EEEKonomics

The world economy is bad. Know why? Here are some popular guesses:

Bad mortgages?

Conflict of interest of rating agencies?

Leverage?

Structured Finance?

Collateralized Debt Obligations? Whatever they are?

E-Z Credit?

House flippers?

Alan Greenspan for not reigning in credit availability?

Sub-prime credit?

Barney Frank for pushing easy mortgage credit?

Oil speculators?

Phil Gramm for pushing repeal of Glass-Steagal?

Well, it beats the hell out of me. But it seems that everyone agrees we have a big problem.

Asking what the solution is gets a lot of talk and a lot of plans, but not any real explanation of why The System can't absorb these credit failures without completely breaking down. It's all about confidence, say our experts. Confidence? What happened to rationality? Remember the rationality of the markets? Just last year our good Republican leaders were telling us that markets were soooo rational that we should, as a society, allow The Market to determine healthcare and education policies.

At least we are having a better day that Sir Allen Stanford whose stock appears to be falling in the market of public opinion.

Among other things I don't understand is why gold is so grand these days. Why are yellow rocks that we can dig out of the ground any better money than papers with Presidents? Well, many people believe in gold (idolatry!) and think that the yellow brick road to the gold standard is the best way back to confidence.

But I doubt it. Confidence is just a stepping stone to what we really need, which is spending! And the best way to get people to spend today instead of save is good old fashioned inflation. Inflation also has the benefit of being selective, which allows today's inflated markets, like housing, to stay flat while other prices in the consumer's basket rise.

So let's go back to those pre-Volcker days and pump up the money supply. Size matters and we need a big fat M1 for a de facto devaluation. I'm telling you, it's the cure.

PDS - Pick, Dust, Start

This is the song President Obama referenced in his Inauguration Speech. I learned it as a child, when my Grandparents and their generation of Aunts and Uncles would sing it to us.

Click the PLAY arrow

So, tonight I'm back in Vegas, starting all over again.

Things are starting off unevenly. My flight got moved to a different concourse, and nobody told me. I made it, and sat next to some very enthusiastic cowboys. They were a chatty bunch. I still managed to sleep about half of the 4 1/2 hour flight.

Vegas has a long cab line at the airport. I was assigned spot number 13. 13? In Vegas? I can't believe they even use that number here. Not the good omen I was hoping for.

At the hotel the countergirl gives me a room on the second floor. Why not just write "low roller" on my forehead? I briefly wonder if I inadvertently offended her.

But, I must say, my room is fantastic! They've completely made over this place, and they did a great job. It's funny how a nice room can pick up your spirits. And when I say "your spirits" of course I really mean my spirits.

Natch I've only packed one pair of pants when I thought I had two. I hope I don't spill anything! No red sauce tonight. The conference is about to start, so I'm showered and dressed and ready to schmooze. Let's see what opportunities we can dig up.

America. Still the land of opportunity.

Looking on the Bright Side

Go ahead and play it for old times sake.

I see skies of blue . . .

Just kidding! Enough with the old music!

But seriously, aren't there some macro indicators that call for a little bit of optimism?

We have a new President. And he's not stupid!

Oil prices are way down. And OPEC (a/k/a NAMBLA) can't get the price to go back up!

Interest rates are way down. This has to be good for somebody!

The Iraq War or whatever it is has an agreement in place for American troops to come home. The troops gotta love that and it should save our government a boatload of money! Which we can give to our insolvent banks instead!

And a tax cut to boot!

It all sounds like a recipe for recovery to me. Let's bake this cake!