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The media seems obsessed with the coming fiscal cliff. Even TV shows are running count down clocks showing how short the time is until ‘we fall off the cliff’. As if that’s a bad thing! The fiscal cliff is about the effect of a number of laws that (if unchanged) will result in tax increases, spending cuts, and a reduction of around 50% in the US budget deficit beginning in 2013. The Congressional Budget Office (CBO) estimates the sudden reduction in borrowed spending will likely lead to a recession in early 2013 with a strong recovery after 2013. This effect, which is sometimes called the expiration of the Bush tax cuts, is largely the result of the Budget Control Act of ...

Last Friday the markets and euro rallied strongly, as hope about the news from the twentieth European summit on the financial crisis was viewed positively. Spanish bonds and European stock markets rallied while the Dow had an almost 300 point gain. Less noticed, but more telling in my opinion was a story in Saturday’s Wall Street Journal about the 2008 acquisition of Countrywide Financial by Bank of America. According to the WSJ, the deal has cost BofA more than $40 billion in real estate losses, legal expenses and settlements with various government authorities. Countrywide was the largest mortgage lender in the US and was especially exposed in the area of subprime and adjustable rate mortgages. Quoting from the article “It is ...

Austan Goolsbee, professor of economics at the University of Chicago and former chairman of President Obama's Council of Economic Advisers from 2010 to 2011 has written a short and brilliant analysis of the European monetary crisis. It’s in the May 30, 2012 Wall Street Journal and entitled “A Fiscal Union Won't Fix the Euro Crisis”. His analysis is so excellent and profound that I can’t improve on it and for those of you who don’t subscribe to the WSJ, you can find its text in the blog below. Goolsbee concludes that the ONLY solutions to Europe’s crisis are: 1) allowing easy and complete mobility between European countries for workers, 2) allowing strong inflation in German and other Northern Europe economies, or ...

On Sunday I watched part of Fareed Zakaria’s GPS, arguably the best of the Sunday talk shows. I like GPS because of the quality of Zakaria’s guests, which combined with his penetrating questions makes the show an educational treat. One of the guests Sunday was Paul Krugman, formerly an economics professor at MIT, currently at Princeton, and a Nobel laureate.  Krugman, well known as a liberal, was pitching the idea advanced by Francois Hollande, France’s new president, who was elected by preaching that austerity  is no way for Europe (or the United States, for that matter) to climb out of the severe recession that has been running rampant through the advanced economies since 2008. Krugman had a couple of hard to ...

You may be aware that the Federal government is the one institution in America that doesn’t have to balance its budget. In a carefully choreographed dance between the US Treasury and the Federal Reserve System money is created out of thin air by the Federal government and appears to be (so far, at least as long as the Chinese are willing to continue to buy US Treasury bonds) limitless. The skyrocketing expenditures of our federal government have become a major focus of this presidential season. The GOP is promising sharp cuts in all kinds of programs (something that preceding Republican administrations, such as those of George W. Bush or Ronald Reagan, promised but never delivered). The Democrats are ready to continue ...

The Boston Globe, February 26, 2012 William Stuntz, a Harvard Law School professor, who recently passed away was highly respected in the field of criminal justice. Interestingly, he was a political conservative. It’s usually liberals who are more concerned about the prison population and finding better ways to deal with criminal issues. The Boston Globe, this past February published a review of professor Stuntz' last major work, a book entitled The Collapse of American Criminal Justice. Clearly the American justice system has fallen off the tracks with the result that the United States now incarcerates 1/4 of all prisoners in the world. We are imprisoning a higher percent of our population than Stalin did of Russians in the 20th century. If you ...

One of the most famous lines in movie history is when Dustin Hoffman in The Graduate is told the secret to his future success, “plastics”, which was a hot growth area in 1967. In my career I’ve been fortunate enough to witness a few ‘next big things’ and be in a place and time when I could act on them. In 1971 I was asked to teach a course on data base management. At that time it was a very new subject with a worldwide installation base of no more than a few hundred sites, mostly IBM’s IMS. I thought it would become big and the topic of data base management systems ultimately led to the formation of Digital Consulting, Inc. ...

My current research interests include ‘big data’ and ‘predictive analytics’ You may have noticed articles or coverage of the topic as it’s made it into the popular media. Business Week, Time, the New York Times and others are covering what’s happening with big data. From time to time I’ll post updates here on what we’re doing and finding out about building a new software company to attack the problem of mining ‘big data’.

You may be aware that the Federal government is the one institution in America that doesn’t have to balance its budget. In a carefully choreographed dance between the US Treasury and the Federal Reserve System money is created out of thin air by the federal government and appears to be (so far, at least as long as the Chinese are willing to continue to buy US Treasury bonds) limitless. With low interest rates and no other places to put so many billions of $US, foreign governments like the Chinese will buy American treasury bonds, in effect lending us money at rates as low as 2%. But as the presidential election looms over our 2012 news, we are becoming more aware that ...

The title of this blog is a statement that has been debated in many leading American publications since the financial panic and market crash of 2008/2009. It’s also the title of a well written article by Matt Taibbi in March 3, 2011 issue of Rolling Stone  http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216?print=true . The subtitle of Taibbi’s article says it all: “Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them.” Taibbi’s writing is representative of the way many feel and raises the unanswered question of how is it possible that events which caused so much pain and destruction for so many people have gone unpunished by the criminal justice system? Here is a little more ...