Posts filed under “Politics”

The View From Europe

I spent the early part of this week presenting at several conferences in Belgium, in and around Brussels. I was the not-so-randomly selected person to give the American take on the state of the global economy and capital markets. Or, at least, an American take. I never want to misrepresent my own biased and conflicted views as the consensus. Regular readers should have some idea of what I think of most of the conventional wisdom.

Whenever I travel, I always find things to be puzzled over, e.g., Why don’t we have dual flush toilets here? (Not all flushes are created equal, and dual water capacity makes sense from an efficiency perspective).

The perspective of America from across the Atlantic is invariably one those things I find perplexing. The Europeans are genuinely puzzled by our political stalemates (makes sense if you come from a parliamentary system); they do not really understand the rise of Tea Party; and they cannot figure out what happened to the Occupy movement. They still like President Barack Obama, but the blush is very much off that rose; they still do not care very much for President George W. Bush.

I very much got the impression that Europeans marvel at the strength of America’s economy. Its diversity, adaptability and innovation are signs of a tremendous resilience that seems to be consistently underestimated. In the present cycle, the U.S. seems to far ahead of the EU zone in recovering from the Great Recession. Perhaps that explains why European Central Bank chief Mario Draghi took a page from the Federal Reserve with his surprise rate cut last month.

Lots of other things surprised me. Even though Belgians have a system of bank insurance — they guarantee deposits up to 100,000 euros — they do not have much faith in it. During a panel debate, questions were also asked of the full audience. About 90 percent of those in the room did not believe their deposits were safe. I found this astounding. Then again, the Europeans have a longer history of bank failures, including central bank collapses, than we do in America. And I cannot say I fully understand their deposit insurance structure, as it does not seem to be an independent entity such as the Federal Deposit Insurance Corp. Regardless, the folks in this room on this particular night had little faith that their deposits are secure.

I would be remiss if I failed to mention a few words about the infrastructure in Brussels and surrounding areas. While the locals complain that the roads need work and other items are in disrepair, to this New Yorker’s eyes, things looked, well, wonderful. The roads are autobahn smooth, a delight to drive fast on (I was a passenger). The airports are architectural marvels, large and functional and very efficient. They seems intelligently engineered and quite easy to navigate. Public transit — both buses and trains — are well thought of by the public (I did not take any mass transit).

Given the high price of gasoline, the availability of compact fuel-efficient manual transmission cars was no surprise. What was a surprise were the large number of big, superefficient diesel cars. A long ride back to the hotel in a BMW 5 series diesel wagon at 130 km hour (~80 mph) revealed a car that was smooth, powerful and, at over 40 MPG combined fuel economy, surprisingly efficient. This is no tiny Yaro, but rather a full-size estate wagon. Why don’t we have more of these here?

Belgium also has a current scandal relevant to the giant wind turbines that dot the landscape. It is their Solyndra, only they are unwilling to let it go bankrupt. Apparently, the farms have been a huge money-loser, and instead of allowing for a reorg, the Belgians keep pouring more money into the projects. My advice? Allow it to go bankrupt, so they can be bought for pennies on the dollar and run more productively by a new group of investors/managers.

It’s a cliché that the second mouse gets the cheese, but it is often true. Bankruptcy allows, for the lack of a better phrase, second mouses to take over. Indeed, part of my presentation is on why bankruptcy is such a wonderful mechanism following any type of mal-investment. It allows capital to be reallocated to more productive uses, and replaces the early speculative investors with the next generation, which may have a better business model and will definitely have a lower cost structure.

The one thing that seems to be ubiquitous today everywhere is political discord. The northern and southern portions of the country — Flemish and French — are at odds over corruption, taxes, government projects, the welfare state, indeed almost everything. There is even a burgeoning separatist movement.

Its good to see that wherever I travel, some things remain constant.


Originally published at Bloomberg View

Category: Economy, Investing, Politics, Travel

Economist: How American politics has pulled apart

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Category: Politics, Video

What Are the Risks for Pacific Coast Residents from Fukushima Radiation?

“[The Odds of] Longer Term Chronic Effects, Cancer Or Genetic Effects … Cannot Be Said To Be Zero” It is very difficult to obtain accurate information on the dangers from Fukushima radiation to residents of the West Coast of North America and Hawaii. On the one hand, there is fear-mongering and “we’re all going to…Read More

Category: Energy, Politics, Think Tank

D.C. Is Dragging Down the Economy

click for larger chart Source: Econtrarian   The past two days have seen two positive surprises in economic data. Yesterday, the gross domestic product came in at 2.8 percent growth, significantly better than consensus expectations of 2 percent. This morning, payrolls jumped by 204,000 workers, against median estimates of 163,000. Now imagine how much better…Read More

Category: Data Analysis, Economy, Politics

Source of Government Shutdown Has Faltering Economy

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Category: Digital Media, Economy, Politics

Rand Paul & Janet Yellen

Rand Paul & Janet Yellen David R. Kotok Cumberland Advisors, October 25, 2013       There are reports that Senator Rand Paul intends to put a “hold” on Janet Yellen’s nomination for Federal Reserve Chair. Senator Paul is involved in an absolute act of lunacy. He wants to put Janet Yellen’s nomination on hold…Read More

Category: Federal Reserve, Politics, Think Tank

The New American Center

  This is the first two of 13 charts that help to define the new American “Center” click for all 13 graphics Source: Esquire    

Category: Data Analysis, Digital Media, Politics

Washington’s Open Secret: Profitable PACs

Most Americans believe it’s illegal for politicians to profit from their public office but, as Steve Kroft reports, that’s not the case.

October 20, 2013 4:37 PM

See also Washington’s open secret: Profitable PACs

Category: Politics, Really, really bad calls, Video

A Wonderful Circus

Thats how the FT’s delightful Martin Wolf described the recent silliness in Washington DC:


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martin wolf

Category: Politics, Really, really bad calls, Video

The Truth About the Deficit

Yesterday, I was on Pete Dominick’s Sirius XM Satellite radio show (audio below). A caller asked about how to close the deficit. His comments revealed that his concern about the deficit was merely a ruse, a tool to be used to achieve very different goals. If you are truly concerned about deficit, then what you…Read More

Category: Mathematics, Politics, Really, really bad calls