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Guy Who Explained How We "Ended The Great Recession" A Month Ago, Now Sees 1 In 3 Chance Of Double Dip, Calls For QE2
Arguably the one most definitive market top ticking activity of the past month, in addition of course to Tim Geithner's absolutely disastrous "Welcome to the Recovery Pamphlet" issued literally hours before the wave of economic downgrades of US GDP by Wall Street began in earnest, was Mark Zandi and Alan Blinder's even more laughable administrative job cover letter titled "How We Ended The Great Recession" (yes, gentlemen, we remember). Which is why we read with great fascination that not even a month after the paper was released, Alan Blinder told Bloomberg that "Things seem to be losing momentum. The lending part of the financial system doesn’t seem to be curing itself." Actually, Alan, if that is your justification for why the momentum is being lost, you are an idiot - the lending part, or the supply side, is perfectly cured: it is the demand aspect which proud Ph.D.-bearing economists such as yourself always ignore - yes, people, the medium and small businesses, and virtually everyone else, who makes the economy tick (not Wall Street), don't need the bank's steenking money - not at 20%, not at 0.002%, if they don't know whether they will have a job tomorrow, or if upon waking up their stocks and 401(k) won't be worth 50% what they were the night before. And not to be left alone, Mark Zandi, the other member of the permaclown duo, told Bloomberg TV that he now puts the chance of a double-dip recession at 1 in 3. "If you’d ask me 4-8 weeks ago, I would have said 1 in 4, 12 weeks ago, 1 in 5. So it is rising uncomfortably high." How about 15.8 weeks ago: was the chance 1 in 69? What is it with these economists who need to scientificate every bullshit concept of their worthless occupation? Why quantify the merely abstract? Do economists have such a great mathematician penis envy, that they have to cloak their infinite lack of understanding in irrelevant numbers? The fact that this man a month ago said things are all good, and never realized that America had never emerged from the recession, is all you need to know just how much credibility any and every person working for Moody's has. But we knew that already. And just because a Moody's economist sees the only hope left before the country as even more QE, it merely shows that when QE finally does strike (which it will) it will be the end game for America, and its currency. At least we now know that in the meantime Zandi has blown any chance he may have had getting a job with the administration.
More from Zandi's interview:
Zandi on his predictions re: double-dip recession:
“I put it that 1 in 3 right now. If you’d ask me 4-8 weeks ago, I would have said 1 in 4, 12 weeks ago, 1 and 5. So it is rising uncomfortably high. I am assuming that tax rates on upper income households will in fact occur on January 1st. If that doesn’t happen, it could reduce the odds back closer to 1 in 4. But 1 in 3, that is uncomfortably high. Particularly we’re at a 9.5% unemployment rate. If we go back into recession, it’s going to be very difficult to get out of it in any king graceful way.”
On QE:
“The economy will, at best, be very weak, so weak that unemployment will begin to rise again. I think that’ll be the signal for the Fed to resume quantitative easing.”
On whether the economy will backtrack into a recession:
“I do think that the Federal Reserve will restart quantitative easing over the next few months. I think the economy is going to be, at best, very weak, so weak that unemployment will begin to rise again and I think that will be a signal for the fed to resume quantitative easing.”
On whether he expects job growth in the current market:
“I do expect some job growth, yes, but not enough to forestall further increase in unemployment. Just to give you a number, we need approximately 150,000 jobs per month just for a stable rate of unemployment. Since the beginning of the year, we’ve been getting closer to 100K, subtracting the ups and downs of census hiring. Over the next few months, I would expect no more than 50K given the recent weakening in economic growth. And so that’s not enough to forestall further increases in unemployment.”
Zandi on expectations for Bernanke’s speech tomorrow at the Kansas City Fed:
“The first thing he needs to do is put the string of economic data we’ve been getting into some context. How weak does he think the recovery really is? Then I think he needs to explain more clearly the FOMC’s actions a few weeks ago. Why hold the balance sheet constant? What was the logic behind that? It would be helpful if he could then give as benchmarks for understanding when they possibly could resume quantitative easing, start buying more treasuries, securities and growing the balance sheet.”
On news today that U.S. mortgages with overdue payments have risen in Q2:
“That is a bit disconcerting. It is clear the foreclosure crisis continues on, by my data, we have 4.3 million first mortgage loans are in default or 90 days delinquent and thus headed to default. That is a lot of loans to work through and many will go into foreclosure sale. One more reason to believe that house prices will decline. One encouraging thing was the decline in early stage delinquency. The recent bump up is a bit disconcerting. I do not think it is the beginning of a trend. I am hopeful, that in the next few quarters, we’ll see that come back down again given the tightening in the underwriting and the view that we’ll get some job growth.”
On whether Congress should raise the tax rate for the top 2% in 2011:
“I think if we raise those tax rates, in all likelihood the recovery will still remain intact but I think that is a gamble that would be unnecessary. I do think it would prudent given how fragile the recovery is not to raise any more taxes in 2011. Now in 2012, 13, 14 when the economy is up and running, raising those tax rates in upper income households, I don’t think we’ll have any meaningful impact on their spending and saving on the broader economy and would help with respect to fiscal problems. But I just wouldn’t do it at 2011. It is one more thing for the economy to overcome when the economy has a lot to overcome.”
