Entries by Keith Weiner

Dutch Deflation

A bank, not in the PIIGSC (Portugal, Ireland, Italy, Greece, Spain, Cyrpus) is insolvent. It’s in Netherlands. So the government is taking it over. Inflation is an expansion of counterfeit credit. Deflation, a forcible contraction of credit, is the inevitable consequence of inflation. – goal is to “shore up confidence” – Netherlands’ deficit was already […]

Big Debt in Little China

– Local governments to borrow for unneeded “infrastructure” – They acted under orders from Beijing – Unable to pay, they “rolled the debt over” – Li says it’s OK, it takes time to amortize(!) – Yiping says it’s fine when duration is mismatched – Peng says everyone does it – Most banks refuse to lend […]

Bailouts and Moral Hazard

Bailouts and Moral Hazard are not just for “banksters”. The money quote from this piece about Nortel’s bankruptcy is: “I’d rather end up on welfare than give our hard-earned assets to these vultures,” Mills said in the statement” Mills admits he is not negotiating in good faith, with a taxpayer bailout of his personal finances […]

Ilinois Credit Downgrade

The state of Illinois owes $271B (See here). That they acknowledge. This is owed to someone. Now their credit rating is downgraded again. People should be thinking about the creditors. Who are they? I don’t mean vendors of supplies purchased by the state. I mean the bondholders, not just who own state debt but who […]

Japanese Monetary Policy = Insanity

After 20 years of trying to fight deflation, and 10 or 11 rounds of Quantitative Easing, now Japan is trying the same thing again and expecting a different result. Aside from proving that they are insane, it also proves that the widely accepted theory (rising money supply = rising prices and falling currency) doesn’t work. […]