Krugman:
EconoTrolls
"Noah Smith has a very funny and highly accurate description of the menagerie. If you think he’s making fun of you, he probably is."
http://noahpinionblog.blogspot.it/2012/09/econotrolls-illustrated-bestiary.htmlGeeky fun.
Tuesday, September 25, 2012
European Optimism Fades
"By
Delusional Economics, who is determined to cleanse the daily flow of
vested interests propaganda to produce a balanced counterpoint. Cross
posted from MacroBusiness.
I genuinely thought the Europeans were getting somewhere in the last few weeks as I detected (or maybe that should be optimistically hoped) a change of rhetoric from some of the more hardened camps and a growing realisation that the current approach to “solving” the crisis is failing. My optimism was helped by the fact that the OMT, like the LTRO before it, has driven down sovereign yields which has given theEuropean
leaders yet another opportunity to sit down away from the fire fighting and discuss outcomes beyond a short term market window.
But alas, this isEurope and I appear to have been wrong. So, as I warned last week, the next step along the road to further integration, the banking union, appears to have hit a wall:
The Spanish banking system continues to see rising bad debts and a new report due shortly is likely to show that at over €60bn is required to cover losses. Given the current economic situation of both the state and the regions on top of the continuing declines in asset values it does not seem possible that the Spanish sovereign can cover these costs. The Spanish government is attempting to implement austerity of its own in order to soften the blow of conditionality, but this won’t in anyway alter the outcome that Spain will require an external program.
The poor economic data also continues. In a follow-up to the depressing read that is the Eurozone flash PMIs, the latest German IFO continues to follow the same trend:
In other news the Troika discussions in Greece have been halted for a week after long and heated back-and-forth over further budget cuts. There has been no official word from the Troika as to the outcome but given IMF President’s, Christine Lagarde’s, latest statements I can only assume she has been briefed on the futility of the current situation:
Overnight German lawmakers re-iterated their objections to further funding, so I have to ask what’s left?
I genuinely thought the Europeans were getting somewhere in the last few weeks as I detected (or maybe that should be optimistically hoped) a change of rhetoric from some of the more hardened camps and a growing realisation that the current approach to “solving” the crisis is failing. My optimism was helped by the fact that the OMT, like the LTRO before it, has driven down sovereign yields which has given the
But alas, this is
German Chancellor Angela Merkel and French President Francois Hollande had gathered at the Baroque palace in Ludwigsburg, southwestern Germany, where Charles de Gaulle gave a watershed speech to German youth in 1962.As I said in my previous post on the matter, the most important part of the union isn’t the supervisory component it is unified deposit insurance:
But despite affirmations that European unity was the only way out of the debt turmoil lashing the euro, they differed over a key plank of crisis-fighting: tighter checks on the European banking sector.
“I support a banking union, it is an important measure and we must proceed step-by-step,” Hollande told reporters, while stressing that such a framework should be in place “the earlier the better”.
Merkel, for her part, said Berlin also backed European oversight of lenders but urged a more cautious approach, saying haste could prove costly.
“For me it is important that quality is ensured. It is pointless to do something very quickly that in the end doesn’t work,” she said.
“It must be thorough, it must be of good quality and then we’ll see how long it takes. We will get our finance ministers to work with each other on it as quickly as possible.”
The whole point of having a supra-Eurozone backed insurer is that deposit holders in any participating country know that their savings are backed not just by their own national government, which may be struggling, but by all participating governments. In practice this should significantly reduce the outflow of deposits because, although probably not perfect, periphery banks will be seen as being considerably safer than they do today.Without this component deposit outflows can be expected to continue, further weakening the periphery banking system while stabilising the core. There is a possibility, however, that this is about timing. The Germans would like to see periphery governments under the umbrella of the fiscal compact and providing deposit insurance, like the OMT, is a disincentive. The jawboning of Spain continues and German politicians are becoming frustrated that Rajoy hasn’t yet drunk from the poison chalice:
Germany’s governing coalition showed growing exasperation with Spain, as a senior ally of Chancellor Angela Merkel said Prime Minister Mariano Rajoy must stop prevaricating and decide whether Spain needs a full rescue.Obviously this is about politics. Mr Rajoy is well aware that austerity programs in other nations have seen the end of the government and I am very doubtful, given other circumstances, that Spain will be any different. I note, however, that Mariano is doing a fair job of destroying his own career.
“He must spell out what the situation is,” Michael Meister, the chief whip and finance spokesman for Merkel’s Christian Democratic Union, said in an interview in Berlin today. The fact he’s not doing so shows “Rajoy evidently has a communications problem. If he needs help he must say so.”
