Hamilton: Credit crisis causes vs symptoms

Short but interesting post from James Hamilton at Econbrowser on a recent conference re credit market dislocation. His main point is that many (if not most) economists are focusing on the Lehman collapse and its aftermath as problem, rather than the symptom of a historic run up in credit; accompanied by some easy to comprehend eye candy.

There’s also a link in the comments section to this New Yorker profile of Ben Bernanke – like Hank Paulson’s recent tell (not quite) all, it’s an interesting story.

URLs:

http://www.econbrowser.com/archives/2010/03/modeling_proble.html

http://www.newyorker.com/reporting/2008/12/01/081201fa_fact_cassidy?currentPage=all

Smart Money: Credit Card Companies

Smart Money magazine has a great long running feature, “Ten Things.” Their latest is “Ten Things Your Credit Card Company Won’t Tell You,” a rather timely dissection given passage of the CARD Act.

URLs:

http://www.smartmoney.com/spending/rip-offs/10-things-your-credit-card-company-wont-tell-you-18808/?cid=1230

Continuing credit disasters

An update from CFO.com on the federal government’s attempts to spur small business lending indicates that there’s a lot of fumbling and bumbling going on:

One proposal by the Obama administration is to take $30 billion of unused TARP money and create a Small Business Lending Fund for banks with less than $10 billion in assets. The amount of capital a bank could receive would be a percentage of its risk-weighted assets. The government would get at least a 5% dividend from the capital investment, but that rate would fall if the bank demonstrated an increase in small-business lending compared with a 2009 baseline. For every 2.5% increase in incremental business lending over a two-year period, the dividend rate would fall one percentage point. After five years, the dividend rate would increase to encourage timely repayment.

Assuming they’re looking for a five to ten year repayment, the government’s corresponding financing rate is between 2-4% (less than 1% if they borrow short), meaning a spread of 1-3%. Granted, there’s risk being taken “with taxpayers’ money”, but at a time when most economic theories say that the public sector should be dissaving (much less earning a fat spread on its existing funds), this kind of thinking is potentially disastrous (unless, of course, the dividends are going to be distributed to each citizen — read on once you’ve finished laughing).

Combined with the TARP stigma for recipient banks, we agree with critics of the idea who see it as a non-starter. This follows on the heels of what has begun to look like abject failure of the mortgage assistance programs enacted in 2009:

Earlier this year, the Making Home Affordable program was unveiled to help 3.2 million struggling homeowners stay in their homes either through a loan modification or a refinance…

…it’s not working.  This week, government officials reported to the House Financial Services Committee that 70 percent of borrowers who have signed up are not getting help…

Unfortunately, time is ticking and [better] ideas cannot be implemented quickly enough to keep up with the looming deadlines for these trial modifications, the increasing unemployment rate and rise in foreclosures.

As Rep. Barney Frank admitted in December, “no one can think we have done a satisfactory job.”

What can the feds do? Briefly, the best thing they could do is to minimize uncertainty for lenders and the entire private sector, and to ensure that fiscal policy is supportive – be it spending, tax cuts, or both (and ensuring that the TARP dividends distributed to its citizen-owners are tax free, ha ha ha…).

URLs:

http://www.cfo.com/article.cfm/14480869

http://www.credit.com/news/housing-market/2010-03-07/hamp-has-not-prevented-foreclosures-realtors-say.html

http://www.zillow.com/blog/mortgage/2009/12/09/hamp-harp-tarp-dud/

http://www.washingtonpost.com/wp-dyn/content/article/2009/12/08/AR2009120804194.html

Stiglitz: The Dangers of Deficit Reduction

A timely column from Nobel economist Joe Stiglitz (emphasis added):

A wave of fiscal austerity is rushing over Europe and America…But despite protests by the yesterday’s proponents of deregulation, who would like the government to remain passive, most economists believe that government spending has made a difference, helping to avert another Great Depression.

…even deficit hawks acknowledge that we should be focusing not on today’s deficit, but on the long-term national debt. Spending, especially on investments in education, technology, and infrastructure, can actually lead to lower long-term deficits. Banks’ short-sightedness helped create the crisis; we cannot let government short-sightedness – prodded by the financial sector – prolong it.

Faster growth and returns on public investment yield higher tax revenues, and a 5 to 6% return is more than enough to offset temporary increases in the national debt. A social cost-benefit analysis (taking into account impacts other than on the budget) makes such expenditures, even when debt-financed, even more attractive.

