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am i richer or poorer?
I have a yak wool hat. A week ago, someone offered me 20 euros to buy it. Now I can only get 10€.
I still have my hat!!
“Just how bad have the last three years been for some Americans? A Fed survey has some brutal data today showing that both median family income and net worth dropped dramatically over the last three years. The median family net worth dropped a staggering 40% to $77,300 in 2010 from $126,400 in 2007, the Fed said in its Survey of Consumer Finances which is released every three years. The median family income dropped as well from $49,600 in 2007 to $45,800, or a 7.7% drop.”
related material
the mechanics
of inflation: The great government swindle and how it works
the web address for this article is
https://www.abelard.org/news/economics022012.php#inflation_and_prosperity_120612
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updated ho ho ho €40 billion; ho ho €400 billion; &euro trillion- maybe
“Debt crisis: Germany signals shift on €2.3 trillion redemption fund for Europe The German government has begun opening the door to shared debts for the first time in a profound change of policy, agreeing to explore proposals for a €2.3 trillion (£1.9 trillion) stabilization fund in order to stop the eurozone’s crisis escalating out of control.” [Quoted from telegraph.co.uk]
“Italian banks are strong and there is no need to fear possible contagion from the troubles of Spain's banking sector, the general manager of Italian bank UniCredit said on Saturday. Euro zone finance ministers meet to discuss a bailout of Spain's banks on Saturday, although officials have sought to emphasise that the Spanish troubles were spawned by a burst property bubble rather than by government finances as in Greece. "Our banks are strong," UniCredit's Roberto Nicastro said at a conference of young entrepreneurs organised by business lobby Confindustria. "Spain can be in a delicate situation, but substantially we do not have to be scared about Spanish banks" ” [Quoted from cnbc.com]
“Spain's problems are multidimensional, from having to deal with real estate to fixing the budget deficit and all at the same time,” said Jakobsen. “The idea that you can solve the situation with 40 billion euros of European money for the banks makes no sense.” An EU and International Monetary Fund bailout package for Spain that covered the government's gross funding needs through the end of 2014 and included 75 billion euros to recapitalize banks would amount to about 350 billion euros, David Mackie, the chief economist at JPMorgan Chase & Co. (JPM) in London, wrote in a May 30 report.” [Quoted from smh.com.au/business]
Nothing to see here, move along, the king isn’t naked. Really peally, he isn’t.
And now Ireland wants more favourable terms for its bail out.
The more I see of this, the more it looks like a slow motion bail out similar to that underway in the UK and USA; but it’s ‘illegal’' in the eurozone. And Merkel has an election.
In my view, they will just continue to print money surreptitiously while all the time denying it. But the huge transfers from north to south will continue, while they try to play a three-card trick with the electors.
related material
EMU (European
Monetary Union) and inflation – a civil liberty
issue
the web address for this article is
https://www.abelard.org/news/economics022012.php#spanish_bailout_100612
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the slow-motion crash that is the euro
“Heretical thoughts are gaining traction. El Confidencial suggested that Spain should engage in "blackmail" against the EU ("chantaje" in Spanish). "Rajoy has a card up his sleeve: leaving the euro. It is not the best option, and fundamentally it is not what most people want. But the time has come to make Brussels a poisonous proposal: "we have already done everything we possibly can, and if you won’t help us, we will leave," it said.”
—
“Italy is scarcely more predictable. Ex-premier Silvio Berlusconi offered us his cunningly pitched "mad idea" on Friday. If the ECB refuses to act as a lender of last resort, Italy should take matters into its own hands. "We should use our own mint to print euros," he said. It is a thinly veiled threat.”
—
“Switzerland is threatening capital controls to repel bank flight from Euroland. The Swiss two-year note has fallen to -0.32pc, not that it seems to make any difference. Denmark’s central bank said it was battening down the hatches for a "splintering" of EMU. It has cut interest rates twice in a matter or days and pledged to do whatever it takes to stop euros flooding into the country. Contingency plans are on the lips of officials in every capital in Europe, and beyond. On a single day, the European Commission said monetary union was in danger of "disintegration" and the European Central Bank said it was "unsustainable" as constructed. Their plaintive cries may have fallen on deaf ears in Berlin, but they were heard all too clearly by investors across the world."
As warned several times.
“Tim Congdon from International Monetary Research said regulators were making a grave mistake by forcing banks to cut lending during a slump. "What they are doing is frightening. If banks shrink their balance sheets, it destroys money. It causes a credit crunch and intensifies the recession. This is why we are facing a global slowdown," he said.”
related material
EMU (European
Monetary Union) and inflation – a civil liberty
issue
the web address for this article is
https://www.abelard.org/news/economics022012.php#euro_slomo_crash_040612
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lower taxes, better outcomes
“Econometric analysis of advanced OECD countries for the period
1965-2010 finds that a higher tax to GDP ratio has a statistically
significant, negative effect on growth. For example, an increase in
the tax to GDP ratio of 10 percentage points is found to lower annual
per capita GDP growth by 1.2 percentage points. A similarly
statistically significant negative effect on growth is found with a
higher spending to GDP ratio. Detailed regression analysis stripped
out the impact of variables such as investment as a proportion of GDP,
the growth rate of the labour force, and the growth rate of human
capital.”
