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The Bear's Lair: Modern accounts are instruments of deception

November 17, 2014

One of the courses I took at business school was "Analysis of Financial Reports," in which we learned to deconstruct all the scam accounts that had proliferated in the late 1960s boom. Most of these companies, undone by negative cash flow, went bust after 1970. We were informed by the professor that the Financial Accounting Standards Board (FASB), set up in 1973, was introducing new and more rigorous accounting principles, so that pretty soon all the accounting scams of the late 1960s would become impossible. Accounts would become readily comprehensible, with few differences in approach between those of different companies.

Well, that didn't last long!

Financial Sphere Bubbles

November 15, 2014

Not an inopportune time to ponder Financial Sphere vs. Real Economy Sphere analysis.

The Bear's Lair: Governments can't spend their way out of trouble

November 10, 2014

Japan caused a euphoric rise in global stock markets last week by raising the cap on its "quantitative easing" purchases of government bonds to 80 trillion yen a year ($720 billion, some 14% of Japan's GDP.) Yet even with the huge "stimulus" and the declining yen to which it has led, Japan can still barely get its GDP growth rate up to 1%, while its budget deficit is some 8% of GDP. Other countries have tried similar approaches to stimulating their economy and have similar problems. Keynesian public spending stimulus, touted recently by the IMF as the solution to the problem of global economic sluggishness, isn't working. It's worth pondering why not.

Back to the Nineties

November 7, 2014

Draghi follows Kuroda and king dollar spurs EM contagion fears.

The Bear's Lair: Malthus was just 220 years early

November 3, 2014

The average earnings of U.S. men between 25 and 34 with only a high school diploma have fallen 25% since 1979, according to Census Bureau data. Women in the same category have done better, but their earnings also have fallen. Given that GDP per capita has risen 73% in real terms since 1979 on World Bank data, those are shocking statistics. Their implication is that the value of the labor of people with ordinary skills has gone into a deep decline even as the country and the world has gotten richer. In other words, Thomas Malthus' gloomy prophecies, written in 1798, were not wrong. They were merely early.

Kuroda, Bubbles and King Dollar

October 31, 2014

Kuroda stokes stock prices and king dollar.

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