the world to keep rolling the printing presses for “a little while
longer”. They got a resounding “NO”. The head's of state from Germany,
France, England and Canada said NO. Ever polite, the Japanese had not
thing to say and every smart, the Chinese also had nothing to say. As of
tonight there is no engine of growth in any corner of the globe. The US
is going to try to go it alone with big fiscal imbalances. Based on
this weekend’s lack of support for continued deficit spending outside of
America the logical economic conclusion is that the US is going to be
running up big trade and current account deficits with the rest of the
world. We are also going to look pretty silly in about twelve months.
Our boy Tim G. did a lame effort in defending the US position at a press
conference. The full Q&A is here.
Some selected thoughts from the guy who has his hands on the tiller:
What we
share in the G20 is a recognition that if the world economy is to
expand at its potential, if growth is going to be sustainable in the
future, then we need to act together to strengthen the recovery and
finish the job of repairing the damage of this crisis.
One day Tim tells us that things are recovering very nicely and we have a
sustainable economic outlook in front of us. The next day Tim says we
are still in “crisis”. Tim talks from both sides of his mouth.
He does it on the world stage. No one outside of the border seems to be
buying this. After reading tomorrow’s headlines not too many inside the
border will believe it either.
I would
look to the language the President used in the letter he sent to his
counterparts. You can see in that letter, again, the basic strategy we
think makes sense, which is to make sure we’re focused on growth now.
Sorry Tim. No sale. You tipped the scales. Now they have to get back.
We do think it’s very important to continue to put in place a
targeted set of additional supports to help promote small business
lending, give aid to states in the United States to make sure they can
keep teachers in the classroom, to provide incentives for business
investment to try and make sure we’re helping the long-term unemployed. Those
things are good policy now. They make sense for the country.
Tim is referring to a failed effort by the Administration to get
Congress to pony up an extra $50b. That was the cost to keep 300k
teachers on the books and to extend unemployment until after the
election. As of Friday, Congress has said no. As of tomorrow it will be
dead on arrival.
There’s
another mistake some governments have made over time to, in a sense,
step back too quickly in the hope that -- on the hope that it’s over.
And we want to do is continue to emphasize that we are going avoid
that mistake.
This is the heart of the matter. A growing number of both "leaders" and
regular folks have concluded that the really Big Mistake
in front of us is if we were to borrow a few more trillion to fend off
something for a few more quarters. Tim sees the Big Mistake
in exactly the opposite direction.
You’re
not going to have growth in the future unless people believe you have
the political will to bring these deficits down over time. And that’s
our challenge.
Well-said Tim. Without confidence we are dead. And you are doing nothing
to instill the confidence we need.
The
President has outlined actions to reduce our future deficits
No he hasn’t. He is avoiding the issue like the plague. He set up a
deficit commission to look into the matter. What kind of leadership is
that? As near as I can tell a cranky octogenarian who has a very fat
wallet heads this commission. This commission is not going to tell us
anything we don’t already know. This was just a method of delaying the
process until after the bi-elections.
We have to make sure that people understand that we’re going to
take the steps necessary to bring down our deficits over time.
But we also need to make sure we’re growing.
The phrase “over time” could mean anything. It certainly does not mean
the next 24-36 months. Tim is completely out of touch on this issue.
My guess (hope) is that the smack down in Toronto makes a big splash in
the MSM. Both public and market sentiment could be negative. Should that
happen, who might be the lighten rod? None other than Tim G. This
could set up as an opportunity for a new Treasury Secretary that has a
different perspective. If confidence is something you wanted, then a
change is necessary.
We’ll see what the Market says.
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If you have a FB account, here's an account (with links and video) of some of the police brutality that occurred during this summit:
http://www.facebook.com/note.php?note_id=441576393593&id=751870441
The banksters already own the apparatus of violence here. I didn't know that was the case yet in Canada.
Why isn't the Dollar in the tank this morning?
Take a look at the DLR/CHF. My leading indicator. Also look at gold. We will see 1300 this week.
b
Nobody expected the G20 to do acheive anything anyway.
