Ex-Carpet Cleaner Continues to Terrorize C-Suites
It has taken former carpet cleaner Barry Minkow nearly twenty years, but he has finally figured out a reasonably legitimate way to make money - by outing executives who pad their resumes, primarily their educational background. Lets not rush to judge the latest execs, as it appears a least one of Minkow's latest targets are disputing the findings.
But it could create a bit of a stink. Hardworking Broadcom employees certainly deserve better after what they have been through:
Microsemi Corp. Chief Executive Officer James Peterson and Broadcom Corp. Senior Vice President Vahid Manian, who both serve on the board of STEC Inc., claim to have earned degrees that their schools can’t verify.
Peterson, who lists degrees from Brigham Young University in government filings, never received them from that school, said Carri Jenkins, a university spokeswoman in Provo, Utah. He did take classes at Brigham Young from 1978 to 1980, Jenkins said. Bloomberg
Two-Handed Economists Slug It Out
Pakistan vs. India is not the only battle brewing.
Amity Shlaes vs Paul Krugman is getting ugly. The Nobel Prize winner is on a roll, and sticking to his guns:
Not much point in going through Amity Shlaes’s latest: after having inadvertently revealed that she has no idea what Keynesian economics is, she’s back on the warpath against FDR, and me. The main line of empirical argument seems to be that FDR didn’t succeed in ending the Great Depression. Since that’s also what my side of the debate says — fiscal expansion was too cautious, and disastrously abandoned in 1937 — I don’t see what this is supposed to prove.
But I think it’s worth pointing out why Ms. Shlaes thinks the New Deal was destructive of employment: namely, that it raised wages. Funny she should mention that — because the effect of wage changes on employment was the subject of a whole chapter in Keynes’s General Theory.
And what Keynes had to say then is as valid as ever: under depression-type conditions, with short-term interest rates near zero, there’s no reason to think that lower wages for all workers — as opposed to lower wages for a particular group of workers — would lead to higher employment.
Suppose that wages across the US economy had been, say, 20 percent lower than they actually were. You might be tempted to say that this would make hiring workers more attractive. But to a first approximation, prices would also have been 20 percent lower — so the real wage would not have been reduced. So how would lower wages lead to higher demand for labor?
Well, the real money supply would have been larger — but the normal channel through which this might increase demand, lower interest rates, was blocked by the zero lower bound. Yes, there would have been a slight Pigou effect: real private sector wealth would have been higher, because cash under the mattress (or wherever) was worth more. But on the other hand, real debt burdens would also have been higher, probably exerting a contractionary effect. Overall, there’s no good reason to think that lower wages would have helped raise employment.
And once you realize that, the whole argument that FDR prolonged the Depression by sustaining wages evaporates. NYT
Pretty Harsh. Is that anyway to treat a lady? Apparently two handed economists use both fists to take out their opponents.
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Amity in living color, Why Krugman is Wrong:
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Changes in money-wages and Amity Shlaes
Conscience of a Liberal
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
The Latest Bubble: Treasuries
Market Strategist Frank Veneroso has long been looking for a spirited rally in Treasury Bonds...but have we overshot his target?:
June 2008
The spike in the oil price, though a transitory bubble event, is a powerful depressant on aggregate demand as long as it persists. Bernanke is right in seeing the oil price spike as more of a deflationary danger than an inflationary threat.
Bernanke, correctly cognizant of the risk posed by the “financial accelerator”, will not raise rates in response to headline inflation. When the second wave of financial crisis sets into motion the financial accelerator, the Bernanke Fed will cut rates instead.
Then the Great Fake Out will end and the fixed income markets will fly.
Frank was certainly on the money, and today Bernanke threw more gas on the fires smoldering around the globe:
Federal Reserve Chairman Ben Bernanke signaled Monday that officials will hold nothing back in their support of financial markets and the economy, calling further interest rate cuts from already low levels "certainly feasible." But with the Fed's benchmark rate already at 1%, more cuts would bring the rate to near zero, prompting concern that the Fed would be out of recession-fighting ammunition. Mr. Bernanke sought to emphasize other steps the Fed might take to spur the economy.
Those steps could include an unusual attempt to bring down long-term interest rates by purchasing Treasury notes and bonds, something the Fed hasn't done since the early 1950s. Lower long-term rates would help bring down mortgage costs and other borrowing costs for businesses and individuals. WSJ
Invariably, the bubble talk has started:
Volcker’s Role in Obama Administration Takes Shape
President-Elect Obama went largely radio silent from November 10th to the 20th, in deference to President Bush and the "one President" doctrine. That was awfully considerate of him, but these are the times that try men's souls, and I don't think anyone will hold it against Obama if he moves forward, and soothes the rattled nerves began dumping en masse after the election. I have had enough of the Twilight Zone we have been trapped in, and welcome a proactive agenda from the new guy.
