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A Look At This Weekend's Irrelevant G-20 Meeting (As Brazil Intervenes In FX Again)
The biggest non-event this weekend will be the upcoming peace crack pipe pow-wow between the world's most demented Keynesians when a bunch of bloated politicians and economists (except for their much smarter Brazilian colleagues who will instead be frolicking on Ipanema beach and enjoying the fruits of the most artificially-enhanced population on earth) sit down in Seoul and pretend they can come to some resolution over the globalized attempt to destroy all world currencies all at the same time as trillions in shadow money disappears each and every quarter. If this feels like a deja vu, it is - every single G-20 meeting in recent history has had an underlying FX focus, the result ends up being some token agreement, and the very next day the sell off in the dollar continues, as 20 other banks proceed to buy dollars in an act of futility against Ben Bernanke's death star fiat printer. In other words nothing will change. Even JPMorgan agrees: "On Saturday the G-20 may deliver their first statement on FX, and they
may incorporate language which many countries have never collectively
endorsed, but such a statement may not change much in practice. The
status quo, whereby countries manage a dollar decline as best fits their
circumstances as long as they don't deliberately strengthen the dollar,
will probably persist for lack of a better option...The euro too would fall initially, since less intervention implies less
reserve recycling. It would later rally as the dollar broadly declined." In other words - US middle class, a hotdog in Europe will soon cost about as much as it does in Disney Land.
From JPM
As the G-20 convene, leaks from a draft communiqué suggest the group may commit to avoid “competitive undervaluation” of their currencies and a “more market-determined exchange rate system that minimizes adverse effects of excess volatility and disorderly movements in exchange rates”.
If codified, this language could signal a major policy shift whereby the US achieves its objective of global rebalancing -- Geithner's goal expressed in yesterday's Wall Street Journal interview -- through freely-floating currencies and therefore a much weaker dollar. The euro too would fall initially, since less intervention implies less reserve recycling. It would later rally as the dollar broadly declined.
In practice, however, this language could allow countries to maintain the status quo. Despite the pace of intervention and proliferation of capital controls/transaction taxes, central banks and finance ministries are still allowing the dollar to decline, so partially insulate themselves against claims that they are seeking competitive advantage. No doubt courts could quibble endlessly over the meaning of competitive undervaluation, but the debate would not be so material for markets. Unlike international trade, where most disputes can be taken to the WTO, international finance has no arbiter. As a reminder on how lengthy and inconclusive these exchange rate debates can be, see exhibit 1 below -- a G-7 communiqué from April 2006 calling then for greater exchange rate stability from surplus countries.
Commitments to more market-determined exchange rates would also be fairly easy to comply with. Note that even China, when it abandoned its dollar peg in July 2005, flagged its intention to allow supply and demand forces to influence the currency. And as we have argued before, all G-20 members would endorse less volatile markets, which is why it is likely that the communiqué recycles vintage G-7 language such as that from the April 2006 statement.
The fact that the G-7 asked the same of surplus countries four years ago as they are doing now should give pause to those expecting a seismic policy shift this weekend, such as endorsement of the US proposal for targeted reductions in current account surpluses over time. This proposal recalls the voluntary export restraints the US proposed to Japan in the 1990s, with no durable impact on the trade deficit but disastrous consequences for USD/JPY through a trade war. Multilateral ensorsement of the US's proposal seems a stretch, since many countries regard their surpluses as simply the consequence of the US's overspending. Curbing surpluses would be like asking a company to generate smaller profits.
On Saturday the G-20 may deliver their first statement on FX, and they may incorporate language which many countries have never collectively endorsed, but such a statement may not change much in practice. The status quo, whereby countries manage a dollar decline as best fits their circumstances as long as they don't deliberately strengthen the dollar, will probably persist for lack of a better option.
And speaking of FX interventions and what Brazil thinks of all of this, here is what just happened with the BRL:
h/t Lauren
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Again!
And what is it that the G 20 is trying to accomplish? First note, during this induced crisis, the rhetoric from Silva to Geithner has been "strong dollar". Yet for every beginning there is an end; the Central Banking establishments know this, and they have prepared accordingly. Desperation is near to panic, and Mr. Hendry told you that getting to the door before the mob was pertinant. The "Great" Nations of the world will soon succumb to their own folly: IOUs are never fully endorsed, thus the whole reason the IOU system was created. It was not to create wealth but to use it, and in the end, destroy it.
fala agora, bitchez
Agreement to pass the CLIMATE TREATY.
