New interviews with Niall Ferguson

Ferguson is an original thinker who is always provocative and well worth listening to. As Consuleo Mack puts it, he definitely has the gift of gab.

Financial Thought Leader Niall Ferguson discusses why the centuries long dominance of Western economic and political power is waning and what the United States needs to do prevent it from slipping even more.

In his recent book, "Civilization: The West and the Rest," Ferguson attributes the dominance of the West over the East to the following six "killer apps":

1. Competition

2. Science

3. Property Rights

4. Modern medicine

5. Consumer Society

6. Work Ethic

Niall Ferguson on the six "killer apps" of Western civilisation by intelligence2

Interesting article on the Tata Group

The Economist has an interesting article on India's Tata Group:

Out of India

Under Ratan Tata, the business group that bears his name has transformed itself from an Indian giant into a global powerhouse

All David Stockman All the Time

Ronald Reagan's former budget director, David Stockman, has been on a tear lately. Not burdened by partisan politics or crazy-eyed ideology, he tells it like he sees it, which makes for refreshingly honest commentary.

As such, the interview below with Reason TV is must-see TV.


Some of his main points:
1. We live in a Welfare-Warfare State, a state of affairs that is not sustainable
2. We need to Bush's reverse tax cuts for all Americans
3. We need to means-test entitlement programs
4. TARP was a bad idea - Hank Paulson was the most incompetent treasury secretary ever!
5. Bailouts don't work and they don't make sense
6. He believes in "narrow" banking - not every bank should be insured by the FDIC
7. The end of Bretton Woods and the Gold Standard unleashed a wave of speculation and volatility
8. We don't need to spend so much on defense. The Soviet Union was a house of cards, so Star Wars and the huge military buildup was not necessary
9.  Wars should be funded on a pay-as-you-go basis (i.e. raise taxes). The last honest war president was Truman.
10. Social Security and Medicare are an inter-generational Ponzi scheme.

The Triumph of Politics Over Economics

http://reason.com/archives/2011/03/21/the-triumph-of-politics-over-e

The End of Sound Money and the Triumph of Crony Capitalism
http://mises.org/daily/5113/The-End-of-Sound-Money-and-the-Triumph-of-Crony-Capitalism

Crony Capitalism Strikes Again
http://www.minyanville.com/businessmarkets/articles/federal-reserve-fed-central-banking-wall/3/23/2011/id/33504?page=full

Rare interview with John Burbank (Passport Capital)

End of QE2
Too early to tell if there will be QE3
Regardless, we need to fund $2T deficits next year -- will need to raise $800B from Banks or the Fed.
Resource Scarcity and Saudi Arabia
Concerned about resource scarcity
Started investing the middle east in 2006-07
One of the largest investors in Saudi Arabia

The country is not in any index and does not attract institutional money

Aramco may have over $1T in revenue in the near future
Financial Firms

No stake in financial firms

Regulatory issue vs. a bottom up analysis issue

Banks should be not allowed to pay dividends

We are pretending things are stable and back to normal
Recovery

We are "not recovering"

Housing prices are still falling

Mortgage Duration issue (low coupon) - will not be able to refi if rates rise so people will be stuck in houses for a long time

Fed is stuck with owning a lot of mortgages - the problem will get worse over time

Let them Eat iPad!!

On Friday, March 11, President of the New York Federal Reserve Bank, Bill Dudley (aka Clueless Billy)  gave a speech at the Queens Chamber of Commerce. He tried to explain to the masses why inflation was not a threat and why core inflation (i.e. inflation after you remove everything that goes up) was actually quite tame:

"Today you can buy an iPad 2 that costs the same as an iPad 1 [did]. That is twice as powerful. You have to look at the prices of all things."

This lead to widespread derision from the audience. One audience member called the comment "tone deaf."

"I can't eat an iPad" was the classic response from another.

Richard Fisher gets it

Federal Reserve Bank of Dallas President Richard Fisher is one of the few people working at the Fed who gets it:

“There’s lots of liquidity sloshing around the U.S. financial system,” Fisher said. “We are seeing signs of all the intoxication that typically takes place when we have the ambrosia of cheap and readily available capital.”

Unfortunately, the mad men are in charge and there's not much we can do to stop the train wreck that awaits us. Be prepared for the inevitable chorus of "it wasn't our fault" and "nobody could have seen this coming."

Dubai on Empty

Vanity Fair on Dubai's artificiality and exploitation of its immigrant workers.

Dubai is the parable of what money makes when it has no purpose but its own multiplication and grandeur... Dubai is a place that doesn’t just know the price of everything and the value of nothing but makes everything worthless.


The workers, who make up roughly 71 percent of the population, have precious few rights here. They can’t become citizens, though some are the third generation of their family to be born here. They can be deported at any time. They have no redress. Many of the Asian laborers are owed back pay they aren’t likely to get. There are reams of anecdotal stories about the abuse of guest workers. I’m told about the Pakistani shop assistant who, picking up an Arab woman’s shopping bags, accidentally passed gas, got arrested, and was jailed.

The Financial Crisis: Will It Lead to America's Decline?

Niall Ferguson at the Aspen Institute, January 2011

Thomas Friedman on America and China

Niall Ferguson at the Peterson Institute

From May 13, 2010

Fiscal Crises and Imperial Collapses: Historical Perspective on Current Predicaments

It's David Tepper's World

Part I


Part II

It's David Tepper's world (continued)

The famous interview in September 2010 that kicked it all off...

"Everything will go up"

Nassim Taleb on Charlie Rose

The author of the Black Swan talks about his new book “The Bed of Procrustes: Philosophical and Practical Aphorisms”

http://www.charlierose.com/view/interview/11516

Favorite Aphorism

"The Prophet is not someone with special visions, just someone blind to what others see"

Ben Bernanke

Helicopter Ben was completely fooled. He didn’t understand the risks of the system and thought we were in a great moderation.  He couldn’t figure out why the crisis took place and what the solution should be.

The System

The world is so complex that we need more “reserves” (buffers/redundancy) against unpredictability which makes the world less forecastable. For robustness in the system we need a lot of redundancy and a low level of debt (this will result in significant belt tightening). In a society with less debt bankers can be supremely incompetent but can’t hurt the system as much.

Example: mother nature gave us two kidneys. The exact opposite is debt – instead of having two kidneys, we borrow one.

Obama Administration

When Obama came into power he appointed people who were part of the system who got us into these risks. He should have immediately tried to “cut the cancer” similar to what Cameron did in the UK. Instead they converted private debt to public debt. They punished savers and bailed out debtors.

Stimulus packages “fragilize” the system further.

Bailouts

Two moral problems with bailouts:

1.      Innocent pays for the mistakes of the wrong doers

2.      Transferred debt and risk to future generations

Europe

Europe has less debt than the U.S. and thus is more robust. They also understood problem of too much debt early on.

Globalization

Not against globalization, but we need to understand that globalization reduces predictability and results in more winner take all effects – overspecialization (leading to lower inventory and more volatility) and fragility. As a result, globalization can destabilizing. It is not a panacea.

Overall Metaphor

In Korea in October 2009: someone from the IMF showed economic projections for 2010 through 2015. Taleb challenged him to show his projections for 2007 and 2008 that were made in the early 2000s. His main point: You should be as wrong as you want without affecting other people” i.e. the “expert problems” shouldn’t be allowed to hurt society.

Dan Fuss on Bloomberg

Daniel Fuss Says U.S. Interest Rates `Artificially Low'

John Brynjolfsson on Bloomberg

 Armored Wolf's Brynjolfsson Says Fed to Hold Rates as Long as Possible.