In those last two paragraphs, Stiglitz is pointing out that if the returns on public spending are greater than the cost of financing them, then the future debt level will actually be lower. The government’s current cost of financing is simply the yield on Treasury debt. As of Friday, the ten year Treasury note yields 3.7%, while thirty year Treasury bonds yield about 4.6%. If publicly financed investments can be expected to return more than those figures, then undertaking them — and adding to current deficits and debt levels — is a no-brainer.

And as long as the yields on the securities of private sector issuers aren’t abnormally higher than those on Treasuries, the argument that the federal government is going to ‘crowd out’ the private sector is without merit.

Of course, it’s debatable (1) whether public expenditures are likely to produce returns of that magnitude and (2) whether future Congresses, Administrations, and Treasury Departments will manage the federal balance sheet appropriately. Unfortunately, no one’s openly debating these points. Instead, we’re treated to pithy but nonstop dogma from both sides, and a peculiar obfuscation by those in the middle, which in all cases overlook the basic financial calculus that Stiglitz reminds us of in his column.

Most importantly for debt and deficit hawks and those who fear higher taxes (those whom econo-nerds would refer to as ‘Ricardian equivalence’ subscribers), when the financial calculus is positive, then the debt service associated with marginal federal spending can be financed organically, via higher growth, rather than through higher taxes.

In short, people on all sides of the deficit issue should be able to agree, at least on financial and economic grounds, that investments yielding more than their cost of financing, when they do not crowd out private sector borrowing or resource demand, should absolutely be carried out.

—

Unfortunately, Stiglitz overlooks his own argument when he writes the following, which make us wonder if he doubts his 5 to 6% return figures, or if he’s just offering a gratuitous slap at the financial sector (emphasis added):

As the global economy returns to growth, governments should, of course, have plans on the drawing board to raise taxes and cut expenditures…

Continuing with his love of taxes:

The financial sector has imposed huge externalities on the rest of society. America’s financial industry polluted the world with toxic mortgages, and, in line with the well established “polluter pays” principle, taxes should be imposed on it. Besides, well-designed taxes on the financial sector might help alleviate problems caused by excessive leverage and banks that are too big to fail. Taxes on speculative activity might encourage banks to focus greater attention on performing their key societal role of providing credit.

As we’ve pointed out elsewhere, the domestic financial sector is going to shrink even without  punitive measures, as demographic composition shifts away from the saving and investing age groups. Well-designed regulation might be a better approach than taxes to constraining financial sector activities to socially beneficial ones (we admit that a ‘Tobin tax’ can be the most efficient approach to regulation under certain conditions, but aren’t convinced that it’s optimal for the financial sector).

And it would be profoundly unjust for the federal government, which so strongly encouraged and underwrote the expansion of mortgage financing (Stiglitz’ “pollution”), to retroactively punish the financial sector, its employees, and its current and future clients for simply following the government’s orders.

Stiglitz also takes a step back from his underlying thesis with this sentence:

Over the longer term, most economists agree that governments, especially in advanced industrial countries with aging populations, should be concerned about the sustainability of their policies.

From a technical standpoint, this isn’t as iron clad as so many of us reflexively believe. First, we have no idea whether an aging population is bound to be a drag on an economy, whether it depends on particular conditions, or anything else. There simply isn’t much historical data available to test such a proposition. Second, if we assume that it is a significant drag, then policies that are seen as unsustainable under “normal” conditions might very well be the most sustainable under those novel conditions. This could include expanded deficit spending and public debt, and/or expansion of money supply.

[To be fair, Stiglitz is almost certainly referring to entitlement spending obligations in that passage, which might be a bird of a different feather. We're just using it as an opportunity to critique some of the conventional wisdom around demographics.]

—

Despite Sitglitz’ inability to break out of his New Keynesian box, or part ways with his passion for higher taxes, we agree wholeheartedly with his essential argument:

…even with large deficits, economic growth in the US and Europe is anemic, and forecasts of private-sector growth suggest that in the absence of continued government support, there is risk of continued stagnation – of growth too weak to return unemployment to normal levels anytime soon.

