World without Frogs: Combined Threats May Croak Amphibians Scientific American
Wine And Violin Funds Fall On Hard Times Joe Weisenthal, Clusterstock
Nobel Winner Aumann Says Bernanke, Paulson Steps `Not Smart’ Bloomberg
HBOS and RBS to reveal massive asset writedowns Independent
Inflation punctures deflation fears Krishna Guha, Financial Times. The inflationistas have the upper hand for now.
Revenge of the Left across the world Ambrose Evans-Pritchard, Telegraph
Fiscal Implications of the Candidates’ Plans Menzie Chinn, Econbrowser
Antidote du jour:
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Is this the omen of a new 2012 Olympic sport-
Synchronized Drinking?
Poor Evans-Pritchard; he is usually so much more perceptive. Now it is “statist” policies that kept interest rates low, as though the US and British governments were somehow separated by class, interests, and staffing from the reckless idiots on Wall Street and in the City. And he will not be the last conservative to rewrite history and say the recession/depression and extraordinary government intrusion into the marketplace began only after 20 Jan 09. What he really is saying, or should be saying, is that the global rules of trade and finance will be rewritten and AT BEST the US and GB will only be one of many participants in the negotiations to come — the most angry ones now are those countries that attempted to adjust to Globalization after 1998 (careful fiscal policies, accumulating what was thought were currency protections, open markets) and still got screwed.
“Pardons for sale. Rove’s the contact. Eight figure ante. Pass it on.”
E-P’s obsessive compulsive qualities, seen in his American Spectator articles on the Clintons and the Vince Foster case many years ago, seem to be coming back to the fore, don’t they?
The Euromoney link you provided yesterday (indirectly) provides an interesting view point on how much salt needs to be taken with E-P’s writing.
‘Inflation Punctures Deflation Fears’…
The article is mistitled and actually reports that many economists see deflation as great a threat as inflation. One problem pointed out in the article is that ‘banks hording money, refusing to lend, is adding to the possibility of deflation’ (paraphrased)…
Another point of view in the article is…
‘Still, there is a larger risk that inflation could fall to 1 per cent or less in some economies within two years.
This could itself create problems, since central banks would lose the ability to run negative interest rates to fuel recovery or ward off a fresh shock.
But if credit markets are as dysfunctional a year from now as they are today, and inflation a lot lower, deflation would cease being a theoretical danger and would become a real threat.’
If CBs want to run negative real interest rates it indicates that they are not seeking increased savings and are trying to perpetuate a model that has failed. Mr Market will have the final say.
I don’t think it’s going to be “revenge of the left” since the right has us exactly where they want us to be: desperate and broke. When Ronald Regan came into office, he used that situation to end environmental laws as we know them and, as governments encourage even more consumption, the writing is on the wall that resource extraction will only get to new economic highs and new moral lows.
In terms of the Guha article on deflation, I think the following Mishkin quote may be from a while back and therefore somewhat “stale”.
Here is the quote at issue from the article:
““If inflation expectations were to decline sharply that would greatly increase the risk of deflation,” says Frederic Mishkin, a professor at Columbia University.
“But expectations were stable on the way up – when inflation was rising – and there is every reason to believe they will be stable on the way down.”
Two of the most widely used and reliable indicators of inflation expectations are the University of Michigan consumer survey and TIPS prices.
The most recent Michigan survey showed a collapse in inflation expectations, a truly shocking figure.
Also TIPS prices are showing DRAMATICALLY lowered expectations.
And I know Mishkin follows these two indicators closely, as do I.
That’s why I think it may be a dated quotation.
Matt
http://money.cnn.com/2008/11/03/news/economy/ISM_October/index.htm?postversion=2008110310
” Nov. 2 (Bloomberg) — Robert J. Aumann, the Israeli economist who won the 2005 Nobel Prize in economics, said the steps taken by Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson to save financial markets “weren’t smart.”
“The intervention by the regulators to save the U.S. economy will lead to further bankruptcies of banks and insurance companies,” Aumann said at a rabbinical conference in Jerusalem yesterday. “They are only encouraging institutions to take more uncalculated risks.”
I’m not qualified, but here goes:
1) Moral hazard has to be enforced from the start, otherwise there’s a cascading effect from letting the first few get passes. Actions have effects as do words.
2) Acting for your own benefit and not the firm’s or customer’s is a breach of fiduciary responsibility.
3) The situation’s of the U.S. and Israel are not the same.
Don the libertarian Democrat
I would argue that today’s quite bearish Fed survey of senior bank officials about their future lending plans is also very deflationary in its implications for inflation expectations.
Credit is going up in price according to this survey and there will be less of it.
Clearly that impacts directly and decisively upon inflationary expectations.
Matt Dubuque
vote everyone out who voted for the bailout. The complete guide is available at http:/www.dealraider.com
Why do Zebras stripes differ in pattern from one Zebra to another?
Why do we wonder about differences in Zebra stripe patterns when we seemingly do not wonder about tigers stipping variations from one tiger to another?
Why do I wonder about stuff like this?
Matt,
I am looking for the release of those lending plans, please send link to johnbougearel@gmail.com
thanks in advance