> upcoming peace crack pipe pow-wow between the world's most *demented Keynesians*
> This Weekend's *Irrelevant* G-20 Meeting
> bunch of *bloated* politicians and economists
> *pretend* they can come to some resolution
Oh man, that's classic! Whoever is writing this stuff is invited to my home any time for barbecue and beer!
The problem is trading BRL for USD and buying US bonds. That`s stupid.
Trading BRL for USD and buying physical gold, that would be really smart.
The problem is that there is mummies running the Central Banks.
I object to the content of said youtube video.
It is included solely for the benefit of our SEC readers
And here I thought you were trying to destroy puritan archtypes.
Why should the SEC have all the perks Tyler?
More silicon than the beach itself.
I do not object.
But aren't they the wrong gender for the SEC?
I don't know lizzy, I feel you, but at least they are not wafer thin anorexics. I was kind of happy to see this sampling of fleshy, non air brushed, young women. Real bodies (even with the enhancements) with scars, stretch marks, tattoos, flat chests, muscles, short and tall, and all offered as beautiful.
Many of them are considered overweight here.
I guess my bar is set too low. I take my progress where I can get it.
+ + +
I was being facetious :).
The only thing I object to is the lack of a jamie dimon equivalent video (for the SEC readers of course).
Trannies got a gun. I'd accept this for the SEC.
http://www.youtube.com/watch?v=9T-8PdKQ5tk
Think of it is an opportunity for cross-cultural comparison. America is such a boob-centric culture it's easy to forget that much of the world, notably Brazil, is really an ass/hips-centric culture. The most disturbing part of that video was the evidence of boob-jobs. Never used to see that in Brazil - the chest almost seemed like an afterthought. *Sigh* another indigenous culture sullied by crass American values...
G20 to Geithner- 'Surely you must be joking.'
Geithner- 'Dont call me Shirley'
classics
Lucy, I understand your objections to the vid, but if it was part of Lauren's h/t, she is a girl i want to meet
The biggest non-event this weekend will be the upcoming peace crack pipe pow-wow between the world's most demented Keynesians when a bunch of bloated politicians and economists (except for their much smarter Brazilian colleagues who will instead be frolicking on Ipanema beach and enjoying the fruits of the most artificially-enhanced population on earth)
That's pretty much it...like Keynesian Deadheads (of the trustafarian variety) or that Simpson's Krusty Burger Ribwich parody.
Paging Williambanzai, paging Williambanzai...
Those spics in brazil are morons.
The CB of Thailand has been learning from other countries stupid mistakes and so far, has not intervened.
Spics? Really? Quite a credibility boost there fella!
Maybe you meant Spits?
spics are south americans. You are over thinking it.
Then why don't you refer to them as South Americans or Brazilians? I doubt you would call them that to their face. It is basic etiquette and courtesy. Let's put the civility back into civilization huh?
As a side note: spic is a derogatory term associated with Latinos. As the Brazilians are of Portuguese heritage, there is a difference. Just as Germans and French would be insulted by a similar inclusion. Try calling a Ukrainian a Russian sometime.
What about people who think Brazilians are "Hispanic" or speak Spanish?
By the way (next time you're dealing on your friend's au pair): Swedish chicks aren't from Switzerland.
Sweden, Switzerland, Swaziland, what's the difference?
"Artificially-enhanced" is right. Are those ass-implants?
It's injected pig fat.
It is? Let me check that video again.
Wow, and i recall years ago it is being 3 BRL to 1 USD.
Then again i also recall 1 USD to 0.80 EUR
And gold was around $300, now at $1325
Hah see,even JPGorgon agrees that the G20 will deliver a Saturday Night Special.
Well we know according to Market to Mythology that whatever this freak gazes upon turns into tombstone....poor ol' Bear(ied)Stearns.
well as long as Peru stays on the sidelines this time, we should all be ok.
(Sound of knocking on office door)
Timmah; Knock knock!
Ben: (Thought balloon; Oh Jesus God Almighty fuck me how the hell did he get in here this time. Soft whimpering sounds.) Whose there?
Timmah; Me!
Ben; Me, who-oooh?
Timmah; Your very own little buddy!
Ben; (Marginally louder whimpering, feeling nuts constrict, hole in stomach) Come in, sit down. Whatchu want Timmah? (Glancing at blank calendar and broken watch as if to make busy, figidity.)