On what he thinks will tip us towards a second recession:
“It could be, for example, if angst about the European debt situation were to flare up again and we’d see the equity market, stock prices fall another 5% or 10%. I think that would certainly qualify and that could push us back into recession.”
On the European debt situation:
“We’re watching very carefully. The coast isn’t clear. The European economy is holding up better than I would have thought to this point. But it has a lot of headwinds, the fiscal austerity, the financial constraints given the problems in their own banking system, so there is a lot more work to be done. I don’t think they will work to the problem quite yet.”
On tomorrow’s GDP figure and whether he agrees with the consensus is 1.4%:
“I think that is about right. That would be reduction of about a percentage point in estimated growth. Most of that because of a wider trade deficit, some of it related to less inventory. But it clearly highlights the economy lost momentum in the Q2.
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I listened to this on Bloomberg. Reminded of the newsletters I used to get from my money manager. Every "perspective" on the market started with - "Our Analysis suggests..." What the fuck does that mean? How about a little conviction over here?! They lost a lot of my money, btw.
Some where there is a village missing its economist
FTW
Freaking hilarious. Outstanding. No other comment necessary.-:)
"Zandiculous"
OR
The Great Zandini - able to make economic recoveries disappear in less than a month!
Funny! I bet they are also glad the village idiot is gone.
d
@VI
Thanks for all the help today on the new loan! Would you believe that half of my Adsense ads are Amerisave?
@Cursive
Who says an idiot can't help a village. Best to you, buddy.
When the wolves or the bears come he can feed them so the others don't have to sure
Yes, but it takes a village to raise an idiot.
He's only vacationing at the Vineyard. Don't worry, he'll be back.
I didn't bother with the whole post. But on reading the header on the front page I hope tyler really doesn't believe the the supply side is fixed. I can provide am0ple data about this.
banks not making small business loans and forcing people to use credit cards so they pay a much higher interest rate. The longer the banks screw the economy the longer interst rates stay low, the longer banks make easy money via the spread (the big oligarchy banks).
These economist morons (who maintain that people are rational in their economic decisions) can't even run through what behaviors are likley among bankers.
The big problem is that most of what they think they know is based on faulty assumptions. It is as if they think the world is flat and make decisions based on that. so they can't come up with the right answer because the logic that went into it is faulty. There is no place worse than the federal reserve for this.
At the federal reserve they don't appear to understand they have the job (given to them by bankers) because they believe all solutions involve conditions which benefit bankers. If I am limited in my thought process to the conditions which benefit bankers, then I can't find the solution. Much of modern economics is limited by this way of thinking. The bankers are smart they have managed to get it accepted and taught at schools.
The federal reserve is limited to an intellectual paradigm which doesn't work. you must have this limited paradigm to work at the federal reserve. the paradigm is really nothing more than an excuse for bankers to always win. In effect the federal reserves function is to rig the system for bankers. They just don't see themselves that way. So they don't have the ability to find a solution, because they don't even understand the problem
We can begin to fix the problem whenever we like - http://www.bankofenglandact.co.uk/
Fucking Bagdad Bob.
hahahaha, good one
Mark Zandi was hit in the head with a baseball when he played Little League.
(Apologies to all Closed Head Wounds out there).
Is this guy being paid for such comments?
Of course he is! This is all part of the concerted effort to keep the Bush tax cuts for another few years. He's a well-paid mercenary. And that douchebag Obama will lap it all up and give Wall Street every dime they want plus a few trillion more.
Well, Moody's is after all beholden to the Federalies as a NRSRO.
And come to think of it, he might be an excellent addition to Washington. He's worked in the private sector.
He done went Christina Romer on Obama...........next thing you know he'll tell us higher taxes are bad for the economy.
Zandi comes off like a GENIUS though when compared to Scott Wapner of CNBC. I have almost thrown something through the TV listening to that idiot
He even has his own WIKI.... Oh and he is from Moodys... and loves to appear on CNBC... any econ that has time to get on CNBC a lot is indeed a clown...
Mark Zandi is an American economist and co-founder of Moody's Economy.com, a widely-cited source of economic analysis.[1]
He was born in Atlanta, Georgia of Iranian descent [2] and grew up in Radnor, Pennsylvania. He attended Upper Merion High School. Zandi received B.S. and Ph.D. degrees in economics from the University of Pennsylvania.[3] His surname of "Zandi" comes from the Zand dynasty (formally known as the Zandieh dynasty), which ruled southern and central Iran (1750–1794) in the eighteenth century.
Zandi's analysis of the impact of an economic stimulus package on the US economy was cited by Christina Romer and Jared Bernstein in their report on President Barack Obama's proposed American Recovery and Reinvestment Plan.[4] Zandi uses Keynesian models in the spirit of Nobel Prize winner Lawrence Klein. The utility of such models to gauge the impact of fiscal stimulus has been questioned by Harvard economist Robert J. Barro.
Hilarious CNBC spoof.... must see!!!!
http://www.youtube.com/watch?v=adTnyC4MLB0
can zandi also explain what happened to obamas promise that obamacare would lower health premiums and costs
http://www.latimes.com/health/la-fi-insure-rates-20100826,0,842637.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fmostviewed+%28L.A.+Times+-+Most+Viewed+Stories%29
Thank you.
