Financial Bubble

Paul Summerville • August 27, 2010

With the world waiting with baited breath on the uttering's of Federal Reserve Chairman Ben Bernanke from the annual Jackson Hole conference uber-bear Albert Edwards forecasts the S&P 500 will tank to 450, bond bears and bulls duke it out on CNBC, and two famous economists wonder what the Fed can do with its remaining ammo.

Paul Summerville • August 23, 2010

The attractive bright youngish twenty somethings that check us out at our great local Victoria food store Pepper's are on the front line of the growing inter-generational inequity in Canada that is reflected in other high income countries as university debt rises and hip replacement times fall. Wait until they have children.

Is the US dollar on the verge of becoming the mother of all black swans?

Paul Summerville • July 5, 2010

A New York Time's profile of the economists that did their homework, Kenneth Rogoff and Carmen Reinhart.

THE advertisement warns of speculative financial bubbles.


This Time It's Different: Eight Centuries of Financial Folly

Paul Summerville • April 17, 2010

Bubble level home prices that would have to fall by 40% to normalise to long term trends. Fund raised to bet on this outcome. But how to bet on a national housing collapse? Enter Goldman Sachs.

Take existing securities whose underlying asset is mortgages (mortgage backed securities).  Package them into a new security called Collateralised Debt Obligations (CDOs) that act as insurance against falling house prices and sell them to the fund. (So far so legal).

Paul Summerville • March 23, 2010

The political courage of President Obama and Speaker Pelosi in driving the health care debate to its legislative conclusion in the face of unrelenting opposition (Republicans; insurance companies; self-serving media) and Shakespearean-like bad luck (the death the Ted Kennedy and election of Scott Brown) will be required in Canada to end Canadian health care exceptionalism. In the end, whatever you may think of the tone of the debate, there was a debate. Canada needs to do the same.

Paul Summerville • March 21, 2010

The United States passes game changing health care legislation. Yes they could.

The price of getting old, why Chris Hitchens is a bad guy, why Paul Krugman is dangerous, why passing health care reform in the United States will doom America, the problem with debt, and the science of Epigentics.

It took about a century but the United States has changed the face of the country.

Paul Summerville • March 20, 2010

The United States comes to an important crossroad on Sunday with the health care bill vote. The moral imperative alone of extending health care coverage to all the country's citizens ought to be the reason for a successful vote. The economic imperative of reining in health care costs ought to be the reason for a successful vote.

Paul Summerville • March 16, 2010

Three people trying to make sense of the world, Michael Lewis, Peter Tasker, and David Brooks. I met Michael Lewis once in Tokyo in the early 1990s while he was researching the book that became Pacific Rift (1992). Sitting one night with a few other long time financial gaijin types on some restaurant tatami mat somewhere anxious to get home to my family, he struck me as the typical non-Japanese weighted down with platitudes about Japan. He was. I left early.

Paul Summerville • March 14, 2010

When everything is fine human beings tend to bring their future spending into the present. Longer vacations at a better hotel, bigger houses with new furniture, an appetizer and a dessert at the restaurant. When things aren't fine human beings tend to restrict their spending. Staycations, downsizing, dinner in, rented DVDs and not the theatre.

Paul Summerville • March 10, 2010

What role should the state play in creating the conditions for economic growth? A question of excellent futures surely. A report commissioned by the Conservative Party headed by David Cameron is framed by the expectation that the 'government is responsible for change'. Maybe that's the problem.

March 9, 2009 the Great Recession bottom, March 10, 2000 the peak of the dotcom bubble. What have we learned from these two anniversaries?

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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.