By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.
Yesterday I noticed an interesting paragraph over at efxnews about France and its parallels with what many see in the market today:
Read more...It’s a big surprise for some that France is high on the crisis susceptibility index…
One of the striking aspects of the furor over Thomas Herndon, Robert Pollin and Michael Ash’s dissection of the considerable flaws in the Carmen Reinhardt and Kenneth Rogoff austerity-justifying paper are the “the earth is still flat” efforts to salvage the theory.
Read more...By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from http://www.macrobusiness.com.au/2013/01/imf-admits-more-mistakes/“>MacroBusiness.
Another day, another round of atrocious data out of the Eurozone:
Read more...Yves here. Some readers questioned the discussion of Bitcoin’s deflationary qualities in a recent post, so this discussion is a useful follow-on.
Read more...By Eric Yeldan, Professor of Economics and Dean at the Faculty of Economics and Administrative Sciences Yasar University. Cross posted from Triple Crisis
The IMF released the April edition of its World Economic Outlook (WEO). One of the key analytical chapters (Chapter 3) of the Report is titled “The Dog that Didn’t Bark: Has Inflation Been Muzzled, or Was It Just Sleeping?” Its main argument (or rather sort of a mystery that needs to be resolved, in the words of its authors) is that over the course of the previous crisis episodes we used to witness severe increases in unemployment along with a simultaneous fall in inflation. Yet, during the current great recession there has been very little movement in inflation, while unemployment rates soared almost everywhere; —hence the metaphor: inflation (the dog…) does not respond (… bark). And the alleged mystery is but why?
The WEO suggests two candidates for explaining the mystery. Perhaps instead of looking for dogs, they should stop ignoring the elephant in the room.
Read more...By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.
Some of the crown jewels of corporate America have reported declining revenues and earnings, and have lowered their forecasts, and in doing so, have unleashed a flood of obfuscation and excuses – from Easter falling on the wrong date to lazy sales reps.
Read more...There’s a remarkable amount of optimism in the US financial media given the underlying health of the economy. Of course, the sort of short term investors that have come to dominate securities trading had been in a “risk on/risk off” pattern for a protracted period before commodities weakness and the remarkable run of the Nikkei has led to some renewed focus on relative values of various macro plays. But the markets are still dominated by an underlying faith in the willingness of central bankers to protect the backs of investors and limit any downside (while, ironically, many of these same investors howl about ZIRP and QE, which were clearly intended to goose the value of financial assets and real estate, with the hope that would lead to more consumer spending).
And why shouldn’t the professional investors (as opposed to widows and orphans who can no longer rely on low risk bond investments to produce adequate income) be pleased as punch?
Read more...Yves here. This is a short but useful reminder of how the failure to enforce anti-trust laws leads to oligopolies. MBAs are taught how to make markets inefficient to increase corporate profits, and one of the most lasting ways is to achieve a dominant position, ideally in a concentrated industry. “Roll ups” which is a consolidation play, is a favorite among private equity firms (but they often stumble in integrating the companies).
The author describes how dominant players preserve their profits through aggressive lobbying in the food space, and why that is particularly troubling.
Read more...Somebody has some 'splaining to do!
Read more...By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side.
The post raises three questions. How has the risk appetite of the household sector, as reflected in the leverage ratio and the asset mix, changed over time? Does it appear as if the household sector has completed the rebuilding of its balance sheet? What are the implications, if any, if the deleveraging of the household sector balance sheet is incomplete?
Read more...Whither gold?
Read more...Nathan Tankus is a student and research assistant at the University of Ottawa. You can follow him on Twitter at @NathanTankus
President Obama adopted a reflective tone to mark the passing of Maggie Thatcher. Commenting on her death, he stated “the world has lost one of the great champions of freedom and liberty.” In Obama’s proposed budget, we found out what the terms “freedom” and “liberty” mean: the freedom for the old to go hungry and the freedom of the poor to go cold.
Read more...Contributed by Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media.
Catalonia’s riot police unleashed the untamed fury of the state upon the protestors and cleared Barcelona’s Plaza Catalunya of all occupants. A dense ring of shell-shocked people gathered around the square. I was one of them. A child riding on his father’s shoulders held up a sign: “No soy anti sistema, el sistema es anti yo,” it said (I’m not anti-system; the system is anti-me).
Read more...I’ve mentioned repeatedly that Germany wants contradictory things: it wants to stop financing its trade partners (the periphery countries in Europe) and yet wants to continue to run large trade surpluses. I took this to be a sign of German wishful thinking, or just politicians figuring the incoherent strategy can still be maintained for the duration of their time in office.
A post by Yanis Varoufakis show that the Germans at least have better delusions that I realized.
Read more...Nothing like dramatic proof that austerity is a failure
Read more...