Paul Krugman may (or may not) know a lot of economic theory and is a very clever writer, but you should never ever trust him to recount tales of battles between Keynesians and other schools of thought. His misrememberings in this realm are so astounding that they would impress Brian Williams.
"Spectacular Developments" In Austria: Bail-In Arrives After €7.6 Billion Bad Bank Capital Hole "Discovered"Submitted by Tyler Durden on 03/01/2015 - 19:59
Slowly, all the lies of the "recovery", all the skeletons in the closet, and all the bodies swept under the rug are emerging. Moments ago, Austrian ORF reported that there have been "spectacular developments" in the case of the Hypo Alpe Adria bad bank, also known as the Heta Asset Resolution, where an outside audit of Heta's balance sheet exposed a capital hole of up to 7.6 billion euros ($8.51 billion) which the government was not prepared to fill, the Austrian Financial Market Authority said. The punchline: "The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta - or "bailed in" - under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden."
Under normal circumstances, after 2008's conflagration of the calamitous collateralizations, we shouldn’t have seen such irrational, reckless, greedy behavior from Wall Street for another generation. But, Wall Street didn’t have to accept the consequences of their actions. They were bailed out and further enriched by their puppets at the Federal Reserve, the lackey politicians they installed in Washington D.C., and on the backs of honest, hard-working, tax paying Americans. The lesson they learned was they could continue to take excessive, reckless, unregulated risks without concern for losses, downside, or consequences.
"On October 15, the deepest and most liquid market in the world demonstrated a six standard deviation move in less than two hours, a move that happens once in 506,797,346 days and a recent report by BlackRock highlights how “the secondary trading environment for corporate bonds today is broken. These examples signal that the probability of an accident is high and the stage is set for an adverse event meeting with an outsized impact on markets and possibly economies."
As Søren Skou, Maerk's CEO, admitted when he warned that global trade growth could slow this year from recent 4% growth ratnes, as Chinese, Brazilian and Russian economies disappoint, the Baltic Dry is still not only relevant and accurate but telling the real story of global growth, or lack thereof. “The economies in Europe are still very sluggish. Brazil, Russia and China: those three economies used to drive a lot of growth, and right now we are not really seeing that to the same extent. The only real bright spot is the US, and even the US is good but not great.” He added that: "To my mind volumes were sluggish. There is nothing in container volume numbers that suggest that the global economy is just on the verge of starting a new growth trend.”
We’ve tried medication. We’ve tried prayer. We’ve tried heavy drinking – all in an effort to understand how our crazy money system works. And where it leads. You’d think it would be easy. It’s just Central Banking 101, no? Well, no. It is squirrelly... and diabolically subtle. We doubt anyone understands it – especially those who are supposed to control it.
PIIGS Go To War: Spain, Portugal Slam Tsipras' Accusations Of "Conspiracy Plot" To Overthrow Greek GovernmentSubmitted by Tyler Durden on 03/01/2015 - 15:25
Yesterday Tsipras made clear his displeasure with the betrayal of what were formerly his socio-economic equals quite well-known, when he accused Spain and Portugal on Saturday of leading a conservative conspiracy to topple his anti-austerity government, saying they feared their own radical forces before elections this year. As Reuters reports, in a speech to his Syriza party, Tsipras turned on Madrid and Lisbon, accusing them of taking a hard line in negotiations which led to the euro zone extending the bailout programme last week for four months. And the inevitable response: both nations are now demanding that the EU "arbitrate" and respond to Tsipras' allegations, in the process essentially validating his accusations.
"...we are failing to deliver on our obligations as Americans, that is undeniable. We are allowing the political class to plunder our wealth, negate our freedoms and desecrate our Constitution. Sadly we have become the immoral populace our founding fathers warned all future generations not to become... The duty and obligation is ours and so too then are the failures and successes of our society. We are 15 years in to what is absolute denial regarding the competence of our nation’s policymakers. Yet here we sit, silent and indifferent to our own demise; so completely antithetical to the character of a true American."
Somehow, monetary policy is still believed neutral in the long run and that bubbles are market events. Central banks have shown why they cannot command economic performance, but that doesn’t mean they can’t give one hell of a comedic performance. We have taken a monetary ride now into the theater of the absurd.
In case the world needed any more geopolitical risk "hotspots", overnight Venezuela's flailing president Nicolas Maduro, faced with an unprecedented economic crisis at home, decided to do what most authoritarian rulers do when faced with imminent civil unrest: point the finger abroad, and in this case, at Washington, as a distraction. Overnight Maduro switched from broad generalizations to specifics when, as CNN reports, Maduro said Saturday an unspecified number of Americans were arrested "a few days ago" for engaging in espionage and recruitment activities. Additionally, a group of prominent U.S. officials, current and retired, will be banned from entering Venezuela because of what Maduro said was their involvement in "bombing Iraq, Syria and Vietnam" and other "terrorist" actions. The officials include George W. Bush, former U.S. Vice President Dick Cheney, former CIA Director George Tenet.
As the world contemplates the various 'provocation' scenarios - a Russian act, a CIA act meant to look like a Russian act, or a Russian act meant to look like a CIA act? - the following clip suggests this was anything but an ad hoc shooting... Questions remain, but Soviet ex-President Mikail Gorbachev is sure, the assassination of opposition politician Boris Nemtsov as an attempt to destabilize Russia.
Those of us who are libertarians have a tendency to speak frequently of “the New World Order.” When doing so, we tend to be a bit unclear as to what the New World Order is. Is it a cabal of the heads of the world’s governments, or just the heads of Western governments? Certainly bankers are included somewhere in the mix, but is it just the heads of the Federal Reserve and the IMF, or does it also include the heads of JPMorgan, Goldman Sachs, etc.? And how about the Rothschilds? And the Bundesbank—surely, they’re in there, too?
If there was supposed to be any crackdown on opposition voices in Russia following the shocking death of Boris Nemtsov, it wasn't evident today during a rally in which tens of thousands converged in central Moscow this monring to mourn the veteran liberal politician Boris Nemtsov, whose killing on the streets of the capital has, according to AP, shaken Russia's beleaguered opposition. As AP reports, and as the photos below show, the mourners marched to the bridge near the Kremlin where Nemtsov was gunned down shortly before midnight Friday. "The march could serve to energize the opposition or it could prove to be a brief outpouring of emotions that once again dissipates in a climate of fear."