Timmah; Didju you see that Peter-o-Bras Brazilian IPO several weeks ago? Didja, didja, didja, huh, huh (Interrupted)
Ben; Yes, Timmah, don’t you mean Petrobras? What about it?
Timmah; No no, Peter-o-bras. It’s a joke, Peter-o-Bras, you know like those Brazilian hermaphrodites (snigger snigger, giggle, sophomoric chortling)? Hey, they raised a Bazillion dollars from nowhere with no money what so ever and balanced the budget doing it. Didja see that huh, huh, huh, didja didja, (Interrupted)
Ben; Yes, Timmah, I saw that. They’re not hermaphrodites, they’re, oh, go ask Mary Shapiro….. Oh Jesus H fucking Christ with a phallus. So what about it? The offering, not the….. The offering, Timmah. Please, let’s stay on topic. I know how hard it is for you, but lemme work with you here.
Timmah; We oughta do that, too. Everybody’d be so happy, Larry, Christina and Peter, maybe even Rham wouldn’t a left and we’d be happy heroes. Maybe I could even get a promotion, huh? (Sound of gold commode expropriated from MLPF&S office of J. Thain flushing)
Ben; Timmah, we’re already doing that. How many times need we explain this to you? God, you are really fucking annoying! What in Christ’s name do you think we’re doing? We’re creating oodles and oddles, gobs and gobs, bunches and bunches of money out of thin air and I’m buying all your Goddamned treasuries plus every crumb of toxic crap and not to mention the stock portfolio, and you’re still asking questions and giggling about hermaphrodites. Er, whatevers… (moaning sound)
Timmah; We are? I am? But tell me about it again, The hermaphrodites. They have ‘em all the time at the SEC. I want some, too. (On verge of temper tantrum, stomping feet, hands shaking)
Ben; Jesus Christ you moron, how many times do I have to tell you to stay on topic, draw you T accounts to show you things like when GM paid back the money, they’d only borrowed it from another facility. It’s all smoke and mirrors.
Timmah: (Sounding like Ren) Oh, Ben, I love to hear that. Like the Phoenix, rising up from the ashes. Sigh Hey, you know I’m gonna get an on-line honorary on-line degree from them. From Phoenix.
Ben; (Making low growling sounds, bending paperclips into full hangman’s noose like shapes. Hits the intercom button.) Lorraine, bring me some new pencils and a length of piano wire, will you please.
Timmah: They did? But, but, but, but We already do that? Wha, wha, wha…(Interrupted by Mary Schapiro coming out of bathroom.)
Ben: Yes, we’re already doing that!. (mumbling “you moron”)
Mary; Hi Timmah! You see the Waddel and Reed blame thingie? Kinda neat, huh? Makes no fucking sense in the world, but gets rid of it. Sweeps it right under the rug! I thought you’d like that! Right up your alley! Incomprehensible.
Ben; Please don’t taunt him like that, Mary.
Mary; Why Ben! What’s wrong? (Looking at Timmah sulking)
Timmah; Well, Ben and me get to go to Brazil and you don’t! It’s where the peter-o-bras deal was done. (sniggering) You know no money making lookie like lots-o-money. Sorta like those trannies. Things don’t seem like they look. See I gotta big Adam’s apple. (Bouncing it up and down) I wanna see a tranny, I wanna see a tranny. Everybody at the SEC gets trannies and keeps talking about em and I want one, too!
Ben; Mary, have you ever tried to explain the Paradox of the Unfull-deck to him?
Mary; (perplexed look, shaking head “no”)
Ben; I didn’t think so, ‘cause I just made it up. The paradox is that there’s not been a single fucking person playing with full deck around this joint for the last two years, and (interrupted bu Timmah)
Timmah; OK , I’m game! Where’re all the jokers?
(Lorraine walks in bringing Ben the two pencils and a 4’ length of piano wire. Ben slowly, deliberately and calmly twists the ends oft the piano wire about the two pencils, wraps it around his neck and begins pulling) Gurggling noises, turning blue.
Mary; Oh, come on, Timmay. We can go over to my offices and let you play on the Internet for a while. Ben seems preoccupied.
Timmah; (Bobbing Adam’s apple up and down, making gurgling noises, trying to harmonize with Ben) Ben, we gotta practice that song so we can sing on our way to Bras-ilness! (Sniggering as he and Mary leave the office.)