I think the outcome was worse than expected, but only behind the scenes not in public. An empty press release was crafted and everyone went home.
G20/G8 is nothing but glorified meetings of mafia family heads. At least in the past they used to be able to crush Gold to show off what good shape their pathetic tools of pillaging fiat currencies were; this time - not so much. Someone(s) must've lost their job(s) at JPM.
What is this OBSESSION with growth, growth, growth? Don't these MORONS realize that NOTHING in nature can keep on growing in a straight line...oh wait...there is something...A CANCEROUS TUMOR, which is what the entire global economy is today, thanks to the fraudulent fiat money system.
BTW, I don't think what Timmy the puppet says is even worth paying attention to.
Gordon, the reason for the constant growth talk is that the money masters central banking system must have growth to keep the fraud going. Any sustained shrinkage is terminal for their manipulation game. Without growth there is no way for their equation of MONEY + INTEREST = PAYMENT to work. The INTEREST is never 'printed' and so keeps feeding off the growing MONEY to then reach the solution of PAYMENT. Problem is, in the long run that INTEREST eats up a larger and larger supply of MONEY and thus reaches a stage of needing to print more and more MONEY out of thin air to keep the 'game' going.
You're right. But our money masters are also part of nature and have to obey its laws, which is why the game is about to blow up disastrously in their faces, no matter how well they might have prepared for it.
GG thanks for the Denninger Dialogues and the rest of your great posts.
I just saw DSK on BBC. The presenters were going on and on about austerity, austerity, austerity when discussing the G20 concluding. Then they had a clip of DSK, mostly sort of mumbling, but saying ... everyone will work towards 3% of GDP, by some date ... in the future ... mumble, mumble, unless of course they will hurt the recovery!!
Timmy must be worth something as at the time he was annointed, he was described as the only possible candidate, overriding TurboTax or not.
Thank you for your kind words, Bringin It.
deleted.
Timmay G.
If it wasn't for Timmay's Uncle Jamie and Aunt Lloyd... boy would be out of a job...
The only recovery that is present is the same type of recovery you have in a disaster.
That is, you're recovering and burying bodies. In this case, it's people whom are no longer favorable to support(e.g. long-term unemployed) and need some way to be "disposed of".
Ole Larry Summers must have the goods on quite a few people. How is it that his mug shows up in every nook and cranny of the financial world? Has he not done enough damage? (The questions are rhetorical...)
Well crafted crap Timmy!
No effing way they implement QE 2.0 now. They have no political cover to do so. 2/3 of Americans think deficit reduction is more important now than growth. Most of the other world leaders think likewise. Going ahead with QE 2.0 now would make Obama and Geithner look like lunatics. The Dems in Congress would probably start the rebellion against it themselves because to go along will only cement the epic losses that are coming their way in November.
You wanna bet? All they have to do is fill everyone's bank account with $10k and watch the opposition melt away.
2/3 of Americans don't even know who Geithner is, or what the Treasury does.
Give an American cash for his clunker, a tax refund check, a housing credit, a stimulus check, or an artificially low interest rate, and he'll take it very time.
The majority of people only care about deficits in conversation, or when they are trying to argue political points. In reality and in practice, they could not care less.
Yup, it's amazing how cheap we are. I threw that $10k out of my ass... I think something much smaller will do. $3k/household will be a home run for sure. Just enough to catch up with late credit card payments but not enough to payoff the balance. Banks get the money, leverage the dough 30:1 for new plastic, people go and buy Made in China shit taking more debt... rinse and repeat.
Bruce, I agree with all you say, except, I don't think the MSM will have much to say. As has been said many times, they are so in-the-tank for the Obama Admin, a bigger tank had to be built.
And the markets are being successfully manipulated (with our tax dollars) so it is not clear the markets will have much to say either.
Great article, Bruce. The US people deserve better than B.O. and Timmy.
Agreed, the MSM have given Geitner a free ride, but that likely isn't going to change as there aren't any Rolling Stone reporters near at hand. However, a change in Treasury Secretary's without a change in fundamental administration policies does not solve anything either. And a change in policies results in immediate downdraft as opposed to downdraft days/weeks/months hence. There are no options without significant pain. Bring on the pain. There is never a good time for pain.
