The Real Dark Horse - S&P's Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt MarketSubmitted by Tyler Durden on 01/13/2012 19:55 -0400
All your questions about the historic European downgrade should be answered after reading the following FAQ. Or so S&P believes. Ironically, it does an admirable job, because the following presentation successfully manages to negate years of endless lies and propaganda by Europe's incompetent and corrupt klepocrarts, and lays out the true terrifying perspective currently splayed out before the eurozone better than most analyses we have seen to date. Namely that the failed experiment is coming to an end. And since the Eurozone's idiotic foundation was laid out by the same breed of central planning academic wizards who thought that Keynesianism was a great idea (and continue to determine the fate of the world out of their small corner office in the Marriner Eccles building), the imminent downfall of Europe will only precipitate the final unraveling of the shaman "economic" religion that has taken the world to the brink of utter financial collapse and, gradually, world war.
We have now entered the fifth year of this Fourth Turning Crisis. George Washington and his troops were barely holding on at Valley Forge during the fifth year of the American Revolution Fourth Turning. By year five of the Civil War Fourth Turning 700,000 Americans were dead, the South left in ruins, a President assassinated and a military victory attained that felt like defeat. By the fifth year of the Great Depression/World War II Fourth Turning, FDR’s New Deal was in place and Adolf Hitler had been democratically elected and was formulating big plans for his Third Reich. The insight from prior Fourth Turnings that applies to 2012 is that things will not improve. They call it a Crisis because the risk of calamity is constant. There is zero percent chance that 2012 will result in a recovery and return to normalcy. Not one of the issues that caused our economic collapse has been solved. The “solutions” implemented since 2008 have exacerbated the problems of debt, civic decay and global disorder. The choices we make as a nation in 2012 will determine the future course of this Fourth Turning. If we fail in our duty, this Fourth Turning could go catastrophically wrong. I pray we choose wisely. Have a great 2012.
It just may turn out that Europe's strategic "plan" of kicking the can down the road indefinitely, or at least until aliens can come down and bail out the global central banking cabal - aka the Deus Ex Alpha Centauri plan - may have worked! In a rather curious announcement, the SETI website of UC Berkeley has announced that it has found signals that "look similar to what we think might be produced from an extraterrestrial technology. They are narrow in frequency, much narrower than would be produced by any known astrophysical phenomena, and they drift in frequency with time, as we would expect because of the doppler effect imposed by the relative motion of the transmitter and the receiving radio telescope." And in the off case that said aliens prove to have an atavism to rude European waiters, at least Paul Krugman will be delighted: after all there is nothing better for the economic voodoo shamans out there than intergallactic warfare. Then again, since Keynesianism appears to be a popular universal delusion, we wouldn't be surprised if it is us who ends up having to bailout them...
Rosenberg, Ryding, Zandi, Arbess, Zuckermann And Rickards All Chime In On The Future Of The EurozoneSubmitted by Tyler Durden on 12/27/2011 16:49 -0400
When six out of five economists (thanks to the magic of Keynesianism... and self promotion from general counsel to general expert) all agree on the same topic, and the very definition of groupthink is that the Eurozone will survive, the glaringly obvious call is precisely the opposite. If there was ever an argument to say that 2012 is the year the Eurozone finally dies, the below video is it.
Japan is starting to heat up a little in terms of risk and we hope that Noda is watching carefully. While the strengthening trend in USDJPY and JGBs has been a long one, the last few days are starting to worry some traders and most notably, Bloomberg points out that not only are FX options the most USD bullish-biased (JPY-bearish) in seven years, swaptions (bearish rate bets) have screamed to their highest in over seven months at 54bps. The growing concern that the European crisis will spread to Japan is extremely evident in these option bets, supporting the sentiment of S&P's recent 'downgrade' chatter, Bass's grave concerns, and the IMF's decidely negative perspective on fiscal sustainability as Japan's 'savior' trade-surplus is expected to drop significantly. Perhaps the sad inevitability of the real endgame of Richard Koo's balance sheet-recessionary view of Keynesianism is closer than many believe.