The Spanish banking system continues to see rising bad debts and a new report due shortly is likely to show that at over €60bn is required to cover losses. Given the current economic situation of both the state and the regions on top of the continuing declines in asset values it does not seem possible that the Spanish sovereign can cover these costs. The Spanish government is attempting to implement austerity of its own in order to soften the blow of conditionality, but this won’t in anyway alter the outcome that Spain will require an external program.
The poor economic data also continues. In a follow-up to the depressing read that is the Eurozone flash PMIs, the latest German IFO continues to follow the same trend:
Germany’s relative resilience to the euro zone crisis has been steadily fraying as its firms see falling demand for their products from key European partners and signs of a slowdown in other markets.
Earlier this month ECB chief Mario Draghi announced a new and potentially unlimited bond-buying program to lower the borrowing costs of embattled euro zone countries such as Spain but market optimism has not spread to company boardrooms.
The Munich-based Ifo institute said its business climate index, based on a monthly survey of some 7,000 firms, fell to 101.4 in September from 102.3 in August, defying expectations for a slight rise.
In other news the Troika discussions in Greece have been halted for a week after long and heated back-and-forth over further budget cuts. There has been no official word from the Troika as to the outcome but given IMF President’s, Christine Lagarde’s, latest statements I can only assume she has been briefed on the futility of the current situation:
Greece faces a financing gap that won’t be solved by budget measures being discussed because a weak economy and delayed privatizations have worsened its fiscal situation, International Monetary Fund Managing Director Christine Lagarde said.As I said a month ago the discussion over the latest package is quite irrelevant. The Greek economy is in a shambles, resembling that of a failed state, and it is very obvious that Europe will have to a ) provide on-going funding, b ) provide some form of official sector adjustment, possibly a large lengthening of maturity c) let Greece default.
Lagarde said efforts being discussed by the Greek government and the so-called troika to find 11.5 billion euros in savings won’t be enough to put back on track Greece’s 130 billion-euro (168 billion) bailout jointly funded by the IMF, the European Commission and European Central Bank.
A “financing gap” has emerged because of “the macroeconomic situation, the major delay in privatization and therefore shortfall in proceeds from the privatization” as well as “limited revenue collection,” Lagarde said at the Peterson Institute for International Economics in Washington. “The Greek debt will have to be addressed as part of the equation.”
Overnight German lawmakers re-iterated their objections to further funding, so I have to ask what’s left?
German lawmakers would refuse to back a further writedown of Greek debt because such a move would amount to a third aid program, a senior ally of Chancellor Angela Merkel said.So against my misguided optimism it seems the Eurozone has fallen back into its old ways. The economy continues to shrink, the current policy response is making the problem worse but meanwhile the eurocrats struggle to agree on anything that may help."
“How could we possibly do that?” Michael Meister, the parliamentary finance spokesman for Merkel’s Christian Democratic Union party, said in an interview in Berlin today. “Where would it stop? We’re talking about loans from as recently as last year.” Germany’s lower house of parliament, the Bundestag, which must approve aid, “would not go with it.”
Asked about a report in this week’s Spiegel magazine that Greece’s budget gap may be almost twice as big as envisioned, Meister said that even if it were true, “it’s up to the Greeks” to address the problem. He reiterated that as long as the nominal aid for Greece is not increased, “there are a number of possibilities, including front-loading financial help from the second packet.”
Tuesday, September 25, 2012
Links 9/25/12
Satellites trace sea level change BBC
FiveThirtyEight: The Number of Things Nate Silver Gets Wrong About Climate Change Michael Mann, Huffington Post
Myths about industrial agriculture Aljazeera (Aquifer)
Guess Where These Beautiful Pictures Were Taken … George Washington. A little heavy-handed, but the pix really are pretty.
Apple Co-Founder Wozniak Wants to Be Aussie Citizen, AFR Says Bloomberg. So do I get any points for being 10 years ahead of the curve? I wanted to become an Australian citizen too, but admiring their broadband (actually in 2002 it wasn’t admirable) wouldn’t have been seen as a very good reason by the immigration authorities (and back then, having a high net worth didn’t cut it either, as it does in Canada). But I assume Woz will be welcomed with open arms, PR talk or not.
Taiwanese boats enter Japanese waters Financial Times
Foxconn closes factory after brawl Guardian
I.M.F.’s Call for More Cuts Irks Greece New York Times
Patience snaps in Portugal Ambrose Evans-Pritchard, Telegraph. The Portuguese people have, for the moment, stared down the austerity goons. This is getting interesting.