There’s a quick and dirty video for those who don’t want to work.
20-page .pdf report.
related material
GDP and other quality of life measurements
the web address for this article is
https://www.abelard.org/news/economics022012.php#lower_taxes_better_outcomes_280512
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bernanke
on the euro chaos
21st March 2012
“Although progress has been made, more needs
to be done. Full resolution of the crisis will require
a further strengthening of the European banking system;
a significant expansion of financial backstops, or "firewalls,"
to guard against contagion in sovereign debt markets;
and, critically, continued efforts to increase economic
growth and competitiveness and to reduce external imbalances
in the troubled countries.
“Actions Taken by the Federal Reserve
The Federal Reserve has followed developments in Europe
closely, and we are in frequent contact with key European
policymakers. We are particularly focused on protecting
U.S. financial institutions, businesses, and consumers
from adverse financial and economic developments in
Europe.”
In English, don’t lend to PIIGS.
"As part of this exercise, bank capital positions
were evaluated under a hypothetical stress scenario
that involved a deep recession in the United States
(with unemployment reaching 13 percent) and a notable
decline in activity abroad, combined with sharp decreases
in both domestic and global asset prices. This exercise
was designed to capture both the direct and indirect
exposures and vulnerabilities of U.S. financial institutions
to the economic and financial stresses that might arise
from a severe crisis in Europe. The results show that
a significant majority of the largest U.S. banks would
continue to meet supervisory expectations for capital
adequacy despite large projected losses in an extremely
adverse hypothetical scenario.”
In English, US bank stress tests are much stronger than those in the EUSSR.
“Third and finally, leaders of most of the members
of the European Union have approved a new fiscal compact
treaty that strengthens fiscal rules and their enforcement.
This treaty represents a positive step toward resolving
the fundamental tension inherent in having a monetary
union without a fiscal union, and thus should help bolster
the viability of the euro-area economy in the longer
term.”
In English, the EU is removing powers
from previously sovereign nations.
end note
- PIIGS
- The countries in the European Union with weak economies:
Portugal, Italy, Ireland, Greece and Spain.
the web address for this article is
https://www.abelard.org/news/economics022012.php#bernanke_euro_crisis_240312
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an
interesting discussion of ‘liquidity traps’
Be sure scan through the various comments.
“...In 1940, Dennis Robertson, one of Keynes’
intellectual antagonists, invented the soubriquet ‘the
liquidity trap’ to describe this unfortunate state
of affairs.
“The catchy phrase has subsequently appeared
countless times in textbooks. However, few people now
read The General Theory with the care and attention
that it demands, and the original meaning of the liquidity
trap has been diluted almost to vanishing point. The
phrase has come to be applied to any situation in which,
in some sense or other, ‘monetary policy does
not work’. For example, Paul Krugman, has asserted
in several articles in his New York Times column –
as on 14th December last year – that the world’s
leading economies are in ‘a classic liquidity
trap’.
“According to that column, a classic liquidity
trap occurs when ‘a zero short-term interest rate
isn’t low enough to restore full employment’.
Krugman – who won the Nobel economics prize in
2008 – is widely regarded as the USA’s most
articulate and effective spokesman for Keynesian ideas.
For those uninitiated in macro-economic theory his words
are taken as gospel. However, the trap called ‘classic’
by Krugman is no such thing.”
the web address for this article is
https://www.abelard.org/news/economics022012.php#liquidity_traps_090312 |
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travel
by train, but not in britain
Britain: the most expensive, least comfortable and least
efficient railways in Europe.
| Train
season ticket prices |
| England |
Woking > London |
22 miles |
£3,268 |
| France |
Ballancourt sur Essone > Paris |
24 miles |
£924 |
| Germany |
Strausberg > Berlin |
21 miles |
£705 |
| Spain |
Collado-Villalba > Madrid |
22 miles |
£673 |
| Italy |
Velletri- > Rome |
22 miles |
£336 |
“A couple of years ago, I needed to travel on
short notice from Barcelona to Alicante on the 31st
December for a NYE party. All flights were fully booked
so I headed to the train station dreading how expensive
the ticket will be (by UK standards). When I arrived
there, I was advised that only first class seats were
still available!
“ I decided to take one without asking for the
price not to get a heart attack. I was astonished and
amazed when the cashier asked for 84 € for the
6.5 hours journey! That included food and drinks throughout
the trip. I had a sandwich lunch, a glass of champagne,
3 beers and 2 short glasses of Shivaz whisky. I enjoyed
the trip more than the NYE party especially as this
route is a coastal one.
“OK, now imagine if this was a London to Edinburgh
trip under the same circumstances The 1K mark would
have easily been reached!” [From a correspondent]
Incredible!
I noted this in the linked article:
“The report, which was commissioned by Bob Crow,
leader of the Rail Maritime and Transport union...”
It’s a shame the report didn’t
include union wages and manning levels!
the web address for this article is
https://www.abelard.org/news/economics022012.php#train_cost_comparison_090212
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