Random Musings

At some point I plan to proceed with a series of posts about the Steve Keen book, I just haven't focused on it yet. In the mean time...

-I started a new book about the hyperinflation in Weimar Germany. The topic is one that I've always wanted to learn more about. Unfortunately, the particular book in question has yet to suck me in. It seems it will be a chore to get through.

-I continue to read through my regular mix of econ, investing and sports sites on a daily basis (a group that extends beyond those listed off to the right). Unfortunately, particularly with respect to the first group, the topics covered lately have generally been on the drier side. Hence, not much to grapple with and to inspire blog posts here.

-With that said, one of the econ blogs that I follow had a recent post about the gold standard during the interwar period, which of course led to the author throwing out the standard meme that owning gold is silly and that the asset class is in a bubble. One of the readers made a comment in response that I quote below:

"Do you see something wrong with the structure of this argument: I cannot see why asset X is so expensive, or has gone up so much -- although I am not an authority on X, or on bubbles -- and I therefore declare X a bubble?"

Sounds about right.

-Finally, another game, another win. Lin looked more under control, but he was playing a team without its two best players. Tonight in Miami should make a stronger case one way or the other about whether he's for real.

More Yen

I posted the the FXY chart (proxy for the Yen) on Friday wondering whether a new trend might be afoot. That was a daily looking back 6 months. I decided to stretch the analysis out further and now present a monthly chart going back about 5 years. You'll observe that there could be some support around 123 (where it is now), but more likely some downside left to the 120-121 level (for the short term trader). At that point, it gets very interesting from a long term perspective. A break below might signal the real change in trend that many are expecting. In the end, though, caveat emptor -- it's still just a chart read and anything might happen in this world of crazed monetary policy.

First Take

Perhaps sacrilege around these parts, but tonight's Knicks game (now the third in succession that I've been able to watch) has given me my first real sample of the Jeremy Lin experience -- and I'm not totally sold. He could be a good point guard, but at this point he always teeters on the edge of being out of control. He drives into the lane and guaranteed that at least one defender is going to get his hands on the ball. He's reckless. The flip side is that the team has started to win on a regular basis. And at the end of the games, I have yet to see him miss a big 3. But, with a roster chock full of scorers, the point guard needs to be a settling force. And, so far, Jeremy Lin ain't that.

New Trend?

I watch the Japanese Yen. And here's what the chart looks like these days...

I Hate Jim Dolan

With the Jeremy Lin phenomenon showing no end in sight, it feels rather timely that I recently finished When The Garden Was Eden by Harvey Araton about the Knicks of Clyde and Willis. In many ways, and Clyde recently noted the same in an interview, there is a similarity between the Lin/Carmelo storyline and the Frazier/Monroe dynamic back then. Who would sacrifice and could it work? Now, to be honest, it is almost absurd that in order for the parallel to work that Jeremy Lin, with 6 starts under his belt, is either a modern day Walt or the Pearl. Nevertheless, if the assumption is allowed to stand, we see that what is ultimately required is sacrifice. And, to me, that's what 6 shots and 13 assists represents. Jeremy Lin is not just a flash in the pan. He is a talented player that needed a chance, and he can be a legitimate starting point guard. And if I'm right, that should be enough to allow Carmelo to come back into the mix and be the dominant player that he has always been.

As for the title of this post, I remain one of 2 million New Yorkers without the MSG network. And, since every story needs to have a bad guy, and given that nepotism is something I am intimately familiar with, my nominee is the guy who was born on third base and thinks he hit a triple.

See I told ya...

They just needed a point guard to help right the ship. Hopefully Lin can keep it going. And maybe at some point I'll get to watch a game again.

Time to Debunk

While on vacation last week, I had the opportunity to plow through Debunking Economics by Steve Keen. It is probably the most interesting and informative book on economic theory that I have read to date. At its core, it is a textbook for the layman, covering many of the technical aspects of economic theory, but without getting bogged down in complex math and other such things that would cause the non-economist to stop reading and give up. I would recommend it to everyone.

As for the nitty-gritty, Keen is a Post-Keynesian. In his world, the money supply is endogenous (i.e., private banks are the source of debt creation, not the Fed), which fits in with Hyman Minsky's theory that capitalist systems are inherently unstable, the neoclassical framework for economic analysis is bunk, almost all economic models assume equilibrium (and, largely for that reason, were not able to see the crisis coming), and Keynes is greatly misunderstood and misapplied by the folks who are termed "Keynesians" now.

Going forward, my plan is to dedicate several posts to some of the important points that Keen makes in his book. For now, I will simply jot down a couple of points:

-I have a much greater respect for Keynes as a result of this book and would like to re-read The General Theory now that I have better context.

-The Minsky theory is intriguing, arguing that capitalism is inherently unstable and leads banks (who profit by making loans) to make more and more loans that are more and more risky. In a broad sense, that's plausible, as that's seemingly what happened. But, there is still a missing ingredient (at least from my read of it) that triggers this cycle of reckless behavior. After finishing the book, I did subsequently read some articles by Minsky, but still feel like there is a missing causal link in the progression of events that he describes. Happily, I know Professor Keen is working on a book covering the Financial Instability Hypothesis to be published in 2013.

-My thesis that most economists are ideologues remains in tact.

-While Keen says a lot of things that I agree with, there are still items that I remain skeptical about.

Anyway, that's it for the moment.