Watch Rosenberg And Krugman Debate Larry Summers and Ian Bremmer On Whether The US Is Turning Into JapanSubmitted by Tyler Durden on 11/14/2011 22:54 -0400
Minutes ago, the always delightful Munk Debate on the American economy concluded, which pitted two skeptics: David Rosenberg and (yes, he is a skeptic when it comes to his belief in the "proper" implementation of Keynesianism) Paul Krugman on the one hand defending the null motion of the debate, against Larry "Warren (watch the clip)" Summers, best known for destroying capitalism, and Ian Bremmer. The core debate topic was as follows: "North America faces a Japan style era of high unemployment and slow growth an accurate forecast of the future." Naturally, as Krugman immediately explained, by North America the organizers mean the US, simply because Canada is too small and hasn't screwed up enough (we would add that the screw up has not been perceived yet: everyone has screwed up, but luckily we have enough distractions for the time being). Either way, the progression of the debate should not come as a surprise to most, neither how each particular economist will perform: that Rosie sees Japan in every aspect of the US should not surprise anyone; that Krugman does too unless the politicians agree to being invaded by aliens, is also to be expected. On the other side, "Warren" Summers' argument can be simplified to his fallback motto of Keynesianism and Central Planning 101 in which he believes that the printing of money and job creation are sufficient to fix all US problems. No surprise there either: after all this is the man who three weeks ago said: "The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending."
Actually The ECB Has Already Handed Out €1 Trillion; And Why Germany Equates ECB Printing With HyperinflationSubmitted by Tyler Durden on 11/10/2011 10:21 -0400
For anyone who thinks that the ECB is some pristine virgin which has barely been touched in that special monetary printing place, we, or rather JP Morgan's Michael Cembalest, has some news for you: "To-date, that’s what the ECB has done: of the 1.1 trillion Euros extended to European banks and governments (through sovereign/covered bond purchases and repo), 970 billion has been given by the ECB." So anyone demanding that the ECB print even more outright (which incidentally we are certain will eventually happen - our thoughts are identical to those of Dylan Grice from two months ago: "ECBCTRL+P: The Next Steps In The European Implosion") should probably keep this in mind. It will also explain why German members of the ECB are dropping like flies, and why Germany, which better than anyone else, most certainly proponents of modern reincarnations of failed Keynesianism, knows what happens when central banks have gone wild, is certain that the ECB proceeding to move from €1 to many, many more trillions of explicit monetary support, will mean nothing short of hyperinflation.
Greenspan Suggested Cutting Taxes on the Wealthy to Increase Debt so the Fed Wouldn't "Lose Control of Monetary Policy"Submitted by George Washington on 11/03/2011 20:09 -0400
What a guy ...
Of the three great financial truths that have been left unspoken for the past four years out of sheer dread, lest their mere mention collapse our economy, let's start with the most obvious: if the Federal Reserve and Federal government ever crimped the dripline of "easing" and bailouts, America's financial sector would promptly roll over and expire. Does this strike you as a robust, flexible, transparent system? Of course not. Rather, it is a "hothouse" financial sector, one that needs constant injections and a carefully controlled environment just to keep it alive. And since the U.S. economy has been fully financialized, it is now dependent on financial machinations and skimming for its "growth," profits and the debt expansion that fuels everything else, including the metastasizing Savior State, a gargantuan aggregation of an unaccountable National Security State with crony-capitalist cartels and a dependency-inducing Welfare State. Without the debt conjured into existence by the Fed, Treasury and the financial sector, even the mighty multi-tenacled Savior State would quickly starve. As a result of our dependence on financialization and exponential debt, our entire economy has become a weak, sickly "hothouse" economy which can only survive in a narrow band of temperature, debt injections and opaque manipulations of data and what's left of the nation's shriveled markets.
"We are all Greeks" - so begins one of the best reports on the unsustainability of the status quo, and on what "the new world order" will look like, created by SocGen's Veronique Riches-Flores. Her overarching observation: "No one can claim immunity from a Greek-style spiral" because "Our economies are mature, with weak potential GDP, especially post the financial crisis" and due to that old standby which everyone chooses so conveniently to forget, yet which is the biggest threat to the world's "welfare-state" stability, in existence since 1860 and which has been responsible for not only the longest period of peace in world history, but for the longest stealth plundering of middle-class wealth (there is indeed no such thing as a free lunch): "We are aging - we have no chance to see our future income improving substantially in the long run ; our savings capacities are shrinking and our health and pensions spending is increasing." That, in a nutshell, is it, no matter how many protracted essays one reads predicting the future (or war in Europe): the truth is there is increasingly less cash flow, coupled with increasingly more demands for cash.