Fifty pounds of arrogance. Twenty five pounds of incompetence. Twelve and half pounds of lies. Two packages of yeast naivete . One zest of corruption. Stir ingredients until blended. Bring to a boil of 170. Set aside and let ferment for a year & a half and voila...captain kickass sour mash koolaid...LOL.
Don't forget to save some for the next batch..hiccup ;-)
i don't know how much a zest is but i believe the corruption involved lots of seeds, pulp and juice as well. especially juice.
You can bring your soups to a boil at 170? For some reason I need to go all the way to about 212.
Yes I should not have said "boil" and soup or anything else won't be very good after fermenting for a year and a half either...LOL.
The thought was analagous to something other than what you would crumble saltines into ;-)
Wait until insurers are no longer permitted to model for pre-existing conditions and have to spend 80% of their expenses on medical care. These 15-20% rate hikes will look tame. Obamacare will eventually become 10x more politically disastrous for the Dems than the Iraq War was for the Reps.
Let's throw a little salt on that Trillion Dollar....
http://www.bizjournals.com/sacramento/stories/2010/08/23/daily42.html
Of course we need more debt to get more growth.
It has to be high-quality debt, that's all.
Banks have replaced fraudulent securitizations with even-more-fraudulent credit derivatives designed to make fixed-income investors feel like they are secure. To make those fraudulent CDS promises seem credible, banks have to hold AAA assets and cash. They can't lend normally because it would deprive their business model of "collateral".
Governments will have to lend just not to banks!
Until productve investment and honest, transparent guarantees create a good flow of high-quality, fixed-income product out to the market, we're screwed. The multiplier will never recover.
You mean that stuffs not the best, highest quality?
Then why do they call it securitized? It weren't made secure?
Better sell this before anybody else figger's this out!
Can I get a quote on this zero coupon perpetual interest only in arrears from the paid out pool equity layer piece thing-ala-ma-ging-galie-bob you sold me. Hello? Dave? Dave? Are you there, Dave? Anybody there?
Moody's has done everything so well to this point I am shocked this guy is a fuckin retard...
+1
Typical economist - great at telling you what's happened but has zero foresight
Economists are great at telling you what will happen. They're even better at later explaining that their forecasts were wrong because of a completely unexpected event.
The event being simply the passage of time. They are always wrong, every time, unless they get it right on accident. A chicken is as good a predictor as these economistas. They have no backing in theory, no sound mathematics, no track record, no basis for predictions, and no support from data that does not exist in any case.
The only role they play is to make it sound like someone knows WTF is going on with our money supply, so that people who need constant reassurances in order to function on a daily basis (most of them) will go forward blindly, hoping for the best (which they do.)
Economics will be measured as the most profound and deleterious failure of Western thought ever, or at least since the codification of Papal Infallibility, to which economics actually owes a debt of parentage. Economics has enriched a few at the expense of the many and reinforced so long a list of lies and propaganda that it will take 500 years to erase from our racial memory.
If you are a working economist, kindly kill yourself at your earliest convenience.
Rant off.
That was a thing of beauty.
.
Thank you.
Cougar, I always enjoy your posts, but this is one of your finer efforts.
probably think growth will be revised downwards like this guy says
http://nbyslog.blogspot.com/2010/08/us-outlook-bea-about-to-revise-q2.html
What growth?
Now I have man love.. Probably one of the most profound and telling statements i've seen on here -outside of the gentleman writing the recent "hyperinflation" blogs- in recent memory.
Well said my friend.
curses, you beat me to that quote Max!
while reading the OP, I had it in mind to quote those same sentences and add:
I'll leave you to your man love, who wouldn't respond accordingly? that was a brilliant post Tyler, just seething with righteous snark.
i have now taken to calling #2 time for my dog as "'mark zandi'" time.....and #1 of course is ""JAC"" time (in honor of the not so great joseph abbey cohen)......
which reminds me its time to walk the dog!
ajc
What? Tutter
called capitulation
Power to you, TD!
I have just watched blips and bleeps of CNBC today a little but I have not heard one mention of CUTTING WASTEFUL GOVERNMENT SPENDING with all of the coverage.
In fact, WHAT THE FUCK ARE THESE PEOPLE DOING GOING OUT TO "RETREAT" WHEN THEY SHOULD BE CUTTING EXPENSES AT ONE OF THE THOUSANDS OF GOVERNMENT MEETING CENTERS IN WASHINGTON OR VIA VIDEO CALL ? LET ME S P E L L IT O U T: W E A R E B A N K R U P T.
If Obama (we know Bernanke won't) simply announced a major, top priority policy to cut 25% in government spending - ALL AROUND - over a 5 year period (that is 1.5 trillion will be 1.125 by 8/31/15), then the markets would begin to have some confidence. Meanwhile, the complete idiots in Wyoming are talking about what ? Oh, the monetary policy that has been completed ? Cut the shit people. Talk about the Emperors Clothes....
We have $16 trillion in debt - IT IS CHECKMATE - you and the fucking other clowns in Washington have failed.
Obama....ding-dong, anyone home ? Oh, that's right, he's not, he's on the Vineyard...
Cutting spending will not save us now. They will have to default, period.
In fact, it could easily be argued that they should spend to the moon first and then default.
