Explaining Southern California's economy

Nassim Taleb is SO down with Ron Paul

President Obama might have, most of the time, big-gun public intellectuals like Paul Krugman and Robert Reich in his camp. Mitt Romney has Harvard economist Greg Mankiw advising him. And Ron Paul? Mr. Black Swan himself, Nassim Taleb, says that Dr. Paul is the only candidate who's "saying the right things" and has the "guts" to take on the Federal Reserve

Not surprisingly, it actually seems pretty black and white with Taleb. He's worried about hyperinflation (not regular old run of he mill inflation-inflation, mind you). And he thinks that the only way to fix the financial system to treat government like cancer — in the video above, which I picked up from the Paul campaign's website, he refers to "metastatic" government at least twice. Taleb is himself a cancer survivor, so you can understand his metaphor in that light. But there are plenty of other people who are making this argument. That said, they don't have Taleb's intellectual heft.


Fed stress test results for banks come two days early

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Bank of America was one of the 15 big U.S. banks that passed the Fed's latest stress tests.

The Federal Reserve has released the results of its latest "stress tests" of the country's biggest banks — two days early. Why two days early? Marketplace's Heidi N. Moore had the best quip: The Fed didn't have much choice, after J.P. Morgan Chase jumped the gun on the planned Thursday announcement and showed Wall Street its report card.

Four banks flunked the test: Citigroup, Suntrust Banks, Ally Financial and MetLife, which isn't really a bank but an insurance company with bank-like businesses. Citigroup is the most worrying of that group, as some advance handicapping had it sailing through the Fed tests. Not so, as it turns out. This may remind some of the revelations, from Ron Suskind's controversial recent book about the Obama economic team and the financial crisis, that the White House at one point wanted to shut Citigroup down. Treasury Secretary Tim Geither reportedly stalled the President to avoid executing that decision.


It was a meh week for the stock market

Price Of Oil Rises Amid Stock Market Volatility

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Traders work in the oil options pit on the floor of the New York Mercantile Exchange on August 11, 2011 in New York City.

First the Dow hit 13,000. And almost immediately, as if it we suffering a financial bout of triskaidekaphobia, the market retreated. And then it spend the week basically going nowhere, despite the launch of a new Apple iPad, a solid February jobs report, and a sense that the worst might be over for Greece and that whole neverending European debt crisis.

What's are the markets going to need to hit 13,000 again — and climb higher? Well, it's hard to say. Better GDP growth would help. But the real secret sauce will have to come from the Federal Reserve, which could do another round of "quantitative easing" or employ some new form of monetary policy — perhaps "sterilized" easing, with the focus on preventing inflation from creeping back into the economy.

Is Wall Street trying to force the Fed's hand? Maybe. But for the moment, it looks as if the Fed isn't quite ready to have its hand forced.


February jobs report: Better than January?

A jobs sign hangs above the entrance to


A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC.

The Bureau of Labor Statistics (BLS) will release its February jobs report on Friday. The January report was better than expected, with the country adding 243,000 jobs and the unemployment rate falling to 8.3 percent. The big question for February is, "Will the improving trend continue?"

Chances are good. The ADP report — which hasn't been all that reliable a predictor of the BLS data of late — came out today and said that the economy had added 216,000 new jobs, barely beating the Bloomberg consensus, which expects a nearly identical 215,000. 

Meanwhile, Business Insider engaged in a very elaborate piece of analysis and came up with — wait for it — 285,000! That would be, as BI notes, the best monthly jobs report in six years. I like that BI zeroes in on auto sales as a key predictor. February saw sales rise to a 15-million annual pace, more than two million better than 2011. 


Meet Mark Spitznagel, Ron Paul's L.A. hedge-fund guy

Ron Paul Continues Iowa Campaign Tour

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LE MARS, IA - DECEMBER 30: Republican presidential hopeful U.S. Rep Ron Paul (R-TX) speaks during a town hall meeting at the Le Mars Convention Center on December 30, 2011 in Le Mars, Iowa.

Ron Paul — Republican presidential candidate, GOP congressman from Texas, father of Sen. Rand Paul, libertarian, and dogged foe of the Federal Reserve — is touching down in Los Angeles on March 20 for a fundraiser. If you think Paul, with his desire to return the U.S. to the gold standard (bimetalism, actually, using gold and silver) and his tendency to subject Fed Chairman Ben Bernanke to lengthy disquisitions on inflation, is a litle bit different, just wait until you get a dose of the guy who's hosting this Bel Air shindig, at the former residence of Jennifer Lopez.

He's Mark Spitznagel, a very successful hedge-fund manager whose Universa Investments is based in Santa Monica. There are hedge-fund managers and there are hedge fund managers. Spitznagel is definitely in the latter category. He plies his trade in an exotic corner of the industry, making huge bets on statistically improbable events, now colloquially known as "black swans," after the 2007 book of the that title by Nassim Taleb.