It was an agreeable way to spend a balmy evening: a summer drinks party held in the lush surroundings of London's oldest botanical garden.Champagne glasses clinked as guests from business, politics and entertainment mingled at the elegant soirée hosted by the City public relations supremo Alan Parker at the Chelsea Physic Garden on Tuesday.The Marks & Spencer boss Sir Stuart Rose rubbed shoulders with Stephen Fry and Jack Straw as leading bankers talked excitedly about the new buzzword in their born-again sector: BAB.BAB stands for Bonuses are Back, and its arrival in the lexicon of the Square Mile is evidence that bankers are once again looking forward to bumper payouts, just eight months after the sector faced meltdown and governments worldwide were required to prop them up.
It was an agreeable way to spend a balmy evening: a summer drinks party held in the lush surroundings of London's oldest botanical garden.
Champagne glasses clinked as guests from business, politics and entertainment mingled at the elegant soirée hosted by the City public relations supremo Alan Parker at the Chelsea Physic Garden on Tuesday.
The Marks & Spencer boss Sir Stuart Rose rubbed shoulders with Stephen Fry and Jack Straw as leading bankers talked excitedly about the new buzzword in their born-again sector: BAB.
BAB stands for Bonuses are Back, and its arrival in the lexicon of the Square Mile is evidence that bankers are once again looking forward to bumper payouts, just eight months after the sector faced meltdown and governments worldwide were required to prop them up.
The European Central Bank (ECB) will pump a further €442 billion into money markets after a record auction on Wednesday (24 June), in which eurozone banks snapped up one-year loans amid expectations borrowing costs may rise in future. The ECB move to lend billions of euros across the 16-country currency area is designed to unblock bank lending, improve private sector access to credit and revive the area's ailing economy. The ECB's latest move is designed to unblock lending in the Eurozone Banks provide roughly three quarters of company financing in the eurozone. Financial markets have dubbed the move a continuation of the ecb's non-standard measures, with Wednesday's auction part of a wider ECB policy to provide unlimited liquidity to banks since the financial crisis began.
The European Central Bank (ECB) will pump a further €442 billion into money markets after a record auction on Wednesday (24 June), in which eurozone banks snapped up one-year loans amid expectations borrowing costs may rise in future.
The ECB move to lend billions of euros across the 16-country currency area is designed to unblock bank lending, improve private sector access to credit and revive the area's ailing economy.
The ECB's latest move is designed to unblock lending in the Eurozone
Banks provide roughly three quarters of company financing in the eurozone.
Financial markets have dubbed the move a continuation of the ecb's non-standard measures, with Wednesday's auction part of a wider ECB policy to provide unlimited liquidity to banks since the financial crisis began.
How can we explain the fact that, in the middle of a global recession, and a corresponding slump in oil demand, that the price of a barrel of the black stuff continues to climb? The answer lies near the port of Rotterdam where, out at sea, fully loaded supertankers must wait until oil barons have decided that the time is ripe for selling. Last week when the weather was good, most of the tiny ships you could see dotting the horizon on the coast of Rotterdam were carrying enough fuel to fill five million average sized cars. Virtually all of them were supertankers loaded with two million barrels of of oil. On 19 June, there were eight supertankers outside Europe's busiest port. They could have docked in less than an hour, but their captains had received orders to drop anchor off the coast -- and with good reason. The loading docks were full, so too were the storage tanks -- and even more importantly, the price per barrel did not offer much incentive to sell. In describing this unusual situation, financial analysts speak of a "contango," which occurs when the spot price paid on delivery is less than the price offered by futures contracts (obtained by buying a barrel today and pledging to deliver at a future date). The opposite market condition is more common, because in general markets will offer better prices to buyers who are willing to pay in advance.
How can we explain the fact that, in the middle of a global recession, and a corresponding slump in oil demand, that the price of a barrel of the black stuff continues to climb? The answer lies near the port of Rotterdam where, out at sea, fully loaded supertankers must wait until oil barons have decided that the time is ripe for selling.