There is simply no way out of this trap. Probably that was the plan all along. Not sure what they thought they will get out of it -- bajillions of dollars in profits I suppose. Don't think they are counting on the abject ruin of Western civilization and the reversal of 300 years of "progress" but hey maybe it's still worth it. What do I know.
They will default, but as long they see all those assholes believing in faith of US government, they will borrow as there is no tomorrow.
I'm sure he'll write a book about this in a few years --- about the re-recessions, why and how they happened, how he foresaw the doom that was to come. But, for now, if I were him ---- I'd shut the fuck up...........
"It is as Lord Denethor predicted! Long has he foreseen this doom!" Gandalf: "Foreseen and done nothing!"
Interview in a nutshell:
Q: Are we in trouble?
A: Quantititative Easing. I think when the Fed resumes quantitative easing, our trouble will ease a great quantity.
Q: What would give you hope?
A: Quantititative Easing. I think that, quantitavely speaking, we could be at all be a little more at ease if the Fed would resume quantitative easing.
Q: What is your forecast for GDP?
A: Quantitative Easing. I am at ease that the GDP will indicate a sufficiently poor quantity of economic recovery that the Fed will have no choice but to resume quantitative easing.
Japan is trying the same crap after 20 years... *yawn*
Same story, over and over and over...
Chief Cabinet Secretary Yoshito Sengoku told reporters in the morning that the government is keen to draw up the stimulus measures "as soon as possible" after the policy research council of the ruling Democratic Party of Japan submits proposals.
The stimulus measures will likely include steps to improve the employment situation, spur personal consumption, aid small and medium-size companies hit by the slowing economy, help young graduates find jobs, and provide financial aid to people remodeling their houses.
The government is considering using some ¥920 billion in a reserve fund under the fiscal 2010 budget and an ¥800 billion surplus in the fiscal 2009 budget to finance the package.
"...and provide financial aid to people remodeling their houses."
I have it on good authority that the Mayans developed ritual sacrifice to satisfy the gods so as to keep the truly incompetent from positions of authority.
That's what we should do with all outgoing presidents, and probably congressmen after more than a few terms.
Nouriel Roubini's thoughts on the subject today:
http://www.huffingtonpost.com/2010/08/26/roubini_n_695536.html
fck rubini, he's flip flopped as many as times as there are letters of alphabet for which he tried to relate the "economic recovery" to (v,w,u,L etc)..
The QE 2.0's destruction of the Dollar will not "be the end of America". Tyler you must stop this ridiculous talk, there is just no historical precedence for saying that. America will have to deal with a difficult period, but it will reemerge even better. Our Nanobots will rule the world! We have been through four currencies since our birth as a nation. The current "Dollar" will just join the heap with the Continental, Greenback, Silver Certificate, Confederate Money, etc... That's not to mention the countless private bank notes that went out of existence. The Dollar is toast, but we are not the Dollar. Think of the destruction of the Dollar a gargantuan exercise in Seigniorage. A massive wealth transfer from the world to us. They have traded valueable goods for what will in the end be just worthless paper.
Recommended reading "The History of the Big Board" by Robert Sobel.
This country has been build on the destroyed capital of foreign investors. In an endless series of boom/bust cycles, right from the very beginning of the South Seas bubble , to the Mississippi Scheme, to the Canal Bond debacle, and on through history. The tech, housing and now bond bubbles have just been the latest. We build a boom, the foreigners load up at the top, the bust hits and we buy it back from them for 5 cents on the Dollar.
No different today. The Chinese, Japanese, British, and Europeans will get clocked once a again.
I hear those Treasury Bond "Certificates" make great wallpaper. Oh they don't even get the wallpaper anymore to decorate with - got to love the modern age.
And they are going to sit back and smile at our cleverness? Are you out of your fucking mind??
That is not a game, That is not something GS can blithely arb and scam a few mill before breaking for an afternoon of sex and drugs. That is economic warfare and we are playing to lose because we are no longer relevant in the world you just described. When you are not relevant -- rather you are a nest of pirates looting the productive centers of the world -- you avoid the rat poison. You stay under cover. You keep to the margins. You do NOT kick your blood host in the ass and laugh about it.
God, I bet you're an economist or something putrid like that. Or a college professor. Or someone from the SEC, yeah I bet that's it.
Economist, SEC, College Professor - That really hurt! No just a well self educated
student of the markets and history.
And they are going to sit back and smile at our cleverness?
They are and always have. You see each uninformed generation has to learn these lessons over and over again. Each new generation provides a new class of suckers. The emotional pull of the Fear/Greed impulse is to hard for most to overcome. This is how we get bubble after bubble - it's always the same but in a different way.
Do your homework, it been a never ending cycle. Here is a good book for you to read "Extraordinary Popular Delusions and the Madness of Crowds". published in 1841. As true today as it was then.
This is not a game. Oh yes it is a very very large casino and we are all players one way or another, whether we like it not.
Whether I'm out of my fucking mind - I'm posting here aren't I?
This is really naive thought. If an actual currency crisis occurs this would not be a pleasant place to live, it would be a total disaster. Foreign investors didn't really ever lose their capital.