The risks are asymmetric: if these forecasts are wrong, and there is a more robust recovery, then, of course, expenditures can be cut back and/or taxes increased. But if these forecasts are right, then a premature “exit” from deficit spending risks pushing the economy back into recession. This is one of the lessons we should have learned from America’s experience in the Great Depression; it is also one of the lessons to emerge from Japan’s experience in the late 1990’s.

…we must be wary of deficit fetishism…high-return public investments that more than pay for themselves can actually improve the well-being of future generations, and it would be doubly foolish to burden them with debts from unproductive spending and then cut back on productive investments.

These are questions for a later day – at least in many countries, prospects of a robust recovery are, at best, a year or two away. For now, the economics is clear: reducing government spending is a risk not worth taking. 

URLs:

http://www.project-syndicate.org/commentary/stiglitz123/English

http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

Masters of the Universe: They’re baaaack…

A new BIS paper has some very telling data points. First, they demonstrate the extent to which leveraged financial speculation drove foreign currency movements in the financial crisis (it’s quite reasonable to assume that this factor was at work in other asset class dislocations too). Second, it provides evidence that highly leveraged masters of the universe were back to their old tricks in fairly short order.

Let’s start with a  quick primer on “carry trades.”  A carry trade occurs when a financial market participant borrows in some currency with a low nominal interest rate (the “funding currency”) and invests the loan proceeds in some asset(s) (a “target asset”) that’s expected to appreciate at a rate that exceeds the interest rate due on the borrowed currency. The target asset can be a higher yielding currency, a credit instrument, equities or a stock market proxy, commodities or a commodity index proxy, and so on.

The Yen carry trade — borrowing low yielding Japanese Yen and using them to acquire riskier assets – has been increasingly employed by speculators since the 1990s, and appears to have played a key role in the speculative period of 2004-2008.

Speculators engaging in this activity are taking risks (sometimes massive risks) with (for the most part) Other People’s Money (OPM). When it works, they return the borrowed funding currency plus interest, and pocket the difference. When it goes terribly wrong, you wind down operations and hide from your creditors behind a corporate liability shield, forcing them to write down the value of their loans to you (their funding currency assets).

Nice work if you can get it, and amazingly, investment banks and their subsidiaries have been falling all over themselves to make these loans to privileged clients — including their own proprietary desks and funds — since the late 1990s (in competitive strategy, herd pursuit of bad ideas is usually a sign of an over crowded industry).

Better yet for the carry traders, increasingly lax financial regulation has allowed speculators to lever their carry up to levels not seen before in modern history, meaning they can borrow more money for a given level of collateral, and/or purchase more assets with a given amount of funding currency.

As some of those trades started to go bad in 2008, the result was a breathtakingly sharp and sudden reversal in the key funding currency, the Yen. This can be seen in the circled graph below, along with the following observations:

• The rate of appreciation in the Yen was far greater in 2008 than in the 1997 and 1998 global financial crises. The left most graph shows foreign exchange movements between the Yen and thirty three other currencies during the Asian crisis of 1997. Clearly, forex movements in that crisis were country specific.
• The middle graph shows currency movements against the Yen during the 1998 crisis associated with the Russian sovereign debt default. The appearance of a positive slope is apparent, implying that forex dislocations were due more to speculative behaviors including the rising use of leverage than to country-specific risks (for that we can probably thank the pioneering geniuses at LTCM and their investment bank benefactors).
• The third graph shows the appreciation of the Yen during the recent global financial crisis. The slope, which gives an idea of how sharply the Yen appreciated against those 33 other currencies, is breathtaking. The median interest rate on the target currencies (on the horizontal axis) also appears to have been roughly half of what it was in 1998.

Translating into English, this means that in 2008-09, the Yen appreciated even more sharply than it did in 1998, and against target assets that offered half the expected return of those in 1998. This calls to mind a question we raised recently, which is whether some powerful financial market participants are confusing ”efficient dislocation” with “market efficiency.” That would be understandable after all. History shows that the fatter the economic rents being justified, the more deluded the economic rationales tend to be.

In the BIS paper, the author also notes that carry trade activities are inherently pro-cyclical: borrowing activity tends to push down the market value of the funding currency, while investing activity tends to push up the market value of the target assets, and this will tend to invite increasing levels of speculation until something causes a breakdown.