Valencia: A Spanish city without medicine Paul Mason, BBC. Aiee.
Spain Recoils as Its Hungry Forage Trash Bins for a Next Meal New York Times (Scott)
Bundesbank castigates IMF for saving Europe Telegraph
Judge in late abortion case linked to conservative Christian charity Guardian (Duke of URL)
State department attacks CNN for doing basic journalism Glenn Greenwald
Filling Geithner’s (Small) Shoes Robert Kuttner, Huffington Post (bhikshuni). I hear Robert Altman is also on the list. Gah. A hard-core Rubinite who wants a VAT (expect this as the supplement to or replacement for Medicare/Social Security whackage).
US regulator calls for faster Libor reform Financial Times
Wall Street Rolling Back Another Key Piece of Financial Reform Matt Taibbi (Aquifer). From last week, sorry I am late to it.
Wall St engineering revival of CDS Financial Times. Get a load of the subtitle: “Index to include financial instruments that do not exist.”
30 Issues: Getting Real On Medicare and Social Security Brian Lehrer, WNYC. Jamie Galbraith is one of the participants.
Ex-Regulator Has Harsh Words for Bankers and Geithner New York Times. The fact that Treasury ginned up former Treasury consultant Lee Sachs to defend Geithner is a huge tell. Sachs had trouble containing his contempt in a blogger meeting (the rest of the Treasury types were sincere and convincing). And as head of hedge fund Mariner, he profited from the CDOs created by one of its units, Tricadia, which were the worst deals, bar none (including Magnetar). So if these are who Geithner turns to when he needs a favorable quote, it proves Bair’s case. The Times also misleadingly says Citi’s bailout turned a profit for taxpayers. Wrong. The Feds had to enter into a second deal post the initial bailout, plus Treasury and the regulators went through hoops to preserve the value of $50 billion of deferred tax assets to Citi. Andrew Ross Sorkin called similar treatment of $26 billion of AIG DTA’s a “gift” from taxpayers. So we get more three card monte to preserve the “TARP made money” propaganda campaign.
* * *
FiveThirtyEight: The Number of Things Nate Silver Gets Wrong About Climate Change Michael Mann, Huffington Post
Myths about industrial agriculture Aljazeera (Aquifer)
Guess Where These Beautiful Pictures Were Taken … George Washington. A little heavy-handed, but the pix really are pretty.
Apple Co-Founder Wozniak Wants to Be Aussie Citizen, AFR Says Bloomberg. So do I get any points for being 10 years ahead of the curve? I wanted to become an Australian citizen too, but admiring their broadband (actually in 2002 it wasn’t admirable) wouldn’t have been seen as a very good reason by the immigration authorities (and back then, having a high net worth didn’t cut it either, as it does in Canada). But I assume Woz will be welcomed with open arms, PR talk or not.
Taiwanese boats enter Japanese waters Financial Times
Foxconn closes factory after brawl Guardian
I.M.F.’s Call for More Cuts Irks Greece New York Times
Patience snaps in Portugal Ambrose Evans-Pritchard, Telegraph. The Portuguese people have, for the moment, stared down the austerity goons. This is getting interesting.
Valencia: A Spanish city without medicine Paul Mason, BBC. Aiee.
Spain Recoils as Its Hungry Forage Trash Bins for a Next Meal New York Times (Scott)
Bundesbank castigates IMF for saving Europe Telegraph
Judge in late abortion case linked to conservative Christian charity Guardian (Duke of URL)
State department attacks CNN for doing basic journalism Glenn Greenwald
Filling Geithner’s (Small) Shoes Robert Kuttner, Huffington Post (bhikshuni). I hear Robert Altman is also on the list. Gah. A hard-core Rubinite who wants a VAT (expect this as the supplement to or replacement for Medicare/Social Security whackage).
US regulator calls for faster Libor reform Financial Times
Wall Street Rolling Back Another Key Piece of Financial Reform Matt Taibbi (Aquifer). From last week, sorry I am late to it.
Wall St engineering revival of CDS Financial Times. Get a load of the subtitle: “Index to include financial instruments that do not exist.”
