tag:blogger.com,1999:blog-6948982521501107752.post3610108480081942909..comments2023-10-21T09:03:15.270-04:00Comments on Rogue Economist Rants: Why doesn't capital go where the greatest returns areRogue Economisthttp://www.blogger.com/profile/03439817966760459091noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-6948982521501107752.post-73091682661018000032011-12-06T20:01:29.826-05:002011-12-06T20:01:29.826-05:00+1 ;)+1 ;)Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-3772019647730513822011-12-06T19:13:29.273-05:002011-12-06T19:13:29.273-05:00Mario, you've got my point right, and I want t...Mario, you've got my point right, and I want to reiterate that the confidence fairy as I mean it here is one who tells everyone he will be the investor of last resort in initiatives that create jobs that sustain aggregate demand, not necessarily in overbid up securities that need to correct. <br /><br />Re: Mike Norman's post. It could not get any clearer than that, and in the face of the facts, it's hard to believe anyone still believes the problem in the US right now is too much sovereign debt. There's another agenda there for those who want to cap the debt, and it has nothing to do with the debt.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-14164371408519443172011-12-06T18:18:22.895-05:002011-12-06T18:18:22.895-05:00Rogue...and how about this today:
http://mikenor...Rogue...and how about this today: <br /><br />http://mikenormaneconomics.blogspot.com/2011/12/phony-debt-crisis.html<br /><br />Mike focuses, rightly so, on the debt crises, however in this case the focus could be the ZERO % INTEREST RATE!! wowMariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-77363427447743873642011-12-06T08:05:43.221-05:002011-12-06T08:05:43.221-05:00The biggest problems are very volatile and unstabl...The biggest problems are very volatile and unstable global markets. The investors build its activity on the markets moods and fair that capital which will place in right place will be return with profit. Actually not only with profit but just only return is something will go wrong.draftnikhttp://fibogroup.com/noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-90422279523229124402011-12-06T03:54:35.850-05:002011-12-06T03:54:35.850-05:00It's very beautiful blog, I'm happy to vis...It's very beautiful blog, I'm happy to visit your blog,<br /><a href="http://rediscovermentalhealth.blogspot.com/" rel="nofollow">rediscover mental health</a><br />regards..Anonymoushttps://www.blogger.com/profile/13995726545139997486noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-91002233344271792472011-12-06T00:39:41.441-05:002011-12-06T00:39:41.441-05:00It needs a filler when it suddenly decides to leav...<i>It needs a filler when it suddenly decides to leave a place, so those who never meant to leave do not leave along with the 'hot' members of the horde.</i><br /><br />that's an interesting point as well. I think it's more of an expectations or confidence issue than any "real" or quantitative issue...at least for monetary sovereign nations like the US, AU, GB, JP, etc. <br /><br />For countries in the EU this presents very real issues as we see today. <br /><br />Personally it would be great when our leaders realized that for most nations, bonds are just savings accounts and have the same effect for both sides of the transaction. When people realized this, the only real default risk is insane fools holding the purse strings.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-25915974914041770302011-12-06T00:17:12.717-05:002011-12-06T00:17:12.717-05:00miltonf, you're focusing too much on the rheto...miltonf, you're focusing too much on the rhetorical question, why capital doesn't go to the the highest return destination. The point of the post is to call attention to capital being freed to go to in search of return as justification for complete liberalization. <br /><br />The expectation of liberalization was that capital will disperse everywhere. What we saw is that capital did go everywhere, but as a horde. It came as a horde, it left as a horde. <br /><br />Return wasn't the whole picture, and you're right, risk is the other half of the equation. That's why complete capital mobility is very unstable, and likely to break an economy as it is to make it. It needs a filler when it suddenly decides to leave a place, so those who never meant to leave do not leave along with the 'hot' members of the horde.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-15069756774454690112011-12-05T21:58:10.213-05:002011-12-05T21:58:10.213-05:00it's true miltonf however why not AU and Canad...it's true miltonf however why not AU and Canadian bonds too? The risk is just as low there as with UST...in fact if we were basing our investments on the corrupt crooks at S&P then both AU and CA are LESS risky than UST. So there are other things going on here than just true "risk" analysis. Ironically it appears with with MORE freedom there actually becomes LESS variance.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-48486188665030069902011-12-05T20:13:10.150-05:002011-12-05T20:13:10.150-05:00Capital is free to move about and it doesn't a...Capital is free to move about and it doesn't always go to the highest return because risk is also built into the Equation. That's why capital prefers US Treasuries rather than Italian bonds.miltonfhttp://www.everymaninvesting.comnoreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-53070041952269886402011-12-04T16:44:25.437-05:002011-12-04T16:44:25.437-05:00AA, I see what you're saying about liquidity i...AA, I see what you're saying about liquidity in US securities, although it doesn't relate to the more general point of the post, which was that the previously closed markets of the world were liberalized with the intent of attracting capital to them.<br /><br />But global capital, at least as we see right now, still converged even further in the US, a market that was long ago fairly open and ready to take the rest of the world's capital, without need for liberalization elsewhere.<br /><br />Thanks Mario. I think we find too many paradoxes right now because of the prevalence of ideological beliefs rather than complete understanding of the economy. Example, today most economists are either on the side of free market enthusiasts who hate all forms of government, or they're on the side of progressives that espouse the virtues of all-consuming government, and believe that the free market only leads to evil. <br /><br />The right mix of course is somewhere between the two, and the optimal mix varies over time. Right now, we need to swing the pendulum slightly back because we over-reached on free market.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-30137501493768059402011-12-03T23:51:33.466-05:002011-12-03T23:51:33.466-05:00great stuff. more interesting paradoxical and circ...great stuff. more interesting paradoxical and circular "ties" we find ourselves wrapped up in with our economies. You have a knack for bringing these ties out to the forefront. <br /><br /><i>Moral of story is, when you liberalize the market, you also need to strengthen government to act as cleanup crew in case things get out of hand.</i><br /><br />right...the irony of course being that those who seek to "liberalize the markets" are also the same people who absolutely abhor "regulation." That's one of the main reasons why they fought so hard to "liberalize" at all (note the sub-text of such diction). One more spinning wheel all alone in the universe....Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-20056325212749751222011-12-03T22:57:31.751-05:002011-12-03T22:57:31.751-05:00I think liquidity is an under-rated factor in look...I think liquidity is an under-rated factor in looking at capital flows, in this case, where "liquidity" is broadly defined as the ease at which one can enter/exit a trade, i.e. change their mind on a decision.<br /><br />For example, with US treasuries, it's reasonably easy to "stop out" on say a bad decision made to hypothetically buy 10 year bonds expecting the yield to fall say 50 bp when in fact it rises by 50 bp. <br />You just sell to any number of investors who trade what are the world's most liquid securities.<br /><br />But say a "developing country" bond, although the return/yield is much higher, if it all goes pear shaped then it's much more costly to exit the postiion. Partly because there are less investors in the market with differing views to yours. In other words, you have to be totally committed because it's difficult to turn back. <br /><br />So basically capital is attracted to the US because US treasuries allow you to change your view more easily.ArmchairAnalysthttps://www.blogger.com/profile/00757948485691002389noreply@blogger.com