We are far enough away from the onset of the Great Recession that another down-wave in the depression (or a new recession if you go by NBER) is either here or due soon. It may not be a severe downturn, as housing and autos would be falling from first- or second-floor windows in that case, but it would be occurring on the backdrop of a weakened structure, and thus the financial effects could be more severe than the economic effects (which could be severe or mild). Here is what you need to do.
Back in May 2, 2010, when discussing the first failed Greek bailout (still to be implemented) we made the following observation: "Ignore for a second the sheer lunacy of anyone who thinks that the Greek government can grow GDP and decline the budget deficit in a straight line now that the country will see crippling strikes and rolling riots (not to mention blackouts) on a daily basis. But do note the black line, which shows the projected Debt/GDP ratio for the country as part of the bailout package. In essence Greece will go from having "only" a 133% Debt/GDP ratio to an insane 149% in 2013 before presumably dropping to 144% lower in 2014, still a good 11% higher than currently. Greece just got bailed out so it can get into even more debt! What psychopath of the Keynesian school thinks that this unbelievable trajectory is anything but a complete and utter waste of money? German, and US taxpayers, are merely giving Greece money so it can increase it debtor status with French and a few other European banks. To say that this is a viable solution is something that only those who bow at the altar of Alan Greenspan can do." And so once again, in the endless battle between common sense and Keynesianism, it is former 1 - latter 0, after the Troika yesterday released its revised projections for total Greek debt/GDP, which has just been hiked from 149% to 186% by 2013! Said otherwise, Econ 101 textbook insanity just cost the Greek people roughly half their entire GDP in incremental debt (which they will never be able to repay anyway), however in the process they kept French banks alive and well as a Greek default in May 2010 (the only real option) would have not only destroyed a failed economic monetary union, but blown up the entire French bank system. Fair trade off in that other endless battle, between the 99% and the 1%.
It's not just uninformed people who want to end the Fed.
When it comes to economics, our ridicule of the underpinnings of the dismal voodoo science are well known. Only Ivy league professors can profess to predict the future based on special case equations that isolate a system in vacuum, completely oblivious of the fact that nothing in the world is linear and if anything, a system based on Lorenz attractors and Mandelbrott theory would be far better suited to demonstrate that as far as predicting the future is concerned, it is nothing short of an exercise in futility. That said, we do appreciate the work of those economists who are first to admit not only their own limitations but the limits of the art, not science, that they engage in. Chief among them is Australian Steve Keen, whose work and analysis we always enjoy. For those unfamiliar with Keen, we have attached the following just released interview with Ross Ashcroft of The Renegade Economist in which he deconstructs the failings of contemporary interpretations of Keynesianism (in essence the usurpation of theory by those in power to perpetuate their own greedy practical pursuits), and exposes the core of neoclassical economics that guide every day macroeconomics for the sham it is: "fundamentally neoclassical economists are the priests of Capitalism, but the priests don't necessarily know there is god. They have this model of god and ditto with neoclassical economics: they have a model of capitalism which is almost but not quite, completely unlike actual capitalism. And they don't even realize that they have erected a smokescreen behind which if people want to rip the system off, then there is plenty of avenues created by these guys." Just a thought, but perhaps it is time for #OccupyWallStreet to pay a visit and #OccupyNYUEconomicsDepartment...
Millions of middle class citizens in the U.S. sink deeper into despair every day. Day by day hope is being lost that the future for our children will be better than our past. The political, financial, and corporate leaders of our country are intellectually and morally bankrupt. The major Wall Street banks are bankrupt. Social Security is bankrupt. Medicare is bankrupt. The whole damned world is bankrupt. Anyone with an unbiased view of our planet would conclude that we are in unfathomable danger. The list of impending catastrophic issues that will blow up the world for millions in the U.S. and across the globe is virtually endless... When I started to detail the issues facing our country today, I expected to come up with 10 to 20 bullet points of key concerns. As I methodically worked through the categories of challenges facing the American Empire, the total reached 76 bullet points. The facts as presented above paint a picture of impending doom for America. The slogans and vapid “solutions” proposed by political candidates and entrenched Washington politicians do not even scratch the surface of what would need to be done to save this country from economic collapse. Many of these problems took decades to create and are not solvable in a reasonable time frame. With the country still delusion, overleveraged, and underemployed, it seems like the existing economic and social structure will need to be blown up to restore hope in this country.