This is really naive thought. If an actual currency crisis occurs this would not be a pleasant place to live, it would be a total disaster
I didn't say it would be fun or pretty, as the Revolutionary period or Civil War period wasn't fun or pretty. The point is most of us survived and we reached new highs afterward. Why? Because we are the only country on the planet that openly mixes races and cultures - the strength of this is beyond imagination.
Foreign investors didn't really ever lose their capital.
Dude, what are you twelve? Are you serious. I'll let your comment stand on it's own historically ridiculous basis. When I say history, I mean including the time before 2000.
Not without the US also getting clocked. Many of those foreign 'suckers' are in better positions to survive the collapse than the consumerist, non-saving, non-producing, 'service economy' US.
Sure we'll survive. A fraction of us will, anyway. So will the rest of the world. But isn't there a better way, than just 'surviving' an artificially catastrophic boom-bust cycle that could have been avoided?
I think you are too tough on him. There are others who still think we are OK. At least he is attempting to adjust.
I like gold and silver! I like to buy stocks with the VXX!
It's okay Tyler, don't hold back. Tell him what you really feel.
The problem is he is not an idiot. He gets paid for crap, just try to do the same and make big money on it!
I dunno...he also has to live with himself. How smart is that.
I do believe and it seems to be proven time after time, that eggheads like this with letters behind their names are in fact the most clueless tools. They can read the hell out of a text book, take tests and that's about all. Maybe the most stunning aspect is they think they know everything however can not see how obtuse they actually are.
They're called 'nerds'.
Zandi,,,,let's talk,, China Buys Euros as Fear of World Depression GrowsThe US Treasury has just announced that China’s official holdings of U.S. Treasury securities declined by about $30 billion between April and May of this year, from about $900 billion to some $868 billion. According to the US authorities, this means that Chinese holdings of US government paper are now at the lowest level in the past year. A 2% to 3% decline in a month does not qualify as massive dumping, but simply means that China is in the process of diversification. It is also very likely that China has more U.S. Treasury bonds than this official count would indicate, quite possibly through proxy purchases via Hong Kong and other places.
With the sales of existing homes in the United States falling by 27% this morning, together with disastrous statistics regarding unemployment and foreclosures, it ought to be obvious that the US economy is in depression. Even experts interviewed on CNBC are beginning to wake up to this obvious fact.
World Bond BubbleOn August 24, the Treasury’s two-year note reached its highest price in recorded history, meaning that the yield was at a record low. The entire world is piling into short-term U.S. Treasury paper, and many buyers cannot get enough. The main reason for this demand is of course fear and panic – coming from the growing awareness that the world is indeed experiencing the second wave of a world economic depression of colossal proportions.
There is now a large-scale international bond bubble involving, among others, US treasuries and German Bunds. Since the flash crash of May 6, many investors have fled the stock markets entirely. It is still too soon to sound the alarm on deflation ahead, but deflation has now appeared over the horizon as a concrete possibility – partly because so many major financial players are now convinced that deflation is the wave of the future. If this were to come about, it would mean a depression looking much more like 1929-1933 than the relatively more mild situation we have experienced over the last two years.
Also on August 24, the Japanese yen hit a 15-year high compared to the dollar, and a nine-year high compared to the euro. This kind of currency championship is a Pyrrhic victory which nobody wants, since it means the Japanese exports are in the process of being strangled. This is true currency chaos and world depression at the same time, pointing once again towards the urgent need to restore the fixed rate system of Bretton Woods, which was destroyed 39 years ago this month by Nixon and Kissinger, urged on by Milton Friedman and other snake oil economists.
For the past year, the main thrust of the London and New York financial centers has been the effort to export the Depression into Europe by means of a speculative attack on the government bonds of Greece, Spain, Portugal, and some other countries, all designed to provoke a panicked flight out of the euro, which would in turn allow the Anglo-Americans to loot and asset strip the accumulated wealth of the old continent. This was not a market event, but it orchestrated strategic attack, inspired by such figures as Soros, Einhorn, and Paulson. During July and the first half of August, it became apparent that this Blitzkrieg as originally planned had failed to reach its objectives. But the Anglo-Americans, one-trick ponies as always, maybe persisting in the assault.
China Blocks US-UK Attack On EuroThe Anglo-American hedge fund attack, as we have documented here, employed credit default swaps as the primary weapon against Greek, Portuguese, and Spanish government bonds. The failure of London and New York to induce a panic flight out of the euro during the May-June timeframe was partly results of the German self-defense measures, involving bans on naked credit default swaps and bans on naked shorting of German equities. In addition to this, Chinese support for the euro has played a decisive role.
There is every indication that the Chinese made a decision not to allow the destruction of the euro during the late spring and early summer. That decision was technical, commercial, and political at the same time. The technical part was the China sought to re-balance the basket of currencies it uses to maintain the international stability of the renminbi. As the euro looms larger in Chinese trade, purchases of euros and Eurobonds are in order. It is also worth pointing out that the Chinese have not delivered on their promise to radically raise the international value of the renminbi, as hysterically demanded by Tiny Tim Geithner and others.
