Public debt & the left

Via Bill Blain of Mint Partners, There a couple of good reasons to be more than moderately concerned about what’s happening in the fixed income space. Once more my gallant crew, we are sailing into choppy waters... which may mean trouble ahead, but it also spells opportunity! Two things concern me:

There’s something about the Copenhagen summit that‘s puzzling me. To see it, approach the issue from the perspective discussed by James Buchanan in The Calculus of Consent. There are, he said, three broad ways of organizing our affairs, each with costs and benefits; he was writing about individuals, but for our purposes, we can replace individuals with governments. These ways are:

This comment from Duncan has created some controversy:Whilst it may be logical for one business to focus on ‘cutting costs’ to safe guard profit margins, it is illogical for all businesses to do the same.  It would be even more illogical if the State joined them.This is one area where a little basic maths might help.

By Peter Boone and Simon Johnson Europe needs a new recovery plan, bigger and broader than anything put together so far.  This weekend is the perfect time to put such a plan together.  But be wary of committing official resources too early in this market downdraft – smart policymakers will calmly let the markets fall further, in order to benefit from the rebound potential.

The one thing that most seem to forget in the epic 30 year old story (which has a very sad ending) that is the Japanese floundering economy, is that while the new Abe government may and will likely try everything to crush the Yen (which is already nearing the 90 USDJPY target, however briefly, before it resumes its grind lower once it dawns on investors what it will mean for the Japanese Treasury when bond yields soar), the main reason it has posted three massive monthly trade deficits in a row has nothing to do with its currency, and everything to do with what is now a permanent boycott of

Spanish Bond Yields Back Above 6% Yield on the 10-year Spanish bond is up 22 basis points to 6.06%, having hit a high of 6.08%. It's Not Contagion

Does Europe need more hedge funds? That was one of the more intriguing questions to come out of a one-day seminar on Europe's sovereign debt crisis I attended this week in Brussels. The event was co-sponsored by the IMF and Bruegel, the respected European think tank, and it was held under the Chatham House Rule, which means I can't tell you who said what. But I can give you a few headlines.

The proposal that dog-owners should be forced to buy insurance against their mutt attacking someone encapsulates pretty much all that is most wrong with New Labour. There’s the over-reaction to media scare stories; the use of the law to “send a message”; the further empowering of the police to bully law-abiding people; and the inability to see that the people most likely to own truly dangerous dogs will regard this law as just another one to ignore.