Higher degrees of leverage make the pro-cyclicality and the eventual fallout that much worse. Unfortunately, while a great deal has been made of John Maynard Keynes’ alleged return in the past year, it appears that the brief 2008-09 resurgence of Hyman Minsky — who warned presciently of such dangers – has already been forgotten.

That “Minsky fade” appears to be supported by the bottom right graph (though admittedly, this case isn’t as strong as the leveraged carry trade evidence discussed above). The negative slope in that graph shows that less than a year later, the Yen depreciated markedly against many currencies, especially against higher yielding target currencies, which runs counter to the aftermath of 1997 and 1998.

The implication is that the Yen carry trade came back on line fairly quickly after financial markets regained their footing. Apparently financial cockroaches are, like their arachnid namesakes, largely immune to the effects of fallout. As described by the BIS author:

…with extreme risk aversion abating, carry trade activity – a relatively risky strategy – may have returned in the second half of 2009. Indeed, carry trades in a number of high-yielding currencies, especially those of commodity exporters, provided extraordinarily high ex post returns over this period. Moreover, near zero interest rates prevailed in many major currencies, increasing ex ante profitability not only for traditional funding currencies such as the yen. Carry-to-risk ratios support this conclusion…

A a critically important aspect of this issue is financial regulatory reform. Very little has been done from a regulatory standpoint to bring down the astronomical leverage that was available for carry trade speculation prior to 2008. Yesterday, Larry Summers gave an interview to CNBC in which he emphasized that the scope of the proposed “Volcker Rule” was limited to particular types of banks.

If true, over leveraged areas of global financial markets are likely to continue escaping prudent regulation, which means that the pronounced cycles of euphoria and distress in risky asset classes will continue. While those swings create opportunities for contrarian investors, the dynamic behind them is a zero-sum or even net-negative economic game. In the long run, it causes more economic harm than it’s worth.

And while interest rates have converged substantially since the 1990s, current spreads are likely to persist in the decade ahead for multiple reasons, not least being variation in demographic cycles, which will mean lower nominal rates in most developed countries, and higher rates in most emerging markets.

In other words, the roach bait isn’t going anywhere soon. That means that sound regulation absolutely must fill the void in order for the gains from financial market speculation to approach something resembling a social optimum.

UPDATE 3/2/2010 – AP report on further progress in Senate Finance on financial regulation

URLs:

http://www.bis.org/publ/qtrpdf/r_qt1003f.pdf?noframes=1

http://symmetrycapital.net/index.php/blog/2010/02/wsj-hedge-fund-career-trades/

http://news.yahoo.com/s/ap/20100302/ap_on_bi_ge/us_financial_overhaul

Career trades and object lessons

The WSJ carried an interesting story today (subscription required) about hedge fund bearishness on the euro relative to the USD (i.e., a falling euro exchange rate):

Some heavyweight hedge funds have launched large bearish bets against the euro in moves that are reminiscent of the trading action at the height of the U.S. financial crisis.

The big bets are emerging amid gatherings such as an exclusive “idea dinner” earlier this month that included hedge-fund titans SAC Capital Advisors LP and Soros Fund Management LLC. During the dinner, hosted by a boutique investment bank at a private townhouse in Manhattan, a small group of all-star hedge-fund managers argued that the euro is likely to fall to “parity”—or equal on an exchange basis—with the dollar…

Our interest isn’t motivated by the anti-euro call, which is rather conventional and uninteresting (Robert Mundell, one of the intellectual architects of the EMU, has recently predicted movement towards EUR-USD parity, and USD parity is something of an underlying objective of the EMU, if not the ECB).

Rather, it’s in the social and market dynamics involved, and how strongly they illuminate the ongoing importance of financial market regulatory reform.

The WSJ notes that this was an invitation-only event at a private home, and included some major global macro hedge fund players. While that’s not a bad thing per se, it definitely creates some potential market asymmetries and risks:

• Asymmetries to the extent that a small number of players with (relatively) massive amounts of capital and the ability to take highly leveraged bets (that’s the implication of “career trade”) may all be thinking and moving in the same direction; and
• Market and economic risks may because concerted, highly leveraged bets are likely to accelerate what might otherwise be a more orderly return to parity, i.e., one that unfolds over a longer period of time that allows for interested agents to adjust without too much trouble.

That last one is the more interesting point in our opinion, because of what it implies about the theoretical ideal of market efficiency. If EUR-USD is bound to return to parity, is it less destructive to let it “happen naturally”, or is it healthier in the long term to allow levered up speculators to (attempt to) correct mispricings as soon and as quickly as possible?

