capitalism
without bankruptcy is like catholicism without hell
Worth a scan. Why am I always surprised
when someone talks even approximate sense?!
“The global debt crisis, of course, is nothing
new.
“Since the dawn of time, men have been lending
other men money (or other things of value) and not getting
them back.”
the web address for this article is
https://www.abelard.org/news/economics102011.php#capitalism_bankrupcy_271111
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will
spain’s right wing have the cajones to dump the
euro?
“Too much virtue has become a collective
vice...”
“The Rajoy team hopes this will be a replay of
1996 when the party took over a prostrate economy from
the socialists, and unemployment was almost as high.
It tightened then with Prussian discipline, stunning
Europe by meeting the entry terms for EMU.”
another socialist government destroyed
- in spain
I don’t think Spain is in a particularly
bad place - Spain now has a right-wing government with
a very strong mandate.
This may amuse: Eurozone
debt web: Who owes what to whom?
| |
Foreign debt per person |
Govt debt to GDP |
| Spain: |
€41,366 |
67% |
| France: |
€66,508 |
87% |
| Portugal: |
€38,081 |
106% |
| Ireland: |
€390,969 |
109% |
| Italy: |
€32,875 |
121% |
| Greece: |
€38,073 |
166% |
| Japan: |
€15,934 |
233% |
| Germany: |
€50,659 |
83% |
| USA: |
€35,156 |
100% |
| UK: |
€117,580 |
81% |
related material
EMU (European
Monetary Union) and inflation – a civil liberty
issue
the web address for this article is
https://www.abelard.org/news/economics102011.php#spanish_right_election_win_211111
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could
the euro chaos bring down the german economy?
“...But now they seem to be taking their money
out of EMU altogether. US Treasury (TICS) data shows
that the money is going into US Treasury bonds as the
ultimate safe-haven.”
—
“Germany's exposure to the crisis is already huge,
and the strains can only get worse as the eurozone tips
back into recession. The Bundesbank is so far liable
for €465bn in "Target2" payments to the
central banks of Club Med and Ireland for bank support.
Hans Werner Sinn from the IFO Institute said this is
a form of back-door eurobonds that leaves German taxpayers
on the hook. "The current system is dangerous.
It is prone to a gigantic build-up of external debts,"
he said.
“The Bundesbank is final guarantor behind €180bn
in bond purchases by the European Central Bank, a figure
still rising fast as the ECB buys Italian and Spanish
debt.
“On top of this, Germany is liable for its €211bn
share of Europe's EFSF rescue fund, as well the original
Greek loan package. If the eurozone broke up in acrimony
with a clutch of sovereign defaults and a 1930s-style
slump – already a "non-negligeable risk"
– the losses could push German debt towards 120pc
of GDP.”
I was also interested in this
article. Liam Halligan is fingering the same mechanism that
I started cataloguing nearly fifteen years ago.
“Far more importantly, once the ECB has bailed-out
profligate governments once, the same countries will over-borrow
all over again a few years down the line. The markets will
eagerly lend to them too, such loans combining a lucrative
yield with a de facto ECB guarantee.”
elated material
EMU (European Monetary
Union) and inflation – a civil liberty issue
the web address for this article is
https://www.abelard.org/news/economics102011.php#euro_chaos_germany_191111
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buffet
plunging into the stock market, big time
“Warren Buffett’s Berkshire Hathaway Inc.
(BRK/A) invested $23.9 billion in the third quarter,
the most in at least 15 years, as he accelerated stock
purchases and broadened the portfolio beyond consumer
and financial-company holdings.
“Berkshire bought almost $7 billion of equity
securities in the three months ended Sept. 30, compared
with $3.62 billion in the second quarter and $834 million
in the first, the Omaha, Nebraska-based company said
Nov. 4 in a filing. Stockholdings labeled “commercial,
industrial and other” soared 62 percent in the
three months to $17.4 billion on a cost basis, surpassing
equity investments in financial and consumer-product
firms.”
the web address for this article is
https://www.abelard.org/news/economics102011.php#buffet_investing_101111
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will
the efsf fund need its own bailout?
“The spreads on EFSF 5-year
bonds have already tripled to 151 above German debt,
leaving Japan and other early buyers nursing a big loss.
The fund suffered a failed auction last week, cutting
the issue from €5bn to €3bn on lack of demand.
“Gary Jenkins from Evolution Securities said
the “frightening” development is that the
EFSF is itself being shut out of the capital markets.
“If it continues to perform like that then the
bailout fund might need a bail out,” he said.”
And
a toy to play with - just how deep is the euromess.
Finally, a tongue-in-cheek explanation:
2:49 mins
end note
- EFSF
- European Financial Stability Facility
the web address for this article is
https://www.abelard.org/news/economics102011.php#efsf__bailout_071111
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the
dangerous economic delusions of france and germany
“Mr Draghi will have to bide his time. A former
Goldman Sachs banker who learned his economics under
Robort Solow at MIT, he is a New Keynesian soulmate
of the Fed's Ben Bernanke, rather than the "hard
money" doctrines of Jean-Claude Trichet.”
