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Michael Covel (FT Press)

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Slippery Slope?

Economics | July 2nd, 2009


Note: No vulgarity or ugly attacks. There are other places for that.

  • Dan K

    What’s wrong with hyperinflation? I won’t mind picking up worthless dollars in the streets to go pay off my mortgage.

    Didn’t we already have hyperinflation without increasing the money supply? The credit in housing bubble inflated everything. No stimulus money will be released until all credit is removed from the market.

    The media keeps saying hyperinflation so beware of deflation.

  • Jim B

    Interesting perspective on banks making deals with homeowners to get a majority interest in a person’s “house equity” to keep them in their homes. The person has a place to live and the bank has an asset. Creative idea!

    As for inflation, the “black swan” potential of moving away from the U.S. $ as the world’s currency to a basket of currencies will create the hyperinflation scenario. China is making its intentions clear by creating bi-lateral trade agreements with many countries bypassing the $. They have also made it clear they are planning to buy more gold. It is a good time to convert from $’s to gold and bet they are making this conversion as we blog.

    Happy 4th of July to everyone…Jim

  • Dan Walther

    Taleb is completely worthless. He just wasted 8 minutes of my life. How anybody can listen to this guy and extract any valuable (=tradable!) information is completely beyond me. Thank God I can stick to trendfollowing so I don’t have to guess if we’re going to see hyperinflation or deflation.

  • http://michaelcovel.com Michael Covel

    Dan of course you can’t trade off what Taleb says, agreed there, but he does make some smart comments economically/politically.

  • gregory

    The solution: Converting debt to equity.
    How shall this work, switching signs?
    Practically, if the gov goes to a house owner with a too large mortgage, what can they do? If they just erase the mortgage by law, banks will really blow up, but there won’t be less money in the system. It’s already floating around since the houses were paid.
    On the other hand, if gov pays the debt back on behalf of the house owner, it’s injecting new money based on debt directly or via other banks.
    But will the houses really be ‘equity’ after that? If gov pays for the house, nobody else will pay. I doubt that after that houses will really be regarded as equity any more…
    So, maybe I missed Taleb’s point, but quant easying one way or the other is just what also happens here, and it erases non-state-debt, but it wont generate new equity.

  • Jeff

    I like what Laszlo Birinyi said recently:

    “The negative case is always more compelling, articulate, and reasonable because it looks at the present, the obvious, and that which is quantifiable”

  • William F.

    What about the trend? He then states … Don’t be fooled by complex systems….. His definition of trend following is definitely not the same as mine.
    Trying to listen to this guy is an exercise of masochism.


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