A day full of rumor and incident.
It begins to feel like the days preceding the collapse of Lehman Brothers.
Failing hopes.
I have been trying to think about aesthetics.
Not a terribly useful consideration in the short term.
Most of my consideration to this point has been negative.
There seems to be no real standard.
There are empirical rules. Those can be violated for cause.
I see that there is a Wikipedia article on Applied Aesthetics.
I will read it with care but not tonight.
Krugman has a piece coming out in the NYRB.
Probably content rich for those who have not been paying attention.
My morning started with this:
http://krugman.blogs.nytimes.com/2012/06/06/wisconsin-2/
Wisconsin
The best lack all conviction, while the worst are filled with a passionate intensity. Obviously I’m not happy with the result; not just out of political sympathies, but because all the recent political trends have been rewarding the side that caused the very crisis from which it is now benefiting, not to mention politicians who have been wrong about everything since the crisis hit.
I’m even more unhappy with how it happened, with national Democrats basically sitting on their hands while conservatives poured resources into the race.
This combination of Democratic diffidence and confusion, on one side, with right-wing ferocity on the other, is the main subject of a long piece Robin and I just wrote for the NYRB; deadline pressure on that piece is why I blogged so little yesterday. So much more about it all in the near future.
Still, my rule for myself is, never give up. All seemed lost politically in 2004; it wasn’t. Then a lot of people, including, I’m sorry to say, Obama, slacked off after 2008, believing that the other side would have to compromise.
It’s never over, for good or bad. Keep on plugging."
I’m even more unhappy with how it happened, with national Democrats basically sitting on their hands while conservatives poured resources into the race.
This combination of Democratic diffidence and confusion, on one side, with right-wing ferocity on the other, is the main subject of a long piece Robin and I just wrote for the NYRB; deadline pressure on that piece is why I blogged so little yesterday. So much more about it all in the near future.
Still, my rule for myself is, never give up. All seemed lost politically in 2004; it wasn’t. Then a lot of people, including, I’m sorry to say, Obama, slacked off after 2008, believing that the other side would have to compromise.
It’s never over, for good or bad. Keep on plugging."
"Be careful what you wish for. You may get it."
The Republicans own the economy. Our nation needs to know.I went and read this:
http://hat4uk.wordpress.com/2012/06/06/crash-2-berlin-reverses-its-millimetre-of-movement-on-eurobonds-4/
"CRASH 2: Berlin reverses its millimetre of movement on eurobonds
The Earth may be turning, but the economy is at Dead Stop
‘Germany has not moved one inch towards fiscal union of any kind’ writes Ambrose Evans-Pritchard in today’s Telegraph.And I’m afraid he’s right. Merkel is a crafty minx, and no mistake: she appeared to have buckled yesterday, but now she’s upped and said “Oooo nein, you misunderstood me”. This isn’t playing well in either Washington (where Geithner is tearing his hair out by the roots) and back in Bankfurt, where – I’m told – even Draghi looked exasperated after taking a phone-call from the Ostikanzler yesterday late afternoon.
“It goes back to what I told you last year,” an equally Merkeled-out diplomat in Paris told me this morning, “You never know at any time which Germany you’re talking to. A few here have given up hope.”
Meanwhile, the world heads on down into the vortex, ignoring the Antics Roadshow above. The flight of eurodeposits remains as it’s been for some time: Zurich, Frankfurt’s ECB, Bankfurt per se, and to a lesser extent Paris. French and Italian visitors to Switzerland are bringing currency in by car, and the Swiss police are searching every fourth vehicle. It beggars belief that the ‘machinery’ in Brussels just sits there round tables handing out fantasy press releases while Europe’s fiscal and economic structure crumbles.
Even Obamite New York Times columnist Floyd Norris said Friday’s US jobs report “was worse than almost anyone expected.” He too is right, but the picture as a whole is doing little more than fulfil The Slog’s expectations. Europe’s entire banking system risks collapse. Greek and Spanish banks face panic withdrawals. In April, Spanish retail sales plunged 9.8% – the sharpest monthly drop on record.
Chinese manufacturing declined for the tenth time in eleven months. Bank lending missed government targets by about $200 billion. Brazil shows increasing weakness. India is in a steeper output plunge than is being admitted by the Government. South Korea and Australia are beginning to realise they face a crash, especially the latter. Korea has a better chance of coming through, on the grounds that there are no Wayne Swans there.
