The Hubris Of The Bulls
Pride goeth before destruction, and an haughty spirit before a fall. Proverbs 16:18 I spend a good portion of my time trying to figure out the mood of the market. That isn’t just so I can bet against it although that is the proper strategy at times. John Maynard Keynes likened the fluctuation of stock .. read more
Secular Trends – Keynesian Policies
Economies travel in cycles. Some factors contributing to economic cycles are the following: Periods of great innovation and capital formation Fluctuations in fiscal policies Credit/Money creation War, disease, natural disaster At Alhambra, we often refer to Keynesian theory v Classical theory in reference to responses to the cyclical nature of an economy. The reality, economies .. read more
Trend Watcher – Nasdaq At 10-Year High
Joseph Gomez, Sr. Investment Advisor The Nasdaq made a multi-year high this week. The index is now up 11.54% for the year, which is nearly double the 6.94% YTD return for the S&P 500. The key to this rally has been the strength we’ve seen in the Financial and Technology sectors, which make up roughly 35% of the .. read more
A Failure of Policy, Not Rhetoric
There has been a lot of commentary recently about whether the Fed’s latest round of quantitative easing will be effective in raising the growth rate of the US economy and therefore reducing the unemployment rate. Whether it does or not – and I am firmly in the camp that believes it will do more harm .. read more
Getting Austerity Wrong
I wrote yesterday about the austerity debate and today David Leonhardt tackles the subject in the NYT: The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation .. read more
The Paradox of Keynesianism
The very foundation of Keynesianism is based on a fallacy – the Paradox of Thrift. Paul Krugman explained this alleged paradox in one of his New York Times editorials: Some background: one of the high points of the semester, if you’re a teacher of introductory macroeconomics, comes when you explain how individual virtue can be .. read more
Keynes and Broken Windows
David Boaz at Cato provides this insight about Keynes thinking on the economy: Drama was a Keynes tool. During a 1934 dinner in the U.S., after one economist carefully removed a towel from a stack to dry his hands, Mr. Keynes swept the whole pile of towels on the floor and crumpled them up, explaining .. read more