The commercial and political sides of Chinese support for the euro were reflected in the June visit of the Chinese vice prime minister to Greece, notably to the port of Piraeus. This Chinese envoy signed more than a dozen important economic cooperation deals, including shipping and shipbuilding, telecom, and container ports. The deputy Greek finance minister, Theodoros Pangalos, was quoted as saying: “The Chinese want a gateway into Europe. They are not like these Wall Street [blankety-blanks], pushing financial investments on paper. The Chinese deal in real things, in merchandise. And they will help the real economy in Greece.”1 The emphasis on the production of tangible physical commodities by the Chinese, in contrast to Wall Street’s reliance on a mass of toxic and kited derivatives, points to the real basis of Chinese economic ascendancy. If the Chinese are wise, they will not go overboard with short-term greed, but rather be ready for generous concessions to the Greek labor movement, so as to get the unions on their side. In any case, these euro-denominated Greek purchases are one obvious reason why Beijing is holding fewer greenbacks and more euros.
Will Hungary, Ireland, or Budget Austerity Sink The Euro?The Anglo Americans are still beside themselves with rage and consternation over the fact that their original attack on the euro has not worked. But since about the middle of August, the euro has fallen from over $1.30 to about $1.26 or thereabouts. Part of this is due to the decline of the New York Stock market, given the long-standing dollar-Dow trade-off. Another negative factor for the euro is doubtless the cruel and stupid deflationary policies introduced by many EU governments in a craven attempt to ward off further speculative attacks. In a depression, government spending is the main thing that supports the entire economy, so cutting the government budget is a recipe for economic disaster, as they contend, not good, as some EU countries are now being reminded. Another factor is simply the month of August, when Catholic Europe, including France, Italy, Spain, and Bavaria, tends to shut down.
Where Will The Next Panic Break Out?The world is now in a time of mixed signals and cross-currents. The forces of depression, in the form of $1.5 quadrillion of toxic and kited derivatives, are most emphatically still lurking, and since they have not been shredded, canceled, deleted, outlawed or abrogated, they will soon find a way to explode once again. Serious financial observers are now waiting to see where the next currency or banking panic will come. Over the last day or two, there have been reports of heavy selling of the Hungarian forint, which is inside the EU but not part of Euroland. Late on August 24, Standard & Poor’s announced a major downgrade of Irish debt, switching to a negative outlook. If the panic comes in Hungary or Ireland, then the euro could indeed go down. CNBC traders, in response to the question of how to make money off the crisis of the Hungarian currency, immediately replied that the way to do that was to short the stocks of Austrian banks, who hold much Hungarian debt. From here, the crisis would move on to Germany, and soon the entire continent would be back in the soup. The British pound sterling also has massive vulnerabilities to being the next monetary unit to crash.
But the most likely victim remains Wall Street itself. A glance at the stock chart of Bank of America over the past three months shows what any technical analyst would regard as a very ugly picture. There are rumblings that Citibank may be heading towards liquidity trouble in September and October. For those who like to read the tea leaves, CNBC’s Jim Cramer today responded to a question about Citigroup by emphatically declaiming “Stick with Citi,” and “Stick with Pandit.” Citigroup, he affirmed, remained his “favorite speculation.” For contrarians who have learned something over the past two years, this may already be enough to head for the hills. In any case, if the banking panic breaks out in New York, then the dollar may turn out to be the victim.
Bernanke and QE2Today also brought the publication of the August 10 minutes of the Federal Reserve’s Open Market Committee. These minutes reveal a serious split in the management committee of the US financier oligarchy. Bernanke and his majority are afraid of deflation, and want a new round of quantitative easing – already dubbed QE2 by the Street. But there is also a significant Austro-monetarist reactionary minority who regard inflation as the greater evil, and to whom a deflationary crash would not be unwelcome, as libertarian rantings over many decades have made plain. These tensions may well be on display at the Federal Reserve’s annual conference at Jackson Hole, Wyoming at the end of this week.
Another CNBC analyst has ventured to predict a ragged decline of the Dow to about 5,000 over the months ahead. If that begins to happen, then the danger of deflation will be enhanced, and in such a scenario the dollar would actually tend to increase in value compared to other currencies. On the other hand, Helicopter Ben Bernanke’s trademark is his strategy for flooding the system with bailouts and other liquidity if deflation looms. Bernanke is the captain of that ship of fools known as the QE2. The one certainty is that there is no recovery, and that the second wave of a world economic depression dominates the world. My young Zandi..
I couldn't have said that better myself.
Hilarious CNBC spoof...
http://www.youtube.com/watch?v=adTnyC4MLB0
in celebration, hold on! repost from months gone by
and from 1974. john cale..speaking of "ship of fools".
precient, odd how it has all been known way before it
even happens.....
.
http://www.youtube.com/watch?v=Y6rJi6so2SU
.
well said geopol!
ps. i just love this tune.
Geopol, While your comments about Greece being under speculative attack are well taken one cannot hide the fact that the country cannot service its debt. The fact is out there plain and simple for anyone to see and the Soroses of this world merely accelerated the process.
when I scroll down the thread posts, and your moniker appears, geopol, I take a deep breath, settle back and savour. . . like two fingers of Talisker, glass warmed by hand, sipped slowly, finish with a warmth of knowing, acquired taste.
as always, thank you for the time you spend distilling and sharing your thoughts.
One of the better and elegant responses to my posts....
Thank you so much..
Geopol,
Great post. I think in the competition of US/UK QE vs. Eurozone austerity (even with China support of Euro debt), US/UK QE comes out on top.