Bruce: you have filleted Geithner deftly, and with him his tool of a boss. Unfortunately I have little hope that the media will see things your way.
One minor quibble: perhaps there are some small engines of global growth: BRIC minus the C perhaps. Lots of people but obv smallish in the macro sense.
With the rumor that AEP posted today from RBS that Helicopter Ben is ready to try our his thesis on ending deflation, I suspect they have already made the decision. They are going for QEIII (3 I think?), and it will be a biggy!
Summers wants it, Timmy G wants it, Bam wants it and Ben is just itching to give it a go. Orzag (sp) left I surmise because when he saw the plan he wanted nothing to do with it. Congress is paralyzed with fear, so do not look for help there.
We are soooo screwed.
sschu
Buy gold and silver. Maybe oil.
Replacing Tim will make no difference as long as Obama and the Democrats are calling the shots. Their policies are spend, spend, spend. Not spending kills their policies.
Their economic policy is the equivalent of "I'm fat and unfit and I'm gonna eat my way back to being slim and fit." They're not doing this because it's good economic policy. They're doing it because they're addicted to gorging themselves, so they have to believe their insane policy will work.
They won't change, no matter how many Timmy substitutes they roster. Until they are turned out of office, the US economy will continue to tank.
Same people at Treasury as Bush admin.
Same people at Defense as Bush admin.
Same people at Goldman, Morgan and JPM as Bush admin
...and you're going to tell me we had a change of admnistration???
...don't make me laugh... certainly political analysis can go beyond this childish assumption of whoever is in the White House controls the country.
The difference? Bush and Cheney are part of the superstructure... Obama is just a rentier for TBTB ... and those powers that be remain far more closely aligned (sometimes directly) with Bush and Co.
Do you think things would have been different if George Bush or any Republican was President? Perhaps in minor ways, but nothing of substance.
The answer is Yes, though he certainly wouldn't be my preferred president to deal with the current mess.
I don't think he is great at managing an economy and he, at Paulson's (ex GS) behest allowed TARP to go forward. He is a statist, inclined to expand government, not just as big a statist as is Obama and the Democrats.
What he would not have done is foist Obamacare and all the anti-industry regulation on the country that Obama and the Democrats have done. It is the same pattern that FDR used to perpetuate the depression in the US for years after other countries had pulled out.
Recessions end when business starts investing strongly, not before. Businesses will not invest unless they see an opportunity to make a profit (you might have noticed that business is sitting on a growing pot of cash) and keep the profit. When you keep adding more restrictions (which impose costs) and uncertainty, there is no visible opportunity to make a profit and no one of sound mind would have any confidence under Obama that if they make a profit in a few years (it doesn't happen overnight) they will be allowed to keep it.
For those disturbed by the finger-pointing at their favored politicos, I can only say that while Republicans have contributed to the harm (by behaving like Democrats instead of like conservatives), the ones currently in power are Democrats and the harm is being done by their continuing actions. Reality may suck but that's the way it is.
Team Bush decided they wanted to disown this clusterfuck, so they put up McCain/Palin. THe dumbarse Democrats walked right into it of course.
Exactly!
Bush and his Republican administration deliberately destroyed this country, then the Republicans put Mr. Roper and Crissy up for sale, knowing that no one would buy them. This, in turn, led to Obama being elected, which was exactly what the Republicans wanted. It was just a huge, secretive plot to make Obama look stupid as he tries to fix impossible problems.
The Republicans are in control of everything, even the successful election of Obama.
Glad to see that someone can see truth from fiction. Way to go!
Must.resist.schadenfreude. Ya - you can even blame your buyer's remorse on Bush. Problems with Mom. The LOST finale. See, the thing is, I already know for a fact that your throat is still a little sore from chanting "Yes We Can" and gloating full volume over the glorious victory. Just remember that every time Geithner speaks.
Cut this partisan rethoric and learn some fucking history.We are fucked by the donkey AND the elephant.
