Cross-posted from Credit Writedowns Looking up the term procyclical on the Internet, I see the Wikipedia entry defines it as: Procyclical is a term used in economics to describe how an economic quantity is related to economic fluctuations. It is the opposite of countercyclical… In business cycle theory and finance, any economic quantity that is […]
Read more...Cross-posted from Credit Writedowns I have stopped reporting the quarterly GDP numbers but this last reading bears mentioning. The US Bureau of Economic Analysis reported the following at 830AM ET: Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an […]
Read more...It is one thing to suspect that something is rotten in Denmark, quite another to have proof. Ever since Obama appointed his Rubinite economics team, it was blindingly obvious that he was aligning himself with Wall Street. The strength of the connection became even more evident in March 2009, when Team Obama embarked on its “stress test” charade and bank stock cheerleading. Rather than bring vested banking interests to heel, the administration instead chose to reconstitute, as much as possible, the very same industry whose reckless pursuit of profit had thrown the world economy off the cliff.
But now we see evidence in a new paper by the think tank Third Way of an even deeper commitment to pro-financier policies. The Democratic party has made clear that it supports institutionalized looting by banks, via the innocuous-seemeing device of rejecting the idea of writedowns on bonds they hold.
Read more...Some historical accounts of the Great Fire of Rome, which destroyed three of the city’s fourteen districts and damaged seven others, depict it as an urban redevelopment project gone bad. Emperor Nero allegedly torched the district where he wanted to build his Domus Aurea. Hence any lyre-playing was not a sign of imperial madness, but a badly-informed leader not knowing his plans had spun badly out of control.
President Obama’s plan at social and economic engineering, of rolling back core elements of the Great Deal out of a misguided effort to cut spending in a weak economy, is similarly blazing out of control. The debt ceiling crisis was meant to be a scare to provide an excuse for measures that are opposed by broad swathes of the public. Polls predictably show that voters want five contradictory things before noon: they are against cutting Social Security and care much more about more jobs than about less deficit, but yeah, they’d like that too if they can have it.
While members of the administration may dimly recognize what a firestorm they have unleashed, their crisis responses look to be no better than Nero’s.
Read more...By David Apgar, the founder of ApgarPartners LLC, a firm that helps companies and development organizations learn by treating goals as assumptions to be tested by performance results. He blogs at www.relevancegap.blogspot.com.
Speaker Boehner made three points in his surprisingly combative reply to President Obama on debt ceiling legislation Monday night. Readers of this blog can help determine whether, as I believe, all three were lies despite the seriousness of the impasse on federal authority to continue borrowing.
Read more...Hope you enjoy this chat. I’m pretty sure I corrected saying “House” rather than “Senate” at the time but that appeared not to have made the edits. The peril of this medium is low/no tolerance for flubs.
Read more...We commented last night on the parallels between the pressure tactics used to railroad the passage of the TARP and our current contrived debt ceiling crisis. The similarities have increased in a predictably bad way. Even worse than the economic toll radical budget cutting will impose on ordinary Americans is the continued undermining of basic democratic processes.
Read more...By Marshall Auerback, a portfolio strategist and hedge fund manager. Cross posted from New Deal 2.0
The Iceberg Cometh: An economic and financial crisis will soon be brought about by the collapse of the European Monetary Union. And everyone goes down with the ship!
By Satyajit Das, the author of Extreme Money: The Masters of the Universe and the Cult of Risk (forthcoming August 2011) and Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010)
overwhelm attempts to contain and solve the European sovereign debt crisis.
Recent frantic efforts that secured release of Euro 12 billion to Greece avoided immediate default but have not solved the fundamental problems. Greece is unlikely to meet targets for tax revenues, spending cuts and sales of public assets.
Read more...This is another summer rerun piece. I wrote the following post “If the U.S. stopped issuing treasuries, would it go broke?” in November 2009. At the time, I was getting to grip with how the government designed constraints in order to prevent deficit spending. What was and still is clear to me is that while […]
Read more...Cross-posted from Credit Writedowns According to Der Spiegel, Helmut Kohl, the father of a unified Germany and the German politician most responsible for the single currency, is very unhappy with his protégé Angela Merkel. I found this article to be consistent with what I have heard for months about the Kohl-Waigel generation’s feelings about Merkel’s […]
Read more...By Marshall Auerback, a portfolio strategist and hedge fund manager
For once, President Obama has sought to address his progressive critics, without caricaturing them as a bunch of out of touch, irresponsible radicals. At his press conference on Friday, the President made the following argument:
Read more...Here’s what Germany’s largest daily newspaper Bild Zeitung has to say about the politics in the US around the debt ceiling: "Playing poker is part of politics, as is theatrical posturing. That’s fair enough. But what America is currently exhibiting is the worst kind of absurd theatrics. And the whole world is being held hostage. […]
Read more...Hi all. Here’s another summer re-run I wanted to post at NC, but this time from Marshall Auerback. As you know, there has been a heated debate amongst economists as to what policy makers should do if anything about the loss of jobs and the attendant fall in demand and output in the wake of […]
Read more...Can you smell the napalm?
The tone of the market is beginning to feel like 2007: serious signs of danger, like interbank funding stresses, combined complacency and denial.
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