We have some qualms with the latter approach, because: (1) it may create more market and economic havoc than would otherwise occur; (2) if successful, the “rents” associated with the resulting dislocation (even beyond the mere price adjustment) accrue to a small number of privileged players; and (3) if those bets go badly, the damage could very well spread beyond the hedge funds’ assets (LTCM being the archetypal example).

Of course, those rents accrue to a hedge fund’s passive partners too, so there may be outside institutions that benefit, rather than just the funds’ general partners (emphasis on “may”). But speculators aren’t just messing with an asset class here; they’re impacting the very measuring rods of economic activity and financial obligations, and some of them are able to employ astronomical leverage in doing so, if they desire. 

If the net social costs of that activity are negative, it becomes immaterial who the ultimate beneficiaries of the managing partners’ actions are. It also highlights how critical it is to do regulatory reform well, but soon. Speculators are absolutely critical to financial markets and economies, but optimization requires some degree of financial constraint. How many more ‘object lessons’ will we require on that point?

URLs:

http://online.wsj.com/article/SB10001424052748703795004575087741848074392.html

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

IMPORTANT DISCLOSURES: Symmetry Capital Management, LLC is a state registered investment advisor. The foregoing information is for informational, educational, or entertainment purposes only. It does not constitute an offer to buy nor a solicitation to sell any security, or to engage in any investment strategy.

Greece and Goldman

There’s been a good deal of news swirl about Goldman Sachs’ role in entering into swaps contracts with Greece in order to assist it in “hiding” some of its public debt as it prepared to enter the EMU.

Here’s a good primer from 2003 on these types of swaps, and an interesting thought piece on it from Ed Harrison.

URLs:

http://www.risk.net/risk-magazine/feature/1498135/revealed-goldman-sachs-mega-deal-greece

http://seekingalpha.com/article/190390-inside-the-mind-of-an-investment-banker-greece-goldman-and-derivatives

Fiduciary churn

Ouch! Research by finance professor Scott Stewart finds that the decisions made by plan sponsors on behalf of pensions, endowments, and foundations have persistently negative economic value.  

Using the most conservative approach for interpreting his results, Stewart concluded that plan sponsors had collectively squandered $170 billion in value over the two-plus decades he studied… 

“Plan sponsors never make their money back,” Stewart told me. “If they simply went on vacation, they could save their clients $170 billion – and that doesn’t count transaction costs.” 

The good news for plan sponsors? They’re less bad than most:

Plan sponsors are, of course, not unique in their ability to destroy value in this manner. Numerous studies, including those by Dalbar and Morningstar, have documented that individual investors, for example, buy mutual funds more heavily at the market peak and tend to sell them at the market bottom.  Plan sponsors should be more sophisticated than individual investors and, according to Stewart, they are. “Although they behave like retail investors,” he said, “the amount of value they destroy is a fraction of that destroyed by individuals.”

URLs:  

http://www.advisorperspectives.com/newsletters10/pdfs/How_to_Squander_$170_Billion.pdf  

How do you spell W-I-M-P-Y?

First Congressional jobs bill of 2010 has cleared the Senate:

Senate Democrats Wednesday delivered the first of several promised election-year jobs bills, passing a measure blending tax breaks for companies that hire unemployed workers with highway funding eagerly sought by the states.

The bipartisan 70-28 vote to pass the bill sends it to the House, where many Democrats say it is too puny…

We tend to agree with the House Dems. Among the bill’s measures:

Democrats promise additional measures to create jobs, promising help for small businesses having trouble getting loans, aid for cash-strapped state governments, and subsidies for people who make their homes more energy efficient…

The bill contains two major provisions. First, it would exempt businesses hiring the unemployed from the 6.2 percent Social Security payroll tax through December and give them an additional $1,000 credit if new workers stay on the job a full year. The Social Security trust funds would be reimbursed for the lost revenue.

Second, it would extend highway and mass transit programs through the end of the year and pump $20 billion into them in time for the spring construction season. The money would make up for lower-than-expected gasoline tax revenues…

And the reason it is so wimpy:

But budget deficits are a worry, and future measures are going to be more difficult to pass — especially since a top Senate Democrat has blocked unused authority from the Wall Street bailout program from being used to “pay for” jobs initiatives…

Sen. Judd Gregg of New Hampshire, top Republican on the Senate Budget Committee, blasted the measure for increasing the budget deficit to fund highway and transit programs. He said the measure made a joke of Democratic promises to adhere to “pay-as-you-go” budget rules requiring new spending programs to not increase the deficit.