CB (or anyone who has the privilege to post images), can you help this brother with a "US Debt vs Time" graph?
http://market-ticker.denninger.net/uploads/2010/Jun/debt-to-gdp1.png
<img src="http://market-ticker.denninger.net/uploads/2010/Jun/debt-to-gdp1.png" border="0" alt="" / >
Exactly. Take one look at this graphic and tell me that Obama and Bush
are different.
http://blog.heritage.org/2009/03/24/bush-deficit-vs-obama-deficit-in-pic...
Bruce, I love your pieces, but I must disagree with you here. Germany, France, Italy and UK are all running deficits. True, smaller than us, but a 3% deficit still counts in my book as stimulus by borrowing from the future and spending it in the present. Whereas it is true that we do 10% and Germany does 3%... at the end of the day it is the same game.
I am never a fan of deficits. But 2008/2009 was a period where deficit spending was justified. Every nation did it to one extent or the other. But it is now 2010. Europe is going in a more prudent way. The US is still pedal to the metal. The level of imbalance is significant. But for me the direction is more important. The EU is going one way, we are continuing to go the other.
Markets do repond to the question: "Where are we today?" But a more imortant influence on markets is: "Where will be in a year from now?"
Like I said, I think we are going to look silly.
OK, but 2 things are really worrying
First is the rate of change of these numbers. Europe has decided for political reasons that it has to defend its currency, even if that means destroying its economy. Obama has decided to try to protect his economy by printing currency. This has become clear over the past weeks.
Seond is the statements from the weekend that Bruce summarised. There seems no political ability or willingness to see the other guys point of view. Geithner basically said the European point of view was a huge mistake. Just when we need cooperation and diplomacy, our leaders have failed.
Over time = after I have stepped down and am no longer in a position to be held responsible for the consequences. Typical politician. I will gladly work on your behalf tomorrow for a vote today.
Barry needs to fail so we can all begin to rebuild.
Yes, I agree. Rush Limbaugh said it first: "I hope Obama fails."
If unemployment soars, and the stock market crashes and the US economy launches full throttle toward another Great Depression, then the Democrats will look worse than the Republicans.
That's what we secretly want, isn't it? We need to make sure that the Democrats don't fix the economy so they don't gain political leverage across this country. The absolutely last fucking thing I want is for a black Democrat to save those red, white and blue stripes.
I'd rather have a total systematic failure with widespread economic chaos, than give another Marxist/czar/Nazi/socialist/despotist a chance to infiltrate our white house.
But that's a secret, so shusssshhhh......
You die-hard Obamacrat hard-leftist libbies always fail to recognize that Obama's success will lead to "total systematic failure with widespread economic chaos".. but of course Keynesian policy in a 'Crats eyes will never result in this.
So yes - either way, we're screwed. Sometimes a failed plan doesn't get better by putting more money and more effort into it.. you just let it die off and try something else. Unfortunately, the Obama administration has no idea what plan B is.. all they can push is QE and deficit spending - y'know- whatever W did times 3.
Oh, since you brought up race.. don't forget that if Obama was white, Billary would be the POTUS.
Sheithner.
Geithner is an utter and absolute MORON!
REMEMBER: The Chinese are being VERY well educated (have been there). Employers in China highly value not just education, but what position within your graduating class you earned. With that said, we must remember that Chinese students LAUGHED at Geithner during one of his jabber jawing lying session in the country. Sadly, many Americans are not well educated, and so clueless about what is unfolding around them.
Also agree with Don, Geithner is just doing what his handlers are instructing him to do. Also remember Geithner was head of the NY Fed, so you can easily guess who he really worked for (hint: the privately owned banking cartel regime called the Federal Reserve).
Davos:
Don't make the mistake of thinking any of these officials are stupid. Geithner is no fool and no moron. He just happens to be working in someone else's best interest. You can bet your bottom dollar (he already has) that the taxpayer is on the receiving end of these policies. Keynesian economics is a failure for the country, but it's BRILLIANT for Wall Street. And UPS apparently? (youtube.com/brownbailout) I guess everyone's getting theirs these days. Except for - you guessed it - the taxpayers.