Maison Fleury

“I moved back after five years, and nothing had changed. It was like re-discovering old friends.” The two French women and I were talking about the Spanish magazine “Hola” and the cast of characters that regularly grace its pages. In Spain, these people are called “Los Famosos.” Outside of Spain, with two or three exceptions, nobody has heard of them. The fact that three foreign women living in Spain, with respectable educations and otherwise challenging intellectual preoccupations and jobs had become aficionados of Hola! was intriguing, to say the least. My Spanish mother-in-law explains it this way—“It’s a mental vacation. I can read the same article a second time and not even realize I’ve read it before.” Hola! was started in Barcelona, in the 1940s to focus on “la espuma de la vida”—(poorly translated by me) as “the frothy side of life.” Someone once told me it is the largest circulation magazine in the world. I have not verified this. What I do know is that Hola! pays people for ...

Trying to make sense of the current markets can lead to schyzophrenia. On the one hand fundamentals that triggered the financial crisis haven't changed one bit. The housing market is still in the doldrums. Banks are still sitting on piles of rapidly deterioting toxic shit. The banking system is still bankrupt. Occident is drowning in debt. Some call for a biblical debt jubilee, but really inflation is taking care of that for us. On the other hand we are now experiencing the impact of QE. Or "printing money" by the federales and the Chinese, who print money tit-for-tat to keep RMB in line. QE as a simple effect, it makes all USD numbers go up. This makes the dollar worthless so that from the outside, FX sees a constant or shrinking US economy. This is pure monetary inflation. But will the stability afforded be enough to mend the economy? But it even looks like "recovery", "end of recession". But is it just inflation with recession. Of course, the...

Via "the big picture" a link to the Boston Globe. The article focuses on Minsky as the "coqueluche" amongst economists. He is so hot right now. Minsky is now all the rage. A year ago, an influential Financial Times columnist confided to readers that rereading Minsky’s 1986 “masterpiece” - “Stabilizing an Unstable Economy” - “helped clear my mind on this crisis.” Others joined the chorus. Earlier this year, two economic heavyweights - Paul Krugman and Brad DeLong - both tipped their hats to him in public forums. Indeed, the Nobel Prize-winning Krugman titled one of the Robbins lectures at the London School of Economics “The Night They Re-read Minsky.” Today most economists, it’s safe to say, are probably reading Minsky for the first time, trying to fit his unconventional insights into the theoretical scaffolding of their profession. If Minsky were alive today, he would no doubt applaud this belated acknowledgment, even if it has come at a terrible cost. As he onc...

A recent email thread on the subject of fifth graders and why most of them do not need cell phones...let alone text messaging, called to mind this movie. ...Can't imagine why a fifth grader needs a cell phone for a school trip to France. I can barely figure out the international dialing prefixes from and to various countries, myself...but, then maybe I'm not as smart as a fifth grader. Do they actually think their child is in-danger, in their private school, guided tour over there? Reminds me of an in-flight movie I saw… “Femme Jep” refers to a genre of movies featuring women (from the French word “femme”) in danger (jeopardy). It seems that some women have a statistic-defying penchant for encountering Mortal Danger. Or maybe it’s a vocation to one day appear as guest invitees, sobbing on the maternal bosom or sympathetic paternal shoulder of the host, saying things like “I know I shouldn’t have gotten into that car.” Think the whole tedious thread with Jack Bauer’s daughter,...

Can be analyzed in terms of Friedmanism vs Keynesianism. In July consumer credit fell by 21B out of 2.5 T or an annualized rate of 10%. From The Big Picture. Micro-economics explains the drop, people can't find credit easily, they don't want to spend and job prospects are slim, so they deleverage. Macro-economics explains QE, against this backdrop of disappearing debt-money the central banks are printing as much money as they can. Deflation: 250B QE: 250B Friedman: 1 Keynes: 1. The markets look stable.

It was in the making. It is more believable when it is not the Russian, Chavez, Petrostates and other totalitarian regimes calling for it. In a interview with Bloomberg a UN official shoots for the sky. Money quote: “The most important lesson of the global crisis is that financial markets don’t get prices right,” Flassbeck said. “Governments are being tempted by the resulting confidence game catering to financial-market participants who have shown they’re inept at assessing risk.” Ouch.

The FT this morning has an interesting opinion piece. Ever since Aug 07 the economic profession is caught up in a self-centered post mortem analysis, how could they miss this crisis so badly? Central to the contrarians’ thinking is an accounting of financial flows (of credit, interest, profit and wages) and stocks (debt and wealth) in the economy, as well as a sharp distinction between the real economy and the financial sector (including property). In these “flow-of-funds” models, liquidity generated in the financial sector flows to companies, households and the government as they borrow. This may facilitate fixed-capital investment, production and consumption, but also asset-price inflation and debt growth. Liquidity returns to the financial sector as investment or in debt service and fees. Basically this is a focus on the derivative equations of money. Do not focus on equilibrium but on the flow of money. In the flow of money you see interest, new debt, repayments etc and when you...

Via naked capitalism, some numbers about solar power Of course this spells pain for the existing capacity holders. The commentary points out that the over-supply in from china, but if it is, it is going to take a long time before it reaches Spain or the US. So I am fuzzy as to how this impacts local prices. Also if the prices go down and over-capacity is detroyed then the prices go back up, problem solved. In the meantime we have plenty of cheap solar power... so consumption should go back up... I wonder why they have the numbers go down in consumption, this does not follow normal "supply/demand" logic.

I thought Newt was dead, but no, the latest from the hot-head in the FT .... Sustained reckless budgeting financed by endless tax increases reflects exactly the kind of society that Americans do not want. Hey noot! in the picture you will find the legacy of Bush years with tax cuts and big government spending... another reason why I disconnect from the hypocrisy of the political discourse of republicans. Repugs needs to reconnect to their fiscal conservative roots before long.

The more I read Willem Buiter, the more I like him. This morning in the FT he denounces the financial sector as a harmful sector in some instances. I believe that efficient financial intermediation and a dynamic financial sector are essential for the proper functioning of any decentralised market economy; I also believe that too much financial sector activity is not only socially worthless, but actually harmful. Take financial derivatives. A financial derivative is a bet created by the issuer whose payoff depends on some aspect of the performance of an underlying financial instrument. If the bet pays out when the buyer of the derivative is worse off, we call it insurance. If the bet pays off when the buyer of the derivative is no worse off, we call it speculation. Speculation need not be a problem; it is a necessary feature of the efficient allocation of risk, as long as only one party to the transaction is engaged in it. To tame the rampant excessive speculation in the derivatives ma...