Bubble economy is beyond satire

My brother sends me a link to this article in the internet satire mag The Onion:

Recession-Plagued Nation Demands New Bubble To Invest In

... The current economic woes, brought on by the collapse of the so-called "housing bubble," are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent....

Has the author read iTulip's Eric Janszen on the "bubble economy"? If he has, he'll know Janszen expects the next craze to be alternative energy - full Harper's article here.

Free trade, or shop local?

An essay on the basic argument for trade, at Mises. But the author does admit a problem with externalised costs that aren't taken into account.

A thought: what if we in the UK really don't have much of a comparative advantage in any area, long-term? Once the East has caught up on skills, what do we have that anyone will want to buy?
And what about the monetary distortions in the market? It's like Monopoly with some players cheating by using secret stashes of extra banknotes.

Are the economists misled by an idealised picture of economics?

Will the UK/US trade balance influence the dollar value of sterling?

Here's some trade stats for UK/USA. Last year, we imported $6.6 billion more from the US than we exported to them. Last night, the exchange rate for the pound rose above US$2.00. For some time, we seem to have been shadowing the dollar, but do we have an incentive to allow the dollar to fall further against the pound?

Or will we be more influenced by the desire not to devalue the amount we have loaned to the US via Treasury bonds? And then there is the possible extra unemployment that could result from UK goods becoming more expensive in dollar terms.

Any forex experts care to give a view?

UPDATE: Here's the answer, it seems:

Weak jobs data knocks pound vs dollar and euro (Reuters)

UPUPDATE: ...And here's a different answer:

Sterling up versus dollar, banks support (Reuters)

Wouldn't roulette be more honest, somehow? "Manque! Pair! Impair! Passe! Noir! Rouge! Numero 17!"

How far can the FTSE fall?

The FTSE hit a long-term low at 3,287 at the close of 12 March 2003. If it were to drop to 5,000 now, that would still mean about 8% p.a. compound growth.

Bank deposits are investments, and can go wrong

Karl Denninger takes us back to basics about banks and "your money" (highlighting is mine):

I want to talk about IndyMac for a bit.

The news has covered a few really, truly sad stories. People with $200,000, $300,000, $400,000 or more in there who have seen 50% of their balance over $100k disappear overnight.

Older people who literally have their life savings in these institutions. People who are relatively unsophisticated, but have been told through the years that the government will make it all ok, and who believed it.

It tugs at your heart to see a 70+ year old man pleading for them to let him have his money - money that he worked and saved a lifetime for.

If only it were that easy.

People don't think of a bank as being an investment, but it is.

You are lending your money to the bank so they can make money with it, and they pay your a coupon - interest, or the "safekeeping" in the case of a checking account that does not pay interest - in return!

US banks: uninsured deposits stand at $2.6 trillion

Mish calculates the potential for disaster if depositors lose confidence:

"FDIC Recap

There is $6.84 Trillion in bank deposits.
$2.60 Trillion of that is uninsured.
Total cash on hand at banks is $273.7 Billion."

So 89% of uninsured deposits are not covered by available cash in the bank.

TMS a better measure of the money supply?

What looks like an important idea and discussion of "True Money Supply" in Mish. I shall have to chew on it for a bit, but thought the finance-oriented reader might care to do the same.

Mish says when you look at the situation correctly, we are definitely in DEflation.