By Marshall Auerback and Edward Harrison Marshall here. That was an impressive rally into the close in New York. Stocks ended up across the board. Yves Smith, who was off the grid today, asked “was there any news driving” the rally into the close or was it just tape painting. Here’s what I wrote: No, […]
Read more...It is remotely possible that the EU officialdom will temporarily reverse the train wreck that started last Friday with the resignation of Jurgen Stark from the ECB. That was seen as a sign that Germany has adopted bailout fatigue as official policy. That in turn would mean that Greece will not get any more money lifelines (which as commentators predicted some time ago, means a likely banking crisis, which was the reason for them not to exit the Eurozone).
Mr. Market is giving a big vote of no confidence in European leadership, although the FTSE has reversed some of its early-session losses.
Read more...Satyajit Das is an internationally respected expert on finance with over 30 years working experience in the industry. He is also a best-selling author and a regular contributor to leading finance blogs – including our very own Naked Capitalism. His new book ‘Extreme Money: Masters of the Universe and the Cult of Risk’ is out now and available from Amazon in hardcover and Kindle versions.
Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.
Part I of the interview can be read here.
Philip Pilkington: In the book you describe ‘money shows’ which are presentations where financiers try to flog their wares to the general public. It really struck me how sleazy these shows are; like something out a carnival sideshow. Salesmen — you know, proper ‘snake oil’ salesmen — stand in front of a crowd and whip them into a frenzy, convincing them that they can all get rich.
I almost found the whole thing quite funny – that is, until I realised that many of these people were just trying to make ends meet. It’s well-known that real wages have stagnated in the last 30 years. And at the same time the financial markets have greatly expanded. These ‘money shows’ seemed to me to be the meeting point of these two toxic phenomena. Perhaps you could talk a little about this?
Read more...Wow, this is just embarrassing. A raspberry from businesses, the object of Obama’s tender ministrations. And the reason? Basically, too little demand, something that tax cuts won’t remedy
Read more...By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute
Last year we provided an analysis (on the Naked Capitalism blog and elsewhere, including the Levy Economics Institute Annual Minsky Conference, and CBC interviews), based on the financial balances approach that suggested a number of problems could arise with the eurozone’s pursuit of what are called “expansionary fiscal consolidations”. Without a large and sustained swing into a current account surplus, the financial balance approach revealed that the pursuit of fiscal consolidation would undermine the ability of the private sector to service the debt loads it had built up during the prior decade of currency union. Simply put, higher taxes and lower government spending drain cash flow from households and firms, and that increases the financial fragility of economies.
Read more...Cross-posted from Credit Writedowns How should I begin this post? Let me start out with my former default position: I have always seen a sovereign default and restructuring within the euro zone as more likely than a break-up of the euro zone. I would say I considered the dissolution of the euro zone as an […]
Read more...This interview at Real News Network focuses on the element of the Obama “jobs” plan most likely to see the light of day, namely, the payroll tax cut and the “reform,” meaning gradual erosion, of Medicare and Social Security.
Read more...By Richard Baldwin, Professor of International Economics, Graduate Institute, Geneva. Cross posted from VoxEU
The Eurozone crisis moved into phase 2 this August when the contagion spread to Italian debt, Spanish debt, and most EZ banks. Radical ECB actions prevented a disaster. This column argues that the ECB emergency policies are unsustainable politically and perhaps legally. The only policy combination that EZ leaders could agree on quickly enough involves political cover for ECB bond buying in exchange for national fiscal reforms of the German “debt brake” type.
Read more...One of the most annoying aspects of Life After the Crisis is the utter refusal of banks to take responsibility for the costs they have imposed on the rest of us. This is directly related to their efforts to fight any and all interference with their God-given right to loot.
Read more...This post first appeared on April 30, 2009
In another disheartening development on the banking front, the Senate defeated legislation giving judges the authority to modify residential mortgages in bankruptcy.
Note that the popular description is often misconstrued in short form descriptions. Judges would not have had open-ended authority to make changes. The construct is that mortgages are collateralized loans. The mortgage balance is written down in bankruptcy to the value of the collateral, and the excess is added to the unsecured creditor claims.
Read more...By Philip Pilkington, a journalist and writer living in Dublin, Ireland
Learn to say the same thing
What defeats people is a double confession
One time they will confess one thing
And the next they will confess something else
Talk to them, they will say:
Learn to say the same thing
Let us hold fast to saying the same thing”
– Cat Power, ‘Say’
In Ireland we used to measure our economic performance based on GDP (GNP actually, but we won’t go into that). Pretty standard fare for any advanced economy, really. Not so anymore. These days we measure our economic performance based on the government’s ability to extract tax revenue out of the general populace to pay for extortionate loans to our EU masters.
Read more...I’m a bit surprised that anyone can be surprised by the lousy jobs numbers for August. Consumers are worried and too many economists have been trying to draw trend lines through noise in retail spending data and call it proof that a recovery in under way. Broad measures of unemployment are stuck in the upper teens, big companies are continuing to shed jobs, small businesses on the whole are pessimistic, state budgets are under pressure and federal deficit spending is set to be reined in. With housing in most markets not having bottomed, the overwhelming majority of consumers having taking a wealth hit, businesses not investing and government not taking up the slack, where exactly is growth supposed to come from? The tooth fairy?
Read more...The just released official manufacturing purchasing mangers index (PMI) for China shows a small rebound in August. The headline PMI rose from 50.7 in July to 50.9 in August, just slightly below market expectation of 51.1.
Read more...By Philip Pilkington, a journalist and writer living in Dublin, Ireland
The completeness of the Ricardian victory is something of a curiosity and a mystery. It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.
– John Maynard Keynes
In our previous piece on profits we showed how profits ultimately come from investment. There we saw that whether this investment was from the government sector or from the private sector mattered little (once again we leave out the external sector for the sake of simplicity). Either way it was the key factor determining profits.
We also saw that this entire system was rather fragile and prone to breakdown.
Read more...Cross-posted from Credit Writedowns Economic Cycle Research Institute co-founder Lakshman Achuthan was on Tech Ticker yesterday discussing the outlook for the economy. Business Insider does a good write-up of his commentary, highlighting the fact that the ECRI has yet to signal a double dip. However, I wanted to add a few comments as well. ECRI’s […]
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