“I don’t think you get people back to work in this nation by loading more and more debt onto the next generation,” Gregg said.

Sen. Gregg seems like a good man, but he just doesn’t get the underlying economics (unless he believes that the private sector is in robust shape and capable of standing on its own, which means he’s looking at different data than we are). And as we continue to point out, if he and other budget hawks are wrong about the underlying economics, then they are actually going to leave “the next generation” in even worse shape than they would be with more concerted stimulus.

Mark Zandi is cited as estimating that the Senate bill will create roughly 250,000 jobs. That number is unlikely to even make a perceptible dent in structural unemployment. By our back of the envelope calculations, the Senate bill will add about half a percentage point to GDP under the most optimistic assumptions.

We’ll close by calling again on correspondent J. Wellington Wimpy:

“You will gladly pay me today for a job that might be created tomorrow.”

URLs:

http://news.yahoo.com/s/ap/20100224/ap_on_bi_ge/us_congress_jobs

http://symmetrycapital.net/index.php/blog/2010/02/the-hawks-are-circulating/

The Deficit Commission: Hubris or Pandering?

The President signed an executive order yesterday to establish a deficit reduction commission headed by Erskine Bowles and Alan Simpson. Bowles was instrumental in the Clinton administration’s budget negotiations of the late 1990s, while Simpson helped ensure passage of the tax hikes in 1990 that torpedoed the first President Bush’s reelection.

Why do we think the commission is a display of hubris? Because there’s nothing in its mission about better understanding the nature of the problem, i.e., whether enlarged deficits and public debt ever make sense over a longer period of time, and if so, whether those conditions exist today. Instead, it seeks to cram macroeconomic orthodoxy down our throats, presumably in order to fatten up the livers of U.S. taxpayers by the arbitrarily imposed year of 2015.  But we predict that even in five years the fiscal foie gras will still be pretty lean.  According to the Washington Examiner:  

Here are the kinds of steps the panel is likely to consider as it seeks to tackle deficits that never dip below $700 billion under Obama’s budget:

_Raise the retirement age for full Social Security benefits to more than 67 years old and have benefits grow at a less generous inflation rate. Expose more income to Social Security and Medicare payroll taxes.

_Require seniors to pay more Medicare costs out of their own pockets and curb payments to health care providers.

_Raise taxes on people making less than $200,000 a year, requiring Obama to break a signature campaign pledge.

“You’re going to have to do all of the above,” said [Sen. Kent] Conrad. “You’re going to have to do all of the things that people don’t want to do.”

The first one isn’t a terrible idea, though its second part might constitute an overall tax hike on anyone earning over ~$100K per year, depending on how it is accounted for in income taxes.

The second one, although it’s a pressing issue given demographic projections, would have harsh consequences on seniors, not only in terms of out of pocket costs, but also in the availability of Medicare providers; it also renders the economics of a medical education far more difficult (if not impossible) for those who would be willing to administer primarily to the poor and the elderly.

The third one, depending on how big a hike is involved and how far down the income ladder it extends, could have negative economic consequences and profound political implications.

The long term structural issues do present a fiscal challenge. However, policymakers may be getting too far ahead of the problem, and if they are, the consequences could actually worsen the longer term fiscal outlook. And yet the president has charged the commission with lowering public deficits, period, without any consideration of what it could mean to the economy, or whether there’s any truth to his arguments that the government could “run out of money,” or that it’s subject to the same kinds of budget constraints as a household or business.

Obviously, given our take on the role of the federal budget, we would be relieved if the commission turns out to be little more than election year pandering. And the fact that it aims for budget normalization rather than budget balance, and shoots for it in five years rather than one or two, is a good sign. But based on U.S. demographic composition, we think 2018 to 2020 would make far more sense.

If the commission produces hawkish recommendations that are pursued vigorously in the coming years,  our strong dollar call will become stronger yet, and our willingness to wager on a double dip or ‘recession within a depression’ type of event would increase (2012-2013 could be interesting, and not in a good way).

URLs: