Comments on: The Evil Empire Speaks

By: Making the Interest Rate Interesting | Progressive Fix

Making the Interest Rate Interesting | Progressive Fix — Wed, 06 Jan 2010 19:02:21 +0000

[...] for the Fed to raise rates for a couple of months – to two percent. These hawks tend to be strongly laisse faire conservatives, One of the voices saying we should ignore the Taylor rule is – as Brad DeLong points out – [...]

By: Bman

Bman — Wed, 21 Oct 2009 13:13:33 +0000

anaon – agreed. Most people do not save looking to hit a home run. It is savings, not a leveraged emerging market ETF. Some of it goes into coffee cans.

By: Chicken

Chicken — Wed, 21 Oct 2009 04:55:06 +0000

I’m not necessarily convinced that GS is an evil empire but there are a few questions I have that seem to point in their direction.

a) How does a market like the DOW loose or gain 5% in the matter of a only a few minutes?

b) Why are there so many Goldman veterans involved in the governmental process and does this not present multiple opportunities for conflicts of interest?

Otherwise, I do tend to agree with their current economic assessments, it’s always the time horizon issue that keeps me from accepting these assessments at face value.

By: Michael

Michael — Wed, 21 Oct 2009 01:46:18 +0000

anon: Agreed. Any savings model that doesn’t factor in the impact of existing debts is an incomplete one. In a society with large past debt obligations, lowering of interest rates inevitably results in increasing discretionary income (net of interest expense), facilitating increased savings and consumption. An over-indebted consumer is more likely to pay off debt rather than consume if his discretionary income increases, whereas a consumer without debt may more likely consume in the same environment. In aggregate, I think it depends on the amount of debt out there.

By: anon

anon — Wed, 21 Oct 2009 00:24:10 +0000

i think higher rates will lead to less savings. look asia over the past 10 years…prolonged depressed rates have caused savings to increase…partially in order to create enough income in the future, given the near-zero returns offered.

By: gorgeous

gorgeous — Tue, 20 Oct 2009 23:30:13 +0000

GS must be talking their book. Keeping the dollar down and threats to take it lower only helps service our debt. What exactly are we exporting that is very sensitive to dollar anyway? Weapons or movies? We had the biggest collapse in RE and rents are down. Therefore no inflation threat? Eludes me.

I think a scary scenario is sectors in the economy (eg. Tech) taking off leading to price increases while other sectors with big unemployment staying behind. Fed will be damned if you do damned if you don’t.

By: Bond Girl

Bond Girl — Tue, 20 Oct 2009 21:47:19 +0000

I’m not saying I disagree with their conclusion, but I think GS picked an easy target with this post relative to stronger arguments against current policy, which are basically to the effect that measurements of output gap do not account for bubbles.

By: Bman

Bman — Tue, 20 Oct 2009 21:07:21 +0000

cyclingscholar – there are 4 branches of government now:

Executive, Legislative, Judicial, and the Fed.

By: tom

tom — Tue, 20 Oct 2009 20:49:50 +0000

How can large investment bankers get away with front running their trades before customer accounts when many other persons/brokerages are shut down or jailed for the same thing?

How can they be exempted from this? A tiny X milion penalty without admiting guilt is not severe enough.

By: Wrencher

Wrencher — Tue, 20 Oct 2009 20:20:47 +0000

John,
I enjoy your blog and appreciate your position of being reluctant to cast stones.

In ‘Gone With The Wind’ Melanie Wilkes has died and Rhett is talking to Scarlett : ” “Miss Melly’s a fool, but not the kind you think. It’s just that there’s too much honor in her to ever conceive of dishonor in anyone….” I don’t doubt that the Goldman people are very bright, and that they might well understand the whole system better than anyone else. But we all put on our pants one leg at a time, and I think they are just too good too be true.