We will see.
Do you see any signs of the Germany/Russia ties strengthening further?
I've got a better idea cut the budget. Start with with all the Presidents financial time and Timmy G. Follow it up by dissolving the SEC, and the FED. Then give a the Rep's and Senators 6 years off without pay and my guess, sentiment will be better by morning
In a depression, government spending is the main thing that supports the entire economy, so cutting the government budget is a recipe for economic disaster,
LOL
What?? Read the fucking thing. or not,, your choice..
fxrxexexdxoxmx,,,,,,,,,xxx the xx on the xxx
@ above
.."What is it with these economists who need to scientificate every bullshit concept of their worthless occupation? Why quantify the merely abstract? Do economists have such a great mathematician penis envy, that they have to cloak their infinite lack of understanding in irrelevant numbers? The fact that this man a month ago said things are all good, and never realized that America had never emerged from the recession, is all you need to know just how much credibility any and every person working for Moody's has. But we knew that already. And just because a Moody's economist sees the only hope left before the country as even more QE, it merely shows that when QE finally does strike (which it will) it will be the end game for America, and its currency. At least we now know that in the meantime Zandi has blown any chance he may have had getting a job with the administration."
.
well said and why i read here.
is destroying the currency the only way to stop the mic? ?
i know i'm confused. being a member of a group allows one to
project their own motives onto actions, outcomes, observed in the
social/communal environment, but frequently incorrectly and in error.
maybe a result of suffering from a form of stockholm syndrome.
"slash and burn strategy."..n.roubini.
http://www.radiolive.co.nz/Nouriel-Roubini-the-US-economist-who-Wall-Street-famously-labelled-as-Dr-Doom/tabid/506/articleID/15364/Default.aspx
.
The Gary Null Show - 08/26/10 August 26, 2010http://www.progressiveradionetwork.com/the-gary-null-show-wnye/
minute 49 or so interview with rodney smith. "stepping out of self deception."
keywords: distortion, abstraction, schism, separation. reality.
default position. survival issue.
jaynesian i say, as in julian.
.
http://www.youtube.com/watch?v=Nf0kT-JlRGY
.
"watch the moon come down". gram parker
Blindman,,
Nice post,,,my response to your numerous questions is......Not sure why they do it...
P.S. Not this administration...
thanks for the recent historic summary. nice.
"this administration". much promise, flushed.
Correct,, Brother...
Blindman sat by the road and he cried...
Blindman sat by the road and he cried...
Blindman sat by the road and he cried...
He cried - oh - oh - oh
We've lost our wa---a---y
We've lost our wa---a---y
We've lost our wa---a---y
What a way to go down.
ex VRWC
nice.
add it to the set list. with lyrics it is best to keep
it simple and true. this allows for the emotion and
the music to be heard and felt. too many words and
ideas cause a balance or imbalance in the attention/mind
that shuts down half of the brain. k.i.s.s..
.
nice web page. lots of potential.
imo.
ps. check the links . some good "stuff".
Thinking which song to do next.
'Globalize' on wage arbitrage and its effects.
'Cash Stuffed Heads' on politicians.
'The Pig-Men' - self explanatory.
global eyes.
"Global eyes" Nice hit Blindman! You knocked it outta the park!...
"Global eyes" Nice hit Blindman! You knocked that one outta the park!...
i like the twist too. good title!
we'll see if anyone comes up with
anything on it. e. v. ?
.
Dead thread. Here are my operating lyrics for the song. Its kinda a protest rap, like K-Naan's 'Wavin Flag':
Globalize - ex VRWC
now i want to hear it!
link.
One possible happy outcome of the coming shitstorm might be that our society will at long last get over its infatuation with "experts" like Zandi, who make up the vast majority of our elites, opinion-makers, etc.
It is just these idiots that have brought the system low, and they will fuck up any new construct just as thoroughly, if they are let anywhere near it...
Talk about wishful thinking!
Hey—if I wrote something called "My all-Night Orgy With 20 Super-Hot Super-Models", would I suddenly find myself surrounded by babes begging me to get nekkid?
Gee, I better start writing . . .
GL
Yeah, it always cracks me up to see predictions like 1 in 5 chance is this or that. Like somehow they had a huge history of events available to calculate the probability. I'd like to see one of them say something mathematically amusing like I calculate the probability of double dip as the ratio of e to pi (about even odds).
Well, Greenspan did admit he knows he was wrong 30% of the time...I thought that was comforting ;-)
I think the grammatically correct way to say it is "30% of the time he knows he's wrong". He is a permatard.
+1000
Is Mark Zandi still breathing?
Good post.
These folks might claim to be many things, one of which would be: "expert on the economy." But in reality, they are in the "dime a dozen" class known as political hacks. Pure and simple.
"dime a dozen" class,,,
Very clear,,,right in the forehead..
Let's all take a deep breath and say it together...
We are "# U C K E D"
The fact is that we are in uncharted territory... Everyone agrees that this won't end well (if you doubt this, bang your head on something sharp and say "trillions" until the headache leaves). No one knows exactly what to do to end this debacle. We are looking at failed policies going back at least 30 years which created the growth of easy credit... which has led to successive bubbles... with the latest one being gov't securities...