UK manufacturing hit its lowest level since May 2009. In May, it showed contraction, in what was the sharpest single month decline since November 2008.
The world is coming to a halt. And the varietal factors behind this – debt fears, insane austerity, QE wasted on bank support, redistribution of wealth away from the mass market, stealth taxes, Zirp wiping out silver spenders, Brussels inaction, Wall Street over-leveraging, IMF underfunding and over-demanding – are all different symptoms of the same disease: this globalist, suprastate, finance-obsessed model of capitalism is wrong, wrong, wrong.
Meanwhile, stand by for a new development – predicted here some time ago, and connected to the fact that Global commodity prices had their worst decline in four years during the last four weeks.
The next post will flesh out the detail on a new (and very big) potential Sovereign casualty. Stay tuned."
(Russian oligarchs are straining the peg on the Swiss Frank.)
Quickly followed by more Krugman:
http://krugman.blogs.nytimes.com/2012/06/06/doing-their-best-to-destroy-europe/
"June 6, 2012, 9:33 am
Doing Their Best to Destroy Europe
Martin Wolf is shrill (and rightly so):
Oh, and survey data suggest that the euro area economy is really plunging now, plus Spain is on the brink. What about inflation? It’s falling fast — which is a bad thing under the circumstances.
I don’t think there’s any conceivable economic logic for the ECB’s decision. It can only, I think, be understood as some kind of refusal to admit, even implicitly, that past decisions were wrong.
Like Martin Wolf, I’m starting to see how the 1930s happened."
Before now, I had never really understood how the 1930s could happen. Now I do. All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events.Right on cue, the European Central Bank has declined to cut interest rates, or announce any other policies that might help. Because what possible reason might there be to take action?
I don’t think there’s any conceivable economic logic for the ECB’s decision. It can only, I think, be understood as some kind of refusal to admit, even implicitly, that past decisions were wrong.
Like Martin Wolf, I’m starting to see how the 1930s happened."
http://krugman.blogs.nytimes.com/2012/06/06/think-of-the-children-2/
Think of the Children
Every time I hear some smug pundit or politician saying that we can’t spend to create jobs because that would be laying too much of a burden on our children, I get angry — because of reports like this:
For this generation of young people, the future looks bleak. Only one in six is working full time. Three out of five live with their parents or other relatives. A large majority — 73 percent — think they need more education to find a successful career, but only half of those say they will definitely enroll in the next few years.Everything we know says that this generation will never — never — recover from the terrible job market into which it has graduated. But hey, we can’t do anything about that; we must have austerity, for the sake of the next generation."
No, they are not the idle youth of Greece or Spain or Egypt. They are the youth of America, the world’s richest country, who do not have college degrees and aren’t getting them anytime soon.
http://krugman.blogs.nytimes.com/2012/06/06/estonian-rhapsdoy/
Estonian Rhapsody
Since Estonia has suddenly become the poster child for austerity defenders — they’re on the euro and they’re booming! — I thought it might be useful to have a picture of what we’re talking about. Here’s real GDP, from Eurostat:
So, a terrible — Depression-level — slump, followed by a significant but still incomplete recovery. Better than no recovery at all, obviously — but this is what passes for economic triumph?"
He probably liked Queen.
This came along in the mid afternoon.
The time is not there. I think it is paranoid fantasy:
http://hat4uk.wordpress.com/2012/06/06/euroblown-germany-will-wind-up-owning-europe-while-paying-just-a-third-of-the-asking-price/
"EUROBLOWN: Germany will wind up owning Europe, while paying just a third of the asking price.
Now here’s a funny thing, missus. Go to the EFSF ‘explanation’ thing as issued by the European Bunion, and scroll down to the table on who the biggest contributors are to it.Unsurprisingly, Germany is first and France second. But look who’s running close behind them: Italy and Spain. Now let’s be real about this, does anyone see Italy and Spain as in a position to bail out Greece, Portugal and Ireland? No, me neither.
So while Berlin continues to moan neurotically on about how much the rest of Europe is asking of it, think on these facts: first, from being itself an exporting basket case in 2003-4, Germany has reaped the benefit of an artificially cheap currency since then; and second, while Berlin is responsible for more eurozone debt repayment than most, it is far from being solely responsible. These are the percentages:
Germany 29%
France 22%
Italy 19%
Spain 13%
Now then, my little Berliners, you can’t have it every which way. That is to say, you can’t argue that everything is down to you, but you also want everyone in the dock with you….and with several reponsibility, but not individual responsibility as per the Berlin FinMin proposal leaked last week with a degree of deliberate spin intention.