Ben pulling as hard on the pencils as he possibly can, eyes bugging out tongue pressing between lips, turning blue…….
Fade out for another lost weekend.
Stay tuned for a preview of next week’s antics wherein response to absolutely everything meaningless (as in all) put forth by the US at the G-20 conference is ridiculed and dismissed out of hand, Timmah and Ben go their separate ways in quest of the local culture. Ben hooks up with Snookie and The Situation to go Sambaing while Timmah……
They don't have hot dogs in Europe. But they do have a royale with cheese.
Actually a better story this weekend is the vote in France. They're trying to get it done quickly. Once passed, there are two more "strikes" to get through then this story can fade into oblivion too.
American society seems to be regressing towards infancy, currently at the awkward teen stage. This stage is characterized by hanging out at the mall, buying tight pants on moms (chinas') credit card, checking out the latest iGadget, and gulping down wagon-wheel sized slices of cheesecake.
It's a lot more fun than looking outside the mall at record levels of poverty, as homeless dudes dig through the trash can, pushing aside empty frappachino cups. That could never happen to us, right?
I sure hope dad doesn't lose his job before Christmas. I'm getting Guitar Hero this year.
Screw it, let's go to Harry's house and order pizza and Netflix.
Pension reform just passed in France. Another disaster avoided. Now everyone get back to doing what it is you do all day over there, like hanging out at the cafe, and bitch about the new reform.
Forget hotdogs, how about burritos? Look at Chipotle flying high. Man, there's one that got away. Wanted to buy it last week and it fell off my radar. Oh well. No lack of demand with those consumers, that's for damn sure.
It all comes back to ultimate resource availability or scarcity depending on your viewpoint. The environmentalists are correct in that society has run up against resource availability barriers. The result has not been substitution as economic theory would have you believe because of entrenched political positions (e.g., Saudi Arabia and US) and sunk infrastructure costs (think pipelines, refineries) and misappropriation of available resources as expressed in capital allocation because of bringing too much future consumption forward through low interest rates (think the most recent housing bust).
Ideally, interest rates would track global ecological productivity so that our basic resource consumption does not exceed production of basic inputs. What I've just written applies only to basic commodity/resource production and consumption; not development; where development is an increase in the complexity of systems whereby added value is created. For example, a computer has a low resource input to human leverage ratio. That is, few resources collected together in the shape of computer enable humans to go beyond their limitations. The development function is the value added by the computer for example that enables a reduction in your primary inputs or enables one to use primary inputs more efficiently. Either way it still comes down to the ratio of primary inputs to outputs, and the value added the outputs provide.
Now, because primary resources are increasingly scarce one would argue there is value to added by enabling society to make money by improving the human condition e.g., cheap toilets for third world countries, planting trees etc...: Things that either reduce our impact on the environment and by extension a reduction in our productive capacity or by increasing our productive capacity.
So what am I calling for: I would argue that the FED needs to be replaced or preferably abolished and that money supply be added only to the extent that it reflects real growth in the factors of basic production; production that does not deplete existing capital stock. In other words, don't com-modify all the trees now only to create inflation and therefore devalue their intrinsic value in the present; instead, reverse the process. That is, set interest rates just above global ecological productivity and allow the free market to do its thing.
What the US and the FED are doing is morally and environmentally bankrupt because they want to sustain a consumption level oblivious to raw input costs when the input costs themselves are the drag on consumption.
The principle model underlying our economy needs to be relinked to the environment. We have accessors that access houses; why can't we have accessors that assess environmental productivity. Keep it science and fact based; not airy fairy because who is kidding who. Economics is not a science and never will be; so forget about it providing any meaningful truths.
We can't trust the regulators that we have now. I don't see your "assessors" emerging out of this pack. We need the disaster to be bad so that it will stick in our collective craw and kick our collective asses. Otherwise, why change anything?
It is your lack of understanding of economics that is the most glaring. It is a science as all other sciences. There are no exact sciences, just theories in various stages of acceptance. Further, you argue in economic terms (scarcity, value, added value) and yet reject its' tenets?
Next, study the corn laws. The adjustment of M3 to actual production of goods and services never works. Credit is leverage. Leverage is debasement. Debasement is inflation. Inflation is the business cycle.
Next, You talk free markets and intervention in the same sentence. Freemarkets allow for free price discovery- it cannot be regulated. Otherwise, it is what we have now. We have never had free markets and as long as we have government, we never will.
