17 Sep 2008 14:03:58 +0000

Wow. Five years ago, Ron Paul warned of the immoral consequences that could take place because of the special privileges granted to nationalized Fannie Mae and Freddie Mac (the two loan guarantee companies for mortgages). It’s impressive that his economic understanding could lead him to such an accurate prediction, and noteworthy that his focus on prevention was almost entirely ignored:

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

—Ron Paul

If only Obama or McCain understood economics like Dr. Paul.

AIG Goes “Kinda” Bankrupt

Duane Johnson — Wed, 17 Sep 2008 04:49:59 +0000

There isn’t really a precedent for this strange tale… but tonight, apparently, the Federal Reserve has taken ownership of 80% of AIG (the 3rd largest institution in America) in exchange for an $80 billion bridge loan. The reason, according to various sources, is that AIG is “too big to fail” and would cause systemic failure to the international banking system if it were allowed to fail (it has more than $1 trillion in assets, worldwide).

Some interesting or funny comments over at calculatedrisk:

I know Bush promised us an ‘ownership society’ but this wasn’t exactly what we had in mind…

neil | 09.16.08 - 9:49 pm | #

Long live the United Socialist States of America !

sk | 09.16.08 - 10:01 pm | #

It’s not a bridge financing, it’s a pier financing. It doesn’t get AIG to the other side — more like walk the plank boys.

Hackman | 09.16.08 - 10:02 pm | #

tj & the bear writes:

> Someone on the last thread asked what would be bigger than this.

> Easy — next up WAMU.

What? I just saw one of their commercials last night. They didn’t say anything about problems. I’m sure they wouldn’t be advertising for new accounts if they had problems.

P.S. They even have free checking!

Ken | 09.16.08 - 10:08 pm | #

The US is just a taxpayer funded PUBLIC EQUITY GROUP.

We just put the America into American International Group.

Gold Medal CMBX diver | 09.16.08 - 10:17 pm | #

A great article and commentary on this unfolding situation is here at the CalculatedRisk blog.

Posted by email from Duane’s Quick Posts (posterous)

I.O.U.S.A. Documentary Showing in Provo Tonight

Duane Johnson — Thu, 21 Aug 2008 18:13:39 +0000

I’ve heard this is a great documentary, and with it featuring Ron Paul and David Walker, I think it’s worth seeing. It will be showing tonight at the Provo South Towne Theatre (Cinemark 16), at 6 PM. I’m without a car right now, but I’m going to see if I can make it anyway.

Other locations in Utah where it’s premiering tonight:

Tinseltown in Layton

Tinseltown Newgate in Ogden

Cinemark 16 Provo in Provo

Cinemark 24 W. Jordan in West Jordan

Salt Lake City 16 in Salt Lake City

Union Heights 16 in Midvale

I hope this message gets out past the people who already know the country’s finances is in a shambles. I think the documentary also offers some solutions, which I’m interested in learning about.

Posted by email from Duane’s Quick Posts (posterous)