30 Issues: Getting Real On Medicare and Social Security Brian Lehrer, WNYC. Jamie Galbraith is one of the participants.
Ex-Regulator Has Harsh Words for Bankers and Geithner New York Times. The fact that Treasury ginned up former Treasury consultant Lee Sachs to defend Geithner is a huge tell. Sachs had trouble containing his contempt in a blogger meeting (the rest of the Treasury types were sincere and convincing). And as head of hedge fund Mariner, he profited from the CDOs created by one of its units, Tricadia, which were the worst deals, bar none (including Magnetar). So if these are who Geithner turns to when he needs a favorable quote, it proves Bair’s case. The Times also misleadingly says Citi’s bailout turned a profit for taxpayers. Wrong. The Feds had to enter into a second deal post the initial bailout, plus Treasury and the regulators went through hoops to preserve the value of $50 billion of deferred tax assets to Citi. Andrew Ross Sorkin called similar treatment of $26 billion of AIG DTA’s a “gift” from taxpayers. So we get more three card monte to preserve the “TARP made money” propaganda campaign.
* * *
Gordon Brown: Europe is in a 'tranquility period'
25 Sep 2012
| 16 Comments
Austerity protest turns violent
25 Sep 2012
| 119 Comments
S&P warns of new eurozone recession
25 Sep 2012
| 18 Comments
Berlusconi: Monti too 'servile' to Germany
Italy's ex-premier and possible future candidate Silvio Berlusconi criticised his successor Mario Monti for raising taxes in an interview out on Tuesday, accusing him of being "conditioned" by the left.
25 Sep 2012
| 12 Comments
ECB and Bundesbank checking legality of bond-buying program
The European Central Bank and Germany's Bundesbank are getting lawyers to check the legality of the ECB's new bond-buying program, a German newspaper said this morning.
25 Sep 2012
| 4 Comments
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Gallery (13 pictures),
25 Sep 2012:
Spanish riot police clashed with thousands of protesters at a rally near parliament in Madrid
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25 Sep 2012: Draghi warns of 'challenging' problems as protesters take to streets of Madrid and Greece prepares for general strike
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25 Sep 2012:
Katharine Ainger: Spain's government is right to fear the public reaction to this new round of suffering mandated by the financial markets
1. MEIMARAKIS’ REQUEST Parliamentary Speaker
Evangelos Meimarakis on Monday requested that he be temporarily
replaced by his deputy speakers following reports that he is among a
number of MPs whose finances are being probed by financial
investigators. Newspaper reports claimed that Meimarakis, who is a New
Democracy MP, was implicated in real-estate transactions from 2005 to
2008 which are being investigated by prosecutors and the Financial and
Economic Crime Unit (SDOE). Meimarakis requested that he be relieved of his duties for the time it takes SDOE to complete its report.
2. DEBT RESTRUCTURING Alternate Finance Minister
Christos Staikouras on Tuesday issued an announcement denying that the
government was considering a further restructuring of the country's
public debt or that the term debt restructuring had been used in a reply
that he had given in parliament. The finance ministry's announcement
was issued in response to media reports, according to which Staikouras
had said in his reply to an MP that the government was examining the
prospect of restructuring the country's debt.
3. PASOK ON RACISM Ratification of the draft law
on stamping out racism and xenophobia is an "absolute priority" for
Pasok, a party announcement said on Tuesday. Pasok stressed that the
need of shoring up society against manifestations of racism and
xenophobia is timelier than ever and condemned racist public statements
which incited such actions. Pasok recalled that, when it had been in
parliament, it had drafted and tabled a draft law which had passed
through the parliamentary committee but was never introduced to the
plenary.
4. ELDER ‘PASTITSIOS’ A 27-year-old man arrested for creating a satirical Facebook page
that poked fun at the cult surrounding the deceased Orthodox monk Elder
Paisios is to face trial for "malicious blasphemy and maligning
religions". The fish-farm worker had uploaded on Facebook an image of
the Elder Paisios modified to look like a spaghetti monster and renamed
'Elder Pastitsios' after a popular Greek dish based on pasta. Under the
penal code, blasphemy is considered a criminal offence.
5. NO FLIGHTS Air flights will be disrupted on Wednesday as Air Traffic Controllers will participate in a nationwide strike
with a three-hour work stoppage from 10am to 1pm. Air Traffic
Controllers said in an announcement that no flight will be serviced in
Greek airspace during the stoppage, forcing airlines to cancel or
reschedule several domestic and international flights. Travellers are
urged to contact their airlines before heading to airports.
|
Good parents allow their adult children to escape. Good adult children release their parents.
I am registered to vote.
I carry no life insurance. When I have an insurable risk, I will get some.
I am not going to look. You will tell me what I need to know.
I answer the phone. I know I can be reached on Skype.
I am not running a printer at this time. Refilling cartridges is easy and effective. I have done it.
Ex cons need shelter. The ones who have not been caught scare me more.
I have no interest in dating randomly.
Sooner is better. As soon as you can is best.
.
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