Do More Complex Financial Systems Create Future Growth??

See link here to today's video that we showed in class. You're welcome Laura...

Ireland Government Defaulting

http://finance.yahoo.com/banking-budgeting/article/112482/ireland-economy-going-bust?mod=bb-budgeting&sec=topStories&pos=2&asset=&ccode=

Generally I think it is safe to say that governments cannot default because they can simply print more money, but this is not the case for Ireland as it is part of the EU. Now Ireland is facing a debt crisis and will default if they do not get bailed out.

Is this even a big issue as "Ireland's entire debts amounts to less than 5% of the total revenue of the euro zone's 17 governments and its net debts are about 3%"?

The graph above is the EUR/USD over the past 6 or so months. The continually strengthening Euro would suggest that Ireland's default is not very important.

Lobbyists rule the world!!

I just read two pieces about the influence of lobbyists on policy making.  The first is a general piece:  all important policy in Washington and Lansing has been vetted by lobbyists.   It presents a Smith-like argument:  we no longer live in a democracy, we live in a plutocracy (see here)    .  The second is a more academic look at Basel III and how it is most likely inadequate as an international tool to strengthen the international financial sector through requiring banks to have adequate reserves (see here).  One last citation:  go to this site and see who funded President Obama's 2008 election bid--no wnder GE doesn't pay taxes. 

Greenspan and perfectly competitive financial markets

More than anyone else, Greenspan enabled deregulation of financial markets through his belief that they were inherently perfectly competitive.  In 2008, around the time that Yves Smith was beginning to write Econned, Greenspan was repenting of his blind allegience to deregulated competition.  But he has since changed his mind as this recent op-ed piece shows.  Perfect competition works and if we think otherwise, we must be wrong. 

Debt Ceiling to be hit by May 16th

"Big issues...no easy answers" - todays top story regarding our nations debt ceiling and the threat that entitlement programs have on our future. I know I brought up entitlement programs in my last blog topic but I think this the most important talk of today's as well as tomorrow's national security so here's another really interesting article regarding these issues. I highly encourage everyone to watch the video, I think is was a really interesting interview.

The two Chairman of the President's debt commission in this interview made some very interesting points. They suggested that cutting and privatization are not what we need to focus on rather solvency. The 1.6% cuts that we are currently striving for "won't get us to the promise land". They also mentioned for every dollar that we spend we borrow 40 cents (just plain stupid!); and by 2020 we will be spending $1 trillion on interest for these major entitlement programs alone. Watch the video and see more of the what they have to say. I don't have any specific questions regarding this article, I was more curious on what you guys thoughts...

See link here.

The U.S. Dollar

http://www.marketwatch.com/investing/index/DXY For the past year the U.S dollar has steadily been losing value to other currencies. The DXY (a futures index that tracks the dollars value to a basket of currencies) chart shows it testing the 75 level, a level that has shown strong support over the past 5 years.

My question is then... Is it a problem that the U.S dollar is becoming less valuable, and do you think it will recover?

House GOP Budget to Call for Big Changes to Medicare, Medicaid

Washington (CNN) -- House Budget Chairman Paul Ryan, R-Wisconsin, will unveil a highly anticipated 2012 Republican budget next week that proposes dramatic changes to political lightning rods: entitlements. The plan, to be released Tuesday, calls for a controversial overhaul of Medicare, the health care program for seniors, and imposes deep cuts in Medicaid, which provides health benefits to low-income Americans, according to House Republican sources with knowledge of the proposal.

See link here.

Entitlement programs are currently creating many problems for our Federal government, reform needs to happen asap. This article addresses the Republicans budget for next year and although it is a very risky and controversial move it's the first real step towards change (which I believe is a good thing). I found this article interesting in that it didn't address social security, which I believe also needs restructuring because it's also a huge contributor to our federal deficit and debt. What are your thoughts on social security reform? The article also talked about the timing of this budget proposal, do you think GOP leaders should have delayed the release of this budget until this years spending difference are resolved? Any other thoughts or comments?