Next, the environment and peak theory are nice, but you can't hang your economic hat on them for price discovery. Read on water, air and sunlight. Especially water in a stranded in the desert versus at the shores of the lake examples. Price discovery is a result of supply, demand and scarcity-only. Unless you live on earth, where they are a function of manipulation, police powers and fraud from central banks.
Economics, especially the austrian variety, can provide many meaningful truths- the first of which, is just how much free markets don't exist or how monetarism is used to make debt slaves of us all.
Thanks for the laugh, Economics is only given the tag 'science' to appear more respectable.
When markets and consumers can be placed in specific market situations and results obtained, and when such tests can be repeated with the same results then I will consider it a science.
As obtaining a perfect isolated market for research purposes is near impossible is more appropriate to describe Economics as an ad hoc application depending on the circumstances of the economy at the present point in time.
You obviously think science is a special class of knowledge, one that is more "precise" in its' measurements. Then let me ask you: why is it consistently changing, upgraded and occasionally proven wrong? Not just the sun revolves around the earth thing, but evolution- how many subset theories do we have now? Unified field theory- physics doesn't quite fit together without it. How about the more mundane: the engineering of a span- all those spans that continue to fall down from reasonance(bridges), or deflection and loads that were not anticipated? Even though engineering exceeds specifications? Maybe we consider the science of medicine with all the trials and the repeated failures, side effects and deaths- xrays were originally thought to be a "cure" for cancer-oops!
Science in the modern era is more often driven by economic reward- forcing "scientists" to fudge or outright lie about data.
It is the promise of mathematics in Keynsian models that were touted as making economics more "scientific". Too bad all those models were developed in "perfect equilibrium" which any Austrian can show you doesn't exist. Consequently, the Keynsian models fail. Because even mathematics is uncertain when used in probability models.
Economics is as scientific as any other subject. Which perhaps should cause us to question if we have put science on a pedestal it does not belong on or deserve. Science is a creation of the human mind and therefore imperfect in all its' dimensions. Useful, but with limitations. The willingness to recognize those limitations is essential.
Science is humanities way of understanding the universe through the gathering of information that can be tried and tested repeatedly, but anyway I believe you understand that.
Where science ends is when it becomes more philosophy, as can be seen using your example of unified field theory. String theory has become more philosophy than science as the concept can't be verified in any predictable way. This actually incensed the great physicist Richard Feynman who believed if you couldn't calculate anything then what was the point.
This is the problem I see with Economics. The philosophy takes more importance than the rigours of analysis to provide definite answers that can be repeated. The theories are put forward, but there is no reliable way to test them (except in a computer modelling perspective) as we both know that there are many influences involved due to the human factors. Thus calling it a science doesn't detract from the fact, like string theory, many theories can be made to describe the results observed, but many proposed theorems can lead to similar answers.
That is why I mentioned it is more ad hoc, as events that do not fit the conclusions of these economic models that are observed in reality are adjusted continuously to fit the observed data, not as it distinct spurts of knowledge/enlightenment that have occurred in such fields as chemistry, physics or biology, which have not necessarily proven the previous ideas wrong, but have incorporated them or shown how to derive the same answers with a deeper understanding, i.e Einstein space-time curvature versus Newtons Laws of Attraction. I can't see this happening with Economics, otherwise the truth about Keynesian or Austrian economic models being the correct one would have been answered long ago.
Sean I think you are a bit harsh on TerraFirma.. I interpret him as basically having a sound argument, saying that the money supply should have scarcity integrity. To the Austrians, gold and silver as backing is just attempting to guarantee this physically since they recognize the tendencies of humans to corrupt themselves. So in the end economics is just as much morals as it is science. Some people say that economics is art and science, perhaps we should say that economics is morals and science. At some point you cannot avoid to discuss whether it is morally right or wrong to let selected groups obtain strong dollars which are issued to debase the money supply. As long as you let other people claim your labor with their currency, you are stuck with this problem.
So, you agree with my argument, classify it as morals and say that excuses Terrafirma's argument in favor of a scarcity based fiat currency? Did you look at the corn laws?
By the way, I mentioned sound money, not gold or silver. People often confuse this argument. Austrians are against fraud in the money system. Therefore, sound money is about warehouse receipts. If I store on with you, I should be able to get the exact same one less storage costs when I return for it. Simple.
