Marshall Auerback Marshall Auerback has 27 years of experience in the investment management business, serving as a global portfolio strategist for RAB Capital Plc, a UK-based fund management group with $2 billion under management, since 2003. He is also co-manager of the RAB Gold Fund. He serves as an economic consultant to PIMCO, the world’s largest bond fund management group, and as a fellow of the Economists for Peace and Security. From 1983-1987, he was an investment manager at GT Management (Asia) Limited in Hong Kong, where he focused on the markets of Hong Kong, the ASEAN countries (Singapore, Malaysia, the Philippines, Indonesia, and Thailand), New Zealand and Australia. From 1988-91, Mr. Auerback was based in Tokyo, where his Pacific Rim expertise was broadened to include the Japanese stock market. From 1992-95, Mr. Auerback worked in New York for the Tiedemann Investment Group, where he ran an emerging markets hedge fund. From 1996-99, he worked as an international economics strategist for Veneroso Associates, which provided macroeconomic strategy to a number of leading institutional investors. From 1999-2002, he managed the Prudent Global Fixed Income Fund for David W. Tice & Associates, an investment management firm, and assisted with the management of the Prudent Bear Fund. Mr. Auerback graduated magna cum laude in English and philosophy from Queen’s University in 1981 and received a law degree from Corpus Christi College, Oxford University, in 1983.

Moody’s Does it Again

Marshall Auerback explains how credit ratings agencies are still spreading nonsense.

America’s Triple AAA credit rating could be at risk should its nascent economic revival not develop into a full-blown recovery, Moody’s Investor Service warned yesterday. The credit ratings agency cautioned that if the US were to grow at slower pace than expected, the largest economy in the world’s already-extended finances could be over-stretched, in turn damaging its AAA credit rating.

Dis-credited ratings agencies

Sound familiar? The so-called “Big Three” ratings agencies have been making claims like this for years: in Japan, the UK and, now, the United States. It is worth recalling…

The President Remains Trapped in the Talons of the Deficit Hawks

Marshall Auerback explains why the deficit hawks have it all wrong — and why Obama must stop legitimizing their faulty logic.

Last Friday, Mr. Obama and the GOP staged the equivalent of a British Parliamentary Question Period in front of the TV cameras. It showed the quick-thinking, articulate President at his best. Unfortunately, the subsequent Saturday morning national radio address showed him at his worst. Obama reiterated the need for job creation, even as he decried government deficits, which allegedly imperil our long term economic prosperity. It’s like calling for an open house policy, whilst simultaneously putting explosives on the door…

State of the Union: A Muddled Message

Marshall Auerback breaks down Obama’s address, finding confusion on fiscal policy and not enough on job creation.

If nothing else, it’s clear (as one wag wrote this morning) that the state of Obama’s rhetoric is strong.

The President almost always gives a good speech, but it’s the follow-through that is generally problematic. And the speech itself sends mixed messages about what Mr. Obama views as his “achievements” and his priorities moving forward. For all of the talk about more jobs and tax cuts, the speech also made it clear there has been a shift to ‘fiscal responsibility’ with plans to pay back the…

Barack Hoover Obama?

Marshall Auerback argues that spending cuts would be a major misstep for President Obama — and a return to the policies of Herbert Hoover.

Every instinct the President has honed, every voice he hears in Washington, every inclination of our political culture urges incrementalism, urges deliberation, and an abundance of caution, particularly in regard to our “unsustainable government spending.”  And for all of his apparent newfound populist vigour, it now appears that the President is about to heed these voices of caution.  The moves against the banks, coupled with yesterday’s announcement of a spending freeze and previously voiced support for a…

Health Care: Time to Cross the Rubicon, Mr. President!

Marshall Auerback argues that there’s still a chance for meaningful health care reform.

Many people are lamenting the apparent death of the health care bill in the aftermath of Scott Brown’s election. They shouldn’t be. Congress and the President should use the opportunity to reconstruct a more sensible piece of legislation.

The Reconciliation Route

Senate Democrats, in particular, should not obsess about the number 60. The absence of a so-called super majority of Senators does not preclude the possibility of passing significant health care reform, even the approach is ultimately more piecemeal and incremental. There is still ample opportunity to implement legislation in…

Deficit Terrorism Could Kill the Euro

Marshall Auerback has a proposal for how to save the euro - before it’s too late.

On more than a few occasions, we have discussed the insanity of self-imposed political constraints which limit the range of fiscal policy. As well as imparting a deflationary bias to an economy (and thereby preventing full employment), these kinds of constraints preclude the adoption of prompt counter-cyclical policy, which would otherwise cushion an economy when confronted with a genuine financial crisis, as we are experiencing today.

The constraints under which the US operates are more apparent than real. As we have discussed before, these constraints…

Massachusetts Post-Mortem

Marshall Auerback sees Massachusetts as a signal that Americans are worn out by fraud and corruption.

The post-mortems following the Massachusetts Senate by-election are coming in fast and furiously, but by far the most instructive remarks come from the President himself. He clearly doesn’t get it.

A majority of Obama voters who switched to Brown said that “Democratic policies were doing more to help Wall Street than Main Street.” A full 95 percent said the economy was important or very important when it came to deciding their vote. Surprise, surprise, policies do matter.

But what was the President’s reaction? ABC News reported,

“President Obama…

Grunwald’s defense of Geithner doesn’t wash

Should Geithner get a pass on the AIG bailout? Marshall Auerback thinks not.

It was only a matter of time before someone emerged to defend Tim Geithner and his actions in light of the wrong decision to bail out AIG. Michael Grunwald of Time Magazine (the publication which anointed Ben Bernanke “Person of the Year” in 2009), has likened the attacks on Geithner to someone who “booed Lassie for tracking mud on the carpet after saving that kid in the well”.

In Geithner’s defense, Grunwald trots out the usual “sanctity of contract” arguments: “Nobody has explained how or with what authority anyone…

So what are banks for, anyway?

Sometimes a picture says it best. This graph from our colleagues at Angry Bear is introduced with the caption: What was the job of banks in 2009?

This chart tells me that the whole notion of Obama’s approach to the banks is fundamentally flawed. The Administration has operated on the assumption that the financial crisis is no more serious than some clogged plumbing — a bit of Draino in the form of government handouts and guarantees should be sufficient to get credit flowing again. Second, most major banks are not insolvent but rather have a temporary liquidity problem induced by malfunctioning financial markets.…

Attack the Disease, Not the Symptoms

Obama still doesn’t get it on how to rein in Wall Street.

Conceptual confusion remains at the heart of President Obama’s economic policy. The latest example of this is the decision to try recoup for taxpayers as much as $120 billion of the money spent to bail out the financial system, most likely through a tax on large banks, according to the NY Times.

For once, the American Bankers Association has a point when it argues that imposing yet another fee on the industry would obviously decrease its ability to lend. The new fees will effectively function as a tax, raising the…