We are now finding out what role the esteemed Paul Volcker will play...this should be a net positive for all of us:
President-elect Barack Obama will appoint former Federal Reserve Chairman Paul Volcker on Wednesday to be the chairman of a new White House advisory board tasked with helping to lift the nation from recession and stabilize financial markets, Democratic officials say.
The panel, called the President's Economic Recovery Advisory Board, is modeled on the Foreign Intelligence Advisory Board established by then-President Dwight Eisenhower in 1956, at the height of the Cold War, when officials worried that that the existing bureaucratic structure was inadequate to help the U.S. keep pace with the Soviet threat. The financial crisis has drawn similar worries that the government isn't properly organized to monitor and respond to modern financial markets. WSJ
Group of Thirty Know “What to Do”
Is Ben Bernanke a goner? Steve Liesman, CNBC’s resident Fed watcher, believes Bernanke’s fate will be decided by the summer of 2009.
With Larry Summers presumably waiting in the wings, it would appear Ben is toast. Besides, he does not belong to the people running the show.
What do Larry Summers, Tim Geithner, Paul Volcker, Jean-Claude Trichet and Paul Krugman have in common? They are all members of the new Junta in town, the Group of Thirty.
Krugman is sporting a woodie over their ascension to the seats that matter..Treasury, and probably Fed:
So, it appears that a sinister cabal is taking control of economic policy, not only in the United States, but in much of the world.
Seriously, isn’t it amazing just how impressive the people being named to key positions in the Obama administration seem? Bye-bye hacks and cronies, hello people who actually know what they’re doing. For a bunch of people who were written off as a permanent minority four years ago, the Democrats look remarkably like the natural governing party these days, with a deep bench of talent.
That doesn’t mean they’ll succeed — this might be a good time to reread The Best and the Brightest. But what an improvement! Conscience of a Liberal
Far be it from me to penalize him for showboating, but he sure seems to be giddy these days, and continues to whack at the hacks still in charge....
....this (Citigroup) bailout is an outrage: a lousy deal for the taxpayers, no accountability for management, and just to make things perfect, quite possibly inadequate, so that Citi will be back for more.
Amazing how much damage the lame ducks can do in the time remaining.
Of course, not everyone is so giddy. The folks at the Ludwig von Mises Institute are in for a rough four, and possibly, eight years. Did this passage set them off?
The Power of Ideas
As readers may have gathered, I believe not only that we’re living in a new era of depression economics, but also that John Maynard Keynes—the economist who made sense of the Great Depression—is now more relevant than ever. Keynes concluded his masterwork, The General Theory of Employment, Interest and Money, with a famous disquisition on the importance of economic ideas: “Soon or late, it is ideas, not vested interests, which are dangerous for good or evil.” Krugman - What to Do
Clan von Mises are not down with the Keynesian claptrap:
Krugman, like Laurence Kotlikoff, is horrified that people are starting to save money. Therefore, he says, the next stimulus plan should “focus on sustaining and expanding government spending--sustaining it by providing aid to state and local governments, expanding it with spending on roads, bridges, and other forms of infrastructure.” He says Keynes is “more relevant than ever.” At the end of his call to Keynesian arms, he states, “I believe that the only important structural obstacles to world prosperity are the obsolete doctrines that clutter the minds of men.” Apparently, unworkable Keynesian doctrines don’t fall into the “obsolete” or “clutter” category. Mises Blog
Does Krugman’s piece in the New York Review of Books shed some light on the thinking of the powers now in charge? Bankers, grab your ankes:
My guess is that the recapitalization will eventually have to get bigger and broader, and that there will eventually have to be more assertion of government control—in effect, it will come closer to a full temporary nationalization of a significant part of the financial system. Just to be clear, this isn’t a long-term goal, a matter of seizing the economy’s commanding heights: finance should be reprivatized as soon as it’s safe to do so, just as Sweden put banking back in the private sector after its big bailout in the early Nineties. But for now the important thing is to loosen up credit by any means at hand, without getting tied up in ideological knots. Nothing could be worse than failing to do what’s necessary out of fear that acting to save the financial system is somehow “socialist.”
To the victors go the spoils. The Austrian’s will be watching this one from the nosebleed section.
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What to Do
New York Review of Books
Obsolete Ideas from Dead Living Economists
Mises Economic Blog
The Conscience of a Liberal Blog
NYT
Group of Thirty
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