It now looks like the big media and leaders in both parties are no longer focusing on the Government Shutdown crisis, but are now moving on to the notion that the shutdown is melding with the upcoming probable breaching of the debt limit to create a combined mother of all fiscal crises. Don’t be fooled.
Read more...Yves here. Varoufakis gives a high-level overview of the political and economic constraints on Merkel in dealing with the festering Eurocrisis. While many of the political issues have received decent coverage in the English language press, the nature and severity of Germany’s economic challenges have gotten scant notice.
Read more...Now it may seem churlish to take on a prominent former government official making a star turn to publicize one of the most pressing social and political problems in America, namely, our ever widening levels of inequality. But in fact, Reich is not only selling the equivalent of patent medicine as the remedy but he’s even getting commissions from some of the snake-oil manufacturers.
Read more...Is it merely a coincidence that the troika rode its Trojan horse into Athens again on the very day Angela Merkel went awfully close to an absolute majority in German elections? I’m sure it is. But it’s still very bad news for the Greeks, who now have their perhaps last chance to throw out the international financial system and decide their own fate, before most of their valuables have been sold off to foreign interests. Greece is where democracy started, and the way things are going, it may be where it will end as well.
Read more...The German word for election, Wahlen, comes from the word “choice”, and in this general election there wasn’t really one. And that’s too bad for the rest of Europe.
Read more...Overnight market action shows that nobody really has a clue about the Fed taper any longer.
Read more...In China, things are not looking pretty.
Read more...Yves here. It’s intriguing that “our economic model is based too much on the housing market” is becoming a meme a mere six years after housing bubbles in most advanced economics were a major driver of the global financial crisis.
Read more...While it’s a relief to have Larry Summers out of the running for the Fed chairmanship, it’s also important not to labor under any delusions about Janet Yellen, the nominee presumptive.
Read more...By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness
It’s all about the FOMC meeting at 04:00 AEST tomorrow morning and to be honest nothing else really matters. Ben Bernanke speaks 30 minutes later at 04:30 AEST and the chairman’s speech will also be highly watched, potentially increasing volatility across the board.
Read more...Yves here. This post may strike some readers as a bit wonky and a bit too well-fitted to the woes of the Eurozone. Varoufakis argues that it has broader applicability. And consider: our Richard Smith has speculated that the US civil war was really the result of a strained currency union. I’m not terribly knowledgeable about the economics of 19th century America (I studied England and France during that period instead) but on a first pass, Varoufakis’ ideas appear to have some relevance for that period as well.
Read more...By Sameer Dossani, an advocacy coordinator at ActionAid International, a development NGO dedicated to ending poverty. Cross posted from Triple Crisis
While much of the media coverage around the G20 leaders summit has been about the failure of international diplomacy in Syria, the formal agenda was around one issue: growth. But focusing on growth is a bit like treating strep throat with asprin. You may alleviate some of the symptoms, but you’re not treating the source of the problem.
Read more...Cities have seen dizzying home-price increases that are giddily reported and infused with pandemic housing hype and trillions from the Fed into a self-propagating force. But what happens when it hit the immovable object of higher mortgage rates?
Read more...Yves here. While this post focuses on a newly-released Department of Energy forecast, and forecasting is always a fraught exercise, there’s good reason to see it as realistic. It reflects the power of inertia and entrenched interests. If anything, you’d expect the DoE to present a hopeful outlook on the growth of eco-friendly power sources, given how often Obama talks about “green energy” and “green jobs,” but the authors appear to have steered clear of undue optimism.
Read more...Anyone surprised by the housing recovery is simply blind to the context that the Federal Reserve has administered a bazooka full of aid and comfort over the past few years. They bought up enough mortgage bonds to force interest rates to near-record lows, boosting the fortunes of asset holders. And in so doing they made housing an attractive investment product, bringing lots of Wall Street cash into the REO-to-rental play, at least for a short while. That predictably increased demand and put housing prices on their current trajectory.
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