Hennessy's View

Predicting the Climax

We are watching The Fourth Turning unfold before our eyes. While you should read all of The Fourth Turning by generational historians William Strauss and Neil Howe, here’s one of their predictions for this point in time. The prediction was published in 1997: The economy will in time recover from its early and vertiginous reversals. Late in the Crisis, with trust and hope and urgency growing fast, it may even achieve unprecedented levels of efficiency and production. Read more →

It Can Happen Again—The Big Short Movie

“You know how when you walk into a post office you realize there is such a difference between a government employee and other people,” said Vinny. “The ratings agency people were all like government employees.” The Big Short: Inside the Doomsday Machine (movie tie-in) (Movie Tie-in Editions) (p. 156). W. W. Norton & Company. Kindle Edition. I wanted to blame the government. Like millions of American conservatives, I had developed a powerful narrative of the way the world works. Read more →

Correction

Something weird happened in the stock market today. Yesterday I blogged about the stock markets. I’d been up early to see what was going on in Europe and Asia. I was watching US futures, too. I decided to write about what might happen. And I told you about Ben Hunt, my favorite economics writer. Ben combines remarkable knowledge of game theory and psychology with his genius in finance and economics. Read more →

China Is Crashing and Greece Is Spinning Out of Control

The world is even more fragile than it was in 2007. The big banks are bigger. Aggregate bank assets are concentrated in fewer hands. The bank derivatives books are much larger. Market liquidity is worse. —James Rickards, The Daily Reckoning Well, ain’t that just dandy? And it’s undeniably true. We were told that the 2008 financial meltdown was caused by entities that had grown too large: banks, insurance companies, corporations, derivitives. Read more →

A Dangerous Misunderstanding of Debt

Debt is not a guarantee of future payments in full. Rather, it is a risk that creditors take, in hopes of maybe being paid tomorrow. The key word there is “risk.” If you’re willing to take the risk, you’ll get a premium — in the form of interest. But the downside of that risk is that you lose your money. And Greece just called Germany’s bluff. Jim Edwards nailed a major problem with modern finance. Read more →

Greece Rejects Central Banksters

Greece has voted to reject the “troika’s” bailout terms. The people of Greece said “no” to the central banksters who encourage sovereigns to enslave themselves under mountains of debt. The Greeks showed remarkable courage and resiliency, and their example could disrupt the entire international banking system. Tyler Durden at Zero Hedge: The Greek people have spoken and they said “OXI”! So congratulations Greece: for the first time you had the chance to tell the Troika, the unelected eurocrats, and the entire status quo establishment, not to mention all the banks, how you really felt and based on the most recent results, some 61% of you told it to go fuck itself. Read more →

Take a Walk on the Hedonic Treadmill

Here’s what happens when you raise the minimum wage to $15 an hour, according to scientists: Nothing. Well, not nothing. All kinds of bad things happen to the economy. But nothing happens for two groups of people central to the whole debate: workers who get a bump to $15 and employers who have to bump to $15 an hour. Most cities and states that have raised their minimum wage laws to $15 will phase in the increase over five years. Read more →

Low Interest Rates Hid True Cost of Increasing Debt

House mortgage-type instrument suggested as means to pay off national debt Guest Post By Lee A. Presser Interest rates have been held artificially low by the Federal Reserve since 2008. This has had the effect of hiding the true cost of increasing debt. As interest rates rise back toward 4%, the U.S. Treasury will have less money to spend on discretionary governmental functions. The FY 2015 budget is approximately $3,900,000,000,000.00. Another way to look at that number is about $12,187. Read more →