You might want to argue it that way, but the all-knowing Slog will find you out.
The evidenced truth is that Berlin, under the EFSF conversion into ‘something more permanent’, will be responsible for under a third of all ezone debts. Compare that, my friends, to what their relative gain has been during a decade of export bonanza uderwritten by an articially cheap euromark. And when you hear Onkel Wolfie und Tante Geli droning on about how they have the thankless task of carrying the can, just bear in mind what life is going to be like in the Fiskal Redemption Correction Clinic to which the other sixteen are now committed…including poor blackmailed/deluded Ireland, helplessly broke Portugal, and necrophilically raped Greece.
The politics will be marched onward by Merkel, while the disabled Schäuble will dictate the finances. Yes, of course there is a degree of speculation involved for the Germans. But they are speculating to accumulate…and the accumulation of power now almost within their grasp is awesome.
One is left wondering what the Foreign Office mandarin wonks are up to…if anything."
Followed closely by this:
http://krugman.blogs.nytimes.com/2012/06/06/the-urge-to-punish/
"June 6, 2012, 3:47 pm
The Urge to Punish
I’ve been hearing various attempts to explain the ECB’s utterly bizarre refusal to cut interest rates despite soaring unemployment, sliding inflation, and on top of all that the special problems of a monetary union that probably can’t survive unless overall demand is strong. The most popular story seems to be that the ECB wants to “hold politicians’ feet to the fire”, letting them know that they won’t get relief unless they do what’s necessary (whatever that is).
This really doesn’t make any sense. If we’re talking about enforcing austerity and wage cuts in the periphery, how much more incentive do these economies need? If we’re talking about broader fiscal union or something, what is it about the imminent collapse of the whole system that the Germans supposedly don’t understand? Is there any conceivable way that cutting the repo rate by 50 basis points will somehow undermine actions that would otherwise happen?
What does make sense, maybe, is a two-part explanation. First, the ECB is unwilling to admit that its past policy, especially its past rate hikes, were a mistake. Second — and this goes deeper — I suspect that we’re seeing the old Schumpeter “work of depressions” mentality, the notion that all the suffering going on somehow serves a necessary purpose and that it would be wrong to mitigate that suffering even slightly.
This doctrine has an undeniable emotional appeal to people who are themselves comfortable. It’s also completely crazy given everything we’ve learned about economics these past 80 years. But these are times of madness, dressed in good suits."
This really doesn’t make any sense. If we’re talking about enforcing austerity and wage cuts in the periphery, how much more incentive do these economies need? If we’re talking about broader fiscal union or something, what is it about the imminent collapse of the whole system that the Germans supposedly don’t understand? Is there any conceivable way that cutting the repo rate by 50 basis points will somehow undermine actions that would otherwise happen?
What does make sense, maybe, is a two-part explanation. First, the ECB is unwilling to admit that its past policy, especially its past rate hikes, were a mistake. Second — and this goes deeper — I suspect that we’re seeing the old Schumpeter “work of depressions” mentality, the notion that all the suffering going on somehow serves a necessary purpose and that it would be wrong to mitigate that suffering even slightly.
This doctrine has an undeniable emotional appeal to people who are themselves comfortable. It’s also completely crazy given everything we’ve learned about economics these past 80 years. But these are times of madness, dressed in good suits."
The evening Financial report on NPR and PBS were happy about the run up in the market after several down days.
http://www.bbc.co.uk/news/world/europe/
ECB sees rising risks to eurozone economy
Euro v US Dollar
Last Updated at 07 Jun 2012, 00:20 ET *Chart shows local time| €1 buys | change | % |
|---|---|---|
| 1.2561 | - -0.00 | - -0.16 |
European Central Bank (ECB) president Mario Draghi has said risks to the eurozone economy have increased.
He warned of "heightened uncertainty weighing on confidence and sentiment".But he said governments needed to act to solve the debt crisis. "It is not right for monetary policy to fill other institutions' lack of action," he said.
Some had hoped that he would signal a new round of long-term loans to banks - a policy which is seen as having avoided a new credit crisis in Europe.
Under this three-year loan programme, the ECB injected 1tn euros ($1.25tn; £800bn) into the financial system in February and December 2011.
He said that, despite the continuing crisis in the eurozone, there was no guarantee that such a move would be effective if the problems were due to government policy, rather than a lack of liquidity.
