August 2008

Despite recent grain crash, long term food $$ is on the rise

The contrarian in me is screaming that Reuters' recent piece on food prices is the food inflation equivalent to Businessweek's famous "Stocks are dead" headline from a 1982 issue. Yet another piece is whispering in my hear "baby, it ain't over yet!"

Perhaps it's a little from column A and a little from column B. Food prices have been going up for decades, so how is this any news that we've reached a 20 year high? The rate of inflation (the official BS one and the much higher one using the original formula) has essentially been depreciating peoples' buying power since the end of the Great Depression. Yet, it seems to me, since the latter third of the last century, the rate of growth for the price of food has been growing ever faster.

Don't like what the data says? Hell, Stop Collecting it! BEA to stop tracking Foreign investments in the U.S.

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The Bureau of Economic Analysis (BEA)

Here is the graph of FDI from BEA:

FDI

As you can see Foreign companies are buying US assets extensively so why would the United States not track this very important statistic?

Economy in Crisis writes in Burying the Money Trail:

With the U.S. no longer following the foreign money trail, the American public will cease to have the ability to track the rapid sell-off of America’s best companies to foreign interests, essentially burying the problematic fact that America is for sale.

The American Manufacturing Trade Action Coalition, along with 38 other organizations issued a press release about the BEA decision to not track this vital statistic:

The Euphoric Drug of Profit - Part II - A Brief History of Drug R&D

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In the previous post, The Euphoric Drug of Profit, I asked the simple question, should pharmaceutical drugs be for profit at all? They are life saving compounds after all, something for the public welfare and good.

The National Institutes of Health (NIH), funds billions of taxpayer dollars in public research.

Before 1980, the results of publicly funded research, often performed at United States universities, was considered public domain (de facto).

Some of the problems with this scenario were:

  • basic research was not taken to product and final development
  • funding basic research does not fund the 75% additional costs of bring results to use by the general public

Where Obama Stands on the Economy or Doesn't

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There is a new article out from the New York Times overviewing Obama's economic policy views and details.

It is not calling cash on Obama to get with it on economic policy changes America sorely needs. Matter of fact the article doesn't even report on the hundreds of economists who will show you statistics, details on just wrong headed many of these policy positions are, especially on trade. Seemingly a large deficit doesn't seem to count to the New York Times in terms of referencing credible economists.

That said, this is one hell of an article. It goes through the details of how we can expect basically more free market Chicago school or "business friendly" economic policy.

FDIC Restructures IndyMac Mortgages - Homeowners finally catch a break?

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This looks like some sane and welcome news. Appears FDIC is going to restructure mortgages, lowering interest and payments for people who have housing financing at the failed IndyMac.

The FDIC suspended foreclosures originating from IndyMac and they are managing $15B of mortages.

Bloomberg: FDIC Modifies Mortgages for Some at IndyMac:

The FDIC, which is running IndyMac while seeking a buyer, may also extend repayment terms or base payments on reduced principal to help borrowers, FDIC Chairman Sheila Bair said today in a conference call with reporters. The program might serve as a ``catalyst to promote more loan modifications for troubled borrowers throughout the country,'' Bair said.

Solving the Mortgage Crisis - Part I

I don't know about you all, but I was reading Ben Jones' Housing Bubble Blog 3 years ago when house prices were still climbing 20% a year and housing bulls were laughing at the bubbleheads. To them, the naysayers obviously missed the boat and were just sore losers who rented.

Way back in 2005 there were plenty of people (Federal reserve economists excepted of course) who saw the bubble and predicted that when the adjustable rate mortgage resets came due (beginning en masse in 2007) there was going to be one heckuva housing bust, and a cacophony of calls for a bailout of the greedy and the stupid.

Now that those predictions have come to pass, the question is, should we just let the mortgage/housing debacle play out, or are there ways to intervene that would be socially beneficial?

We ought to at least be able to narrow down the options, filtering out those that mainly bail out the greedy, or else entail too much cost or moral hazard. Of those options that remain, we ought to at least be able to narrow down areas of disagreement. Below are my suggestions.

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