France and Germany are making similar
error to those causing the great depression.
“When the facts change, I change my mind. What
do you do, sir?
Reply to a criticism during the Great
Depression of having changed his position on monetary
policy, as quoted in Lost Prophets:
An Insider's History of the Modern Economists
(1994) by Alfred L. Malabre, p. 220
"Just as worrying, the spread between French
bonds and German Bunds
reached a post EMU-high of 130 basis points earlier
in the day. France
has been hit by a trifecta of worries: French banks'
€400bn exposure
to Italy; a recession that will almost certainly cost
the country its
AAA rating, and perhaps two notches according to Standard
& Poor's;
and plans to leverage the EU's bail-out fund EFSF to
€1 trillion by
using it as a "first loss" insurer. "What
people are worried about is
the contingent liability for France of bailing out the
eurozone," said
Jacques Cailloux from RBS" [Quoted from telegraph.co.uk]
Germany and France were bailed out
by America after the last great war. Now they hope to
get at least one euro on the euro, or perhaps even more
if the economies become deflationary.
Germany has had close to a free ride
on its defences, while it was helped to rebuild its economy.
Germany cannot run a surplus unless
others run deficits.
France tried to deflate its economy
during the 1930s as a matter of vanity. Even then, Keynes
warned that to continually squeeze the poor in favour
of the rentiers was a foolish policy.
“Thus inflation is unjust and deflation is inexpedient.
Of the two perhaps deflation is, if we rule out exaggerated
inflations such as that of Germany, the worse; because
it is worse, in an impoverished world, to provoke unemployment
than to disappoint the rentier. But it is necessary
that we should weigh one evil against the other. It
is easier to agree that both are evils to be shunned.[...].”
[Essays
in Persuasion, p. 75 - Social consequences
of the changes in the value of money, 1923]
Buying East Germany may have been
accepted, but buying Greece or Italy is unlikely to go
down quite so comfortably.
| Lost
Prophets: An Insider's History of the Modern Economists
by Alfred L. Malabre |
 |
£24.94
[amazon.co.uk] {advert}
Beard Books,U.S., pbk, 2003
ISBN-10: 1587981807
ISBN-13: 978-1587981807
$34.95
[amazon.com] {advert}
Beard Books, pbk, 1994) |
the web address for this article is
https://www.abelard.org/news/economics102011.php#euro_deconomic_delusions_041111
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on the eurozone financial shenanigans
is
the real problem greece - or is it germany?
Is there any other fossil media writer
who actually understands what is collapsing the euro
chaos?
“Albert Edwards from Société
Générale said the ECB will have to act,
over a German veto if necessary. "The increasingly
frenzied attempts of eurozone governments to persuade
financial markets that they can draw a line under
this crisis will ultimately fail."
“The impending threat of a euro break-up will
force the ECB to begin printing money, very reluctantly
joining the global QE party. The question is whether
Germany will leave the eurozone in the face of such
monetary debauchery," he said.”
It is not a loss of sovereignty
to leave government financial decisions to Germany
The lefty’s spin is now well
underway.
Meanwhile, the ECB sets about printing
money while pretending not to.
If they meant what they say (they
don’t!) they would be making the same errors made
in the Great Depression, especially by France - generating
a deflationary currency. That would mean debt rising
as the currency strengthened.
And so Britain is missing the bus
again. We are to have a two-speed Europe 17 countries
ruled from Germany, and an outer rim - perhaps we should call it EFTA.
the
chinese want to buy the inner core at sale prices
“French President Nicolas Sarkozy said he
would call his Chinese counter-part Hu Jintao on Thursday
to garner support.
“Beijing will almost certainly impose terms,
renewing its demand for open-door access for Chinese
state firms investing in EU industry and for an end
to Europe's veto on "full market status"
for China under global trade laws.”
Will the following volunteers step
forward?
“The summit has sketched bigger haircut for
banks and private holders of Greece's €346bn
debt, though it may not prove to be Mrs Merkel's 60pc
target. The banking lobby has proposed a last-minute
compromise to head off a hard default. So long as
the deal is "voluntary", it does not trigger
credit default swaps and is easier to control.”
the web address for this article is
https://www.abelard.org/news/economics102011.php#eurozone_finances_281011
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it ain’t the fault of central bankers
The complainers have the wrong target. It isn’t central bankers who pressured the banks to make cheap loans to the impecunious.
It isn’t central banks who forced the incompetent to borrow beyond their ability to repay and control their own debts.
It isn’t central bankers who run the government cartel schools which don’t teach basic economics.
It isn’t central bankers who try to buy votes with borrowed money.
It isn’t even the central bankers who make Far Eastern cultures save to the extent that money gets cheap in a globalized economy.
Meanwhile printing money does not ‘keep interest rates’ low, the market does that by supply and demand. Printing money forces interest rates up, not down. As lenders seek compensation for the inevitable ensuing inflationary effects.
I get a mite peeved by the whining at central bankers, who then do the best they can to help the country to make painful adjustments.
the web address for this article is
https://www.abelard.org/news/economics102011.php#blaming_bankers_181011
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