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Making Money from Municipal Waste

September 10, 2010 By Frederick Sheehan Leave a Comment

Harrisburg, Pennsylvania, is defaulting; Half Moon Bay, California, is disincorporating; and the City of Miami, Florida, declared a “state of fiscal urgency,” then broke contracts with workers. Yet, Pennsylvania, California, and Florida municipal bond funds managed by Blackrock are trading at or near 52-week highs.

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An Addendum to the ‘Flations – Gold $5,000

August 31, 2010 By Frederick Sheehan Leave a Comment

Federal Reserve Chairman Ben S. Bernanke delivered a much-anticipated speech on Friday, August 27, 2010. There was no reason to think this talk would be more or less important than his other talks except for the degree of hysteria whipped up by the media in advance.

Bernanke was addressing an audience of fellow central bankers and their camp followers at an annual gathering in Jackson Hole, Wyoming. There have been memorable comments at these late summer getaways, such as, in 2005, when past-Federal Reserve Board Vice Chairman Alan Blinder claimed then-current-Federal Reserve Chairman Alan Greenspan might be the “greatest central banker who ever lived.”

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The ‘Flations – Part II

August 26, 2010 By Frederick Sheehan Leave a Comment

Inflation versus deflation discussions are the rule for columnists, economists and BubbleTV. This false distinction is potentially harmful for investors and shoppers who think they must decide between the two, then act. Inflation and deflation act contemporaneously. The relative movement of what is inflating and what is deflating (e.g., common stocks vs. gas, bonds vs. bread) influences, and possibly changes, the way we live.

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The ‘Flations

August 13, 2010 By Frederick Sheehan Leave a Comment

The incessant debate of whether the economy is inflating or deflating suffers from a vocabulary problem. This is as it must be since some (Federal Reserve Chairman Ben S. Bernanke) discuss deflation as falling prices of stuff while others concentrate on the debt deflation of an overleveraged economy. The latter is what matters.

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How to Look for a Job

August 4, 2010 By Frederick Sheehan Leave a Comment

Unemployment is stuck in a rut. One reason is the tendency to look backwards. Trillions of dollars have been spent (with no end in sight) to bail out financial institutions, homebuilders, and failing industries. The federal government is spending $787 billion on a rejuvenation plan: ARRA – the American Recovery and Reinvestment Act of 2009. In the bill, $500 million is sequestered to metamorphose former credit-default swap salesmen into nurses and public health workers. Assuming the government wastes half of that money filling a new bureaucracy to administer the training, that still will be a lot of new nurses.

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“Masses of Worthless Paper�

July 19, 2010 By Frederick Sheehan Leave a Comment

We wince at congressional ineptitude but in one category legislative aptitude is improving: propaganda. The on-again, off-again finance bill (it’s on-again) was described by the Wall Street Journal as “the most extensive remapping of financial regulation since the 1930s.” It is nothing of the kind.

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Corporate CEOs Won’t Invest in America, Why Should You?

July 13, 2010 By Frederick Sheehan Leave a Comment

There is no end of economists, analysts, and reporters filling the air with investment recommendations. Is the stock market oversold? Should we invest for inflation or deflation? And so on.

That is talk. American CEOs are voting with their feet. Since they aren’t investing in the United States, does it make sense for the individual stockholder or bondholder to do so?

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Municipal Pathologies Come to a Head

July 7, 2010 By Frederick Sheehan Leave a Comment

Discussions about municipal finance generally assume three absolute conditions. First, the principal and coupon of municipal bonds are guaranteed: “Municipal bonds don’t default,” according to trusted experts. Second, the guarantees are backed by the taxing authority of the state or municipality. Third, accrued pension benefits are guaranteed.

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Kartik Athreya for Fed Chairman

July 2, 2010 By Frederick Sheehan Leave a Comment

Federal Reserve economist Kartik Athreya has written what all Federal Reserve apologists believe: “Economics is Hard. Don’t Let Bloggers Tell You Otherwise.” This paper of June 17, 2010, penned from the Research Department of the Federal Reserve Bank of Richmond, was not so much a beef with economist-bloggers, just those who are not blindly devoted to the supernatural authority of the Federal Reserve.

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