It means that if we agree to trade a receipt for a good, the receipt can be redeemed for something of equal value. It could be gold, silver, land, etc, but it would have to be agreed upon AHEAD of time and not subject to fraud by the warehouseman (banker).
I pointed out the inconsistency in Terrafirma's argument for his benefit. He argued for free markets, but wanted to intervene in the same markets. This is a contradiction in terms. During the period of the corn laws in England, the same argument was made. If we can control the money supply to equal supply and demand of corn, there would be no inflation. However, the same moral dilemma ensued and when supply and demand became distorted, the government wilted to pressure from business and increased the money supply. First a little, then a lot. Eventually rescinding the law and returning to a pure fiat system and all its' problems.
Economics is about humans and their behavior. Austrian economics attempts to highlight systems that encourage good behavior and protect us from bad behavior. It is accomplished through an analysis of human action. It is not perfect, because we are not perfect, but it is preferable to the crony capitalism and monetarism of the present system. The argument for adjusting the money supply to meet production is the first step down the road to fiat debasement. It depends on honest men. There aren't any.
Yep, storage receipts, that is the point. And you only issue these when you actually have something in your warehouse (which depends on honest men....). Sound money could be electronic money, it might make accounting easier (if there are honest men doing it).
Economics is not a natural science since its metrics are abstractions created by humans (states, firms, currencies, indexes, stocks, rates, etc). Economics is oftentimes just the study of humans. How to model someone who is screwing up or is dishonest? All models are wrong but some are more useful than others. I wouldn't go as far to say there are no honest men, but strong integrity of the currency goes a long way to foster honesty. We now have an elite which does not have to go out and compete in the free market to extract currency but can obtain it by being close to the printing press. This does not exactly foster honesty, it breeds parasites.
I would agree with your statement that adjusting M3 to the value of goods and services does not really appear to "work". The corn laws case is a nice illustration, but I prefer a more conceptual counterargument: it is a grandiose central planning theory. When TerraFirma says that money supply should be increased based on "real growth" it is admittedly hard to define such growth and it will invite fraud, but it is still better than outright monthly POMO. Strictly speaking though I would prefer a fixed money supply enforced by laws that are above the politicians, just in case some dishonest men are elected.
The Austrian school has a concept for this: "Efficient Frontier".
Basically when interest rates are too low it sends a distorting signal to the economy that there are both loanable funds, and that its more rational to consume than to save, but in fact it is just inflation that is driving fixed asset investment and consumption. At the end you not only end up with low-yielding fixed assets and consumer debt, you also end up with wasted environmental resources as a consequence.
BRL fell partly due to the fall of the democrat candidate on the last survey released yesterday. It was not due to intervention AFAIK.
Was there Swiss Franc intervention again today? Anyone?
"peace crack pipe pow-wow"
LOL
Must use less sarcasm ! Some of us are trying to work in here.. (kidding, sarcasm is always welcomed.)
On a serious note, while I do agree with the whole QE being unproductive, probably wasteful and obviously not working (total credit outstanding continues to decline), is there a way to keep the dollar value high in order to help out our consumers?
As long as we stay over-leveraged and the world trade dis-balance remains high, I don't think it is possible for value of the dollar to stay high (or somewhat constant) in the long run.
"On a serious note, while I do agree with the whole QE being unproductive, probably wasteful and obviously not working"
its working for obama campaign contributers, its working for bank executives, it works for public employee unions and government workers in CA, IL and NY
Yet another question, what will happen to the corporate America exempt tech sector, when the interest rates move up and the cost of serving the enormous debt skyrockets? And since the "available" cash (- 30%*1/3, lol) is uneven, with the tech & health holding to the most of it, what will happen to the rest of debt overloaded multinationals?
p.s. defaultous byaches !
or be aware of what you wish for thy corporate America because one of those days the deflation option will not look that bad.
Nothing special, everything is fine in nominal land, and here we go holding another international talk shop to the stimulus cheerleaders kicking the can around while we dance to the green shoots on our musical chairs.
Seriously, I think to answer this question would require a thorough industry-wide analysis using the DuPont model. Essentially the distortion may show up when low rates do not penalize companies that hold debt. You may be seeing a great ROE but it could simply be due to large debts. When companies hoard cash and do not increase revenues as a result, for sure it drives down their asset turnover ratio. Hence, they are becoming more and more inefficient at using capital and should immediately invest it wisely or pay it out as dividends for better use elsewhere.