If we can get out of this without a default of the USD... it's an absolutely #uckin miracle of divine intervention.
Sorry for being so vulgar and brutal... it's just unbelievable that things could have come to this.
web bot
Zandi, who bases his home office not far from me in West Chester, PA, has been clueless for a long time. I told folks around me at work months ago the guy was simply an apologist for the bullish, pro-Adminstration set and that was how he intended to make his money, by propagandizing. Moody's Economy forecasts regarding housing have been a joke - a return to 2005 levels of new home sales by 2012-2013.
I wish I got paid to be this stupid. Puh-leze.
Zandi's nuts are in his throat... He does not have anywhere new the amount of personal disgust for the population of this county to be an effective political pawn. He knows this and is shows in his voice and in his facial expressions - He smells as bad as a truck stop hooker after washing her pussy in a puddle on the way to the next truck.
What blows my mind is the number of assclowns carrying guys like Zandis' water. Really. And there always seems to be an ample supply of morons willing to believe that our system is fine. It's nuts. I wanna head butt Steve Liesmann into next year he is so fucking stupid.
The greatest embezzlement that ever occurred in recorded history happened three years ago. Right in front of our faces. They BROKE the law by bailing out banks rather than putting them into receivership. When are we going to demand that they be charged, tried, and hung in the square. When?
...ummmm... like... never...
Mr. Zandi is a tool.
Nuff said.
What? Tutter
Since the rest of the world is trying to devalue, it's unlikely the US dollar is toast. 'Just' mean trade war, which is assuredly on the table.
Guess he really didn't want Romer's job after all. Color me surprised.
I guess he doesn't want to be "in the room" when this all blows up.
Tyler!! Awesome intro paragraph sir! Thank you.
.
did he say "2012 to 2014 when the economy will be
humming along." ? how would he know concerning 2012.?
wtf kind of shit lies does he tell himself to sleep at night?
same old "letting out and pulling in".. j.cale. "ship of fools".
so put me in a cryogenic coma and fucking wake me up
later or as he seems to think, yesterday. something tells me it
just doesn't work like that. for some anyway.
which reminds me of something
else altogether........
.
http://www.youtube.com/watch?v=IbvzYii3z0I&feature=related
.
http://www.youtube.com/watch?v=2pS8Sse1c_A&feature=related
http://www.youtube.com/watch?v=e9TXH_zR7C8&feature=related
.
http://www.youtube.com/watch?v=4oIhkGVi_Vw
.
http://www.youtube.com/watch?v=U9LQ-YFmiao&feature=related
.
http://www.youtube.com/watch?v=QmQeQ-Hc5n0&feature=related
.
etc............................
just give the bankers everything and call it a day. people
don't need culture or identity or anything like that. they just
need to be culled by bankers, call it qualitative easing and the
race to a pre human state of imbecility. give the systemically
essential ruling elite more free money as this is the SYSTEM and
must not ever be stressed to the point of pant wetting. give it up.
etc... enter the no reality zone of the new century. what are the
limits of virtual power? just our attention
"What is it with these economists who need to scientificate every bullshit concept of their worthless occupation? Why quantify the merely abstract? Do economists have such a great mathematician penis envy, that they have to cloak their infinite lack of understanding in irrelevant numbers?"
Everything past a simple supply/demand chart is fundamentally bogus. All you have to do is try to fit a function or a curve to the damn thing, and you're already wading into the swamp, never to be seen again.
Tyler...you forgot to add the all-important conclusion to this, wherein self-serving assholes like Zandi and Blinder are just re-inventing the Merry-Go-Round. The underlying physics doesn't matter much if the peanut gallery only sees the spin. Other than that, LOL...I love it when assclowns are held responsible for their double-speak, even if ZH readers are the only ones who ever get to see it. The idea of "normal" seems to be a fairly mutable term these days, eh wot?
Mark Zandi has ZERO credibility. Every time I see his face on TV I see the face of a clown. It takes all my self control to keep from laughing at him. Whatever he says, I expect the opposite! He is an educated derilict!
If the macroeconomic numbers start going down print more money. Is that all they know?
Now that I know too, can I have my economist degree?
Tyler, I love your article but I completely disagree. I think Zandi has that special blessing needed by all who serve the anointed one, the capacity for complete self-deception. About to be baptized into the new religion of Obama.
Duh.
Obama is just the latest puppet, a con job on the American people; focus on the puppeteers fool.
Duh.
Obama is just the latest puppet, a con job on the American people; focus on the puppeteers fool.
Like attracts like. A Potemkin economy attracts Potemkin economists.
Unless one of the likes is a lying faker. Then the other like is fucked.
Men know about this. But you should really talk to women to get a good picture on this.
Got to feel sorry for Zandi and other Sell Side economists who are forced to take happy pills with their kibble. The real economy never recovered and the public sector is now a net drag. We are in an interest rate trap made by Uncle Ben. I have to do another rant on why duration = NIM.
Thanks for pointing out again that the PHD's know nothing about real life
He say - you full of shit Mr. Zandi.
"oh mandy"....
oh you came and you "something, something"
something, something, oh mandy"
why the fuck does anyone listen to that fool.....
sorry, couldnt remember the words to that manilowe jammie...
Loved this section! Absolutely SPOT ON!
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