"Some of the problems in the euro area have nothing to do with monetary policy," he said.
But he said that banks would continue to have access to all the short-term liquidity (one week, one month or three months) they wanted through fixed-rate ECB loans until at least 15 January next year.
He had previously said that the unlimited funds would be available until 10 July.
Mr Draghi also said that the decision by the ECB to leave eurozone rates unchanged at 1% had not been unanimous, with some members backing a rate cut.
Access to funds Earlier, official figures had confirmed that the eurozone recorded zero growth in the first three months of the year.
The ECB also released its latest quarterly economic forecasts of growth and inflation.
Its growth forecast for 2012 was unchanged at a range of between -0.5% and 0.3%, and there was some surprise among analysts that the prediction had not been cut.
The inflation forecast was narrowed from between 2.1% and 2.7% to between 2.3% and 2.5%.
The euro fell against the dollar during Mr Draghi's news conference, on the news that the decision to keep rates on hold had not been unanimous, but then recovered.
European stock markets also fell back as Mr Draghi spoke, but then regained the ground they had lost.
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I don't know why oil is up. Animal spirits? Market spike means happy days.
http://www.zerohedge.com/contributed/2012-06-06/central-banker-utters-truth
Impure Kool-Ade. The Mother Ship is waiting.
So is this: http://www.telegraph.co.uk/finance/financialcrisis/
And this: http://www.guardian.co.uk/business/debt-crisis
Nothing here that is not pay-walled:
http://www.nakedcapitalism.com/2012/06/links-6612.html
Wednesday, June 6, 2012
Links 6/6/12
A Hamptons Handyman Tweets Out The Hilarious And Absurd Requests He Gets From ‘Citiots’ Every Summer ClusterstockLawmakers Unite to Fight FDA Cigar Regulations Roll Call (Lambert)
A search engine for social networks based on ants RD Mag (furzy mouse)
Do Solo Black Holes Roam the Universe? Science Now
Egyptians protest against Mubarak verdict in Cairo BBC
Protests Turn Into Occupations Throughout Egypt Real News Network
As Taxes Dry Up, Greece Warns of Going Broke New York Times
Spain says markets closing on it, seeks help for banks Reuters
Spain makes plea for EU aid for troubled banks Ambrose Evans-Pritchard, Telegraph. I should write up something on Spain, but I’m on the verge of a jet lag induced face plant (second time I’ve had it worst going west, go figure).
Berlin and EU Weigh Greater Bank Oversight Der Spiegel
Panic has become all too rational Martin Wolf, Financial Times
What We Always Knew About Politics, But Couldn’t Prove Paul Rosenberg, Casey Research (Chris M)
Assassin-in-Chief Tom Englehardt
The Myth of the “Independent” Voter Angry Bear
Pelosi squeezes Dems for cash — asks if they are part of ‘the team’ Politco
How Phantom Accounting Is Destroying the Post Office Alternet (Aquifer)
Paycheck Fairness Act to Be Filibustered Today Dave Dayen, Firedoglake
Macro outline of causes and effects of and predictions for the global financial crisis Ed Harrison
Regulation is not a dirty word mathbabe
Austerity has never worked Guardian (Ed Harrison)
Bank staff costs take bigger share of pot Financial Times. Quelle surprise!
Western banks ‘reaping billions from Colombian cocaine trade’ Guardian
Canada’s oil production to double, industry says Metro News (lambert)
OCC Flip-Flopped on Ethics Matter, Reassigned Husband of B of A Exec American Banker (CF)
US banks moving away from wholesale funding Sober Look
Cold Water on QE3? Tim Duy versus Fed Considers More Action Amid New Recovery Doubts Wall Street Journal
Arms races and the real encumbrance problem FT Alphaville. Shorter version: the more secured transactions, the more depositors are at risk. Which is why allowing banks to put derivatives into the depositary is totally batshit.
Schneiderman Has Little “Independence” on Working Group Investigation Dave Dayen, Firedoglake
New Fannie CEO Has Bank Baggage Wall Street Journal
Did JP Morgan Violate the Volcker Rule? Lee Sheppard, Forbes. Sheppard parses the rule.
Students Pay SLM 9.25% On Exploitative Loans For College Bloomberg
Meet the JOBS Act’s Jobs-Free Companies Wall Street Journal. As foretold. And the worst is yet to come.
Only market evangelists reconcile Jekyll with Hyde John Kay, Financial Times
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