There is nothing like the release of secret tape recordings to clarify an inconclusive debate. Actually, what the tapes really show is that the Fed’s latest policy contraption - macro-prudential regulation through a financial stability committee - is just a useless exercise in CYA. Macro-pru is an impossible delusion that should not be taken seriously be sensible adults. It is not, as Janet Yellen insists, a supplementary tool to contain and remediate the unintended consequence - that is, excessive financial speculation - of the Fed’s primary drive to achieve full employment and fill the GDP bathtub to the very brim of its potential. Instead, rampant speculation, excessive leverage, phony liquidity and massive financial instability are the only real result of current Fed policy.
"In conclusion, this analysis finds little evidence of the permanent structural damage to the economy’s productive potential that many commentators see as the main culprit for the subpar recovery from the Great Recession..." and Surprise... "our model suggests that monetary policy played an important role in cushioning the blow from the financial crisis and in sustaining the recovery, which could have been significantly more disappointing without the aggressive actions undertaken by the Fed."
The U.S. economy has had six full years to bounce back since the financial collapse of 2008, and it simply has not happened. Median household income has declined substantially since then, total household wealth for middle class families is way down, the percentage of the population that is employed is still about where it was at the end of the last recession, and the number of Americans that are dependent on the government has absolutely exploded. Even those that claim that the economy is "recovering" admit that we are not even close to where we used to be economically. Many hope that someday we will eventually get back to that level, but the truth is that this is about as good as things are ever going to get for the middle class.
Some British newspapers have declared that “the dream is over” for Scottish independence. That seems hardly likely, unless by “over,” the newspapers mean “over for the next few years.” Europe-wide, the drive for more regional independence and autonomy will only continue to grow as economies stagnate, and as elites from Brussels or Rome or Madrid continue to maintain that they know best. Eventually, the promises of the centralizers will fall on very deaf ears. Even without a majority vote for secession, the campaign for separation from the United Kingdom has already provided numerous insights into the future of secession movements and those who defend the status quo.
Just one guy's attempt to make sense of what is likely to happen in the coming days.
The present global financial ‘crisis’ began in 2007-8. It is not nearly over. And that simple fact is a problem. Not because of the life-choking misery it inflicts on the lives of millions who had no part in its creation, but because the chances of another crisis beginning before this one ends, is increasing. What ‘tools’ - those famous tools the central bankers are always telling us they have – will our dear leaders use to tackle a new crisis when all those tools are already being used to little or no positive effect on this one?
With the Fed unleashing its bubble-watchers last week, on the heels of warnings from the Central Bankers' Central Bank (BIS), The IMF has decided it is time to chirp in. As Mises' David Howden notes, after promoting QE for years (see here and here), the IMF is finally coming to realize what has been apparent for years now to almost everyone who doesn’t work for the Fed or the IMF: that low interest rates encourage risky decisions.The IMF warns, "financial market indicators suggested investor bets funded with borrowed money looked 'excessive' and that markets could quickly deflate if there were surprises in U.S. monetary policy or the conflicts in Ukraine and the Middle East."
"[A] crash is coming, and it may be terrific... The vicious circle will get in full swing and the result will be a serious business depression. There may be a stampede for selling which will exceed anything that the Stock Exchange has ever witnessed. Wise are those investors who now get out of debt."
A look at new arguments suggesting that globalization is fragmenting. Are they really new? Are they true?
As always, the bottom line is about leverage and bargaining power. It is here that, miraculously, things once again devolve back to, drumroll, oil, and the fact that an independent Scotland would keep 90% of the oil revenues! As we showed several days ago, Scotland's oil may be the single biggest wildcard in the entire Independence movement. It is this oil that as SocGen's Albert Edwards shows earlier this morning, is what gives Scotland all the leverage.
Generally since 1999, and especially since 2008, the financial world has been dominated by Keynesian lunacy. Collectively, Central Banks have cut interest rates over 500 times and printed more than $12 trillion combating a brief 9-12 month period of deflation.
What’s the easiest way to make a 500x return on investment?
CNBC’s long-running “jobs Friday” fetish is getting downright appalling. Each month the BLS puts out a treasure trove of data on the rich and complex mosaic of the US labor market - a download that embodies a truly frightening trend of economic failure. Yet the clowns who assemble in its screen boxes to opine on Hampton Pearson’s 30-second summary of the BLS release never have a clue. Namely, that outside of health and education there has not been one net new job created in the American economy since July 2000! Yes, not a single new jo - as in none, nein, nichts, nada, zip! The point here, however, is about economics, not social worth. And in the realm of economics, the notion implicit in “jobs Friday” - that all jobs are created equal - is simply a fatuous shibboleth.
The term “jobless recovery” is itself an oxymoron since the main function of any economic advance is to broaden participation. Thus a “jobless recovery” is nothing of the sort, indicating more so the re-arranging of numbers rather than full achievement – the hallmarks of redistribution.
As financialism spreads, so does disharmony, not just in function but in breaking correlations among economic accounts and statistics that were once seemingly so unconquerable.
Labor unions are a dying breed. According to the Pew Research Center, union membership in America “is at its lowest level since the Great Depression.” In 1983, there were approximately 17.7 million union workers. Today, that number stands at 14.5 million, with every estimate showing a continued downward trajectory. Clearly, the Norma Raes of the world are going extinct. But as Samuel Johnson quipped, one should never dismiss the triumph of hope over experience. With economic growth still staggering, the decline of union membership can’t come soon enough. Freed from the demands of overpaid bargainers, innovation and productivity inevitably rise. Increasing numbers of Americans are migrating to states with less strenuous union laws. When given a choice, workers go where the money is; not where there’s tough talk about bargaining rights. Ayn Rand had unions pegged best when she declared their purpose has never been to empower the average worker. “Unions and trade associations,” she wrote, “are not directed against employers or the public but against the best among their own members.” The goal has never been about “raising the weak in any way whatever, but simply forcing the strong down to the level of the moron.”