Last week when the weather was good, most of the tiny ships you could see dotting the horizon on the coast of Rotterdam were carrying enough fuel to fill five million average sized cars. Virtually all of them were supertankers loaded with two million barrels of of oil. On 19 June, there were eight supertankers outside Europe's busiest port. They could have docked in less than an hour, but their captains had received orders to drop anchor off the coast -- and with good reason. The loading docks were full, so too were the storage tanks -- and even more importantly, the price per barrel did not offer much incentive to sell.
In describing this unusual situation, financial analysts speak of a "contango," which occurs when the spot price paid on delivery is less than the price offered by futures contracts (obtained by buying a barrel today and pledging to deliver at a future date). The opposite market condition is more common, because in general markets will offer better prices to buyers who are willing to pay in advance.
Really bad news on the health care front. After making the case for a public option, and doing it very well, Obama said this: "We have not drawn lines in the sand other than that reform has to control costs and that it has to provide relief to people who don't have health insurance or are underinsured," Mr. Obama said. "Those are the broad parameters that we've discussed." There he goes again, gratuitously making a big gift to the other side. My big fear about Obama has always been not that he doesn't understand the issues, but that his urge to compromise -- his vision of himself as a politician who transcends the old partisan divisions -- will lead him to negotiate with himself, and give away far too much. He did that on the stimulus bill, where he offered an inadequate plan in order to win bipartisan support, then got nothing in return -- and was forced to reduce the plan further so that Susan Collins could claim her pound of flesh. And now he's done it on a key component of health care reform. What was the point of signaling, right at this crucial moment, that he's willing to give away the public plan? Let alone doing it at the very moment that he was making such a good case for it?
Really bad news on the health care front. After making the case for a public option, and doing it very well, Obama said this:
"We have not drawn lines in the sand other than that reform has to control costs and that it has to provide relief to people who don't have health insurance or are underinsured," Mr. Obama said. "Those are the broad parameters that we've discussed."
There he goes again, gratuitously making a big gift to the other side.
My big fear about Obama has always been not that he doesn't understand the issues, but that his urge to compromise -- his vision of himself as a politician who transcends the old partisan divisions -- will lead him to negotiate with himself, and give away far too much. He did that on the stimulus bill, where he offered an inadequate plan in order to win bipartisan support, then got nothing in return -- and was forced to reduce the plan further so that Susan Collins could claim her pound of flesh.
And now he's done it on a key component of health care reform. What was the point of signaling, right at this crucial moment, that he's willing to give away the public plan? Let alone doing it at the very moment that he was making such a good case for it?
his urge to compromise -- his vision of himself as a politician who transcends the old partisan divisions -- will lead him to negotiate with himself, and give away far too much.
No, it's because he's the frog on the lily pad, always jumping half the distance necessary to get to where america needs to be. He thinks he's being reasonable, but the problem is that he never gets there at all. cos he's always only halfway there.
And he does the frog jumps cos he's confused being assertive about the minimum necessary with being radical. And he'd rather fail to achieve what he needs than be considered radical because as Matt Taibbi wrote a long while back, "he is a largely self-satisfied exponent of the status quo". keep to the Fen Causeway
Almost 7,000 British Airways staff have applied for voluntary pay cuts, including 800 who said they will work unpaid for up to a month, the airline announced today. Of the 40,000-strong workforce, 6,940 employees had volunteered for unpaid leave, part-time working or unpaid work by 24 June, which the company said will save up to £10 million. Chief executive Willie Walsh, who has already announced that he will work unpaid for the month of July, said: "This is a fantastic first response. I want to thank everyone who has volunteered to help us pull through this difficult period. "This response clearly shows the significant difference individuals can make."
Of the 40,000-strong workforce, 6,940 employees had volunteered for unpaid leave, part-time working or unpaid work by 24 June, which the company said will save up to £10 million.
Chief executive Willie Walsh, who has already announced that he will work unpaid for the month of July, said: "This is a fantastic first response. I want to thank everyone who has volunteered to help us pull through this difficult period.
"This response clearly shows the significant difference individuals can make."
In 1969, national governments gave the International Monetary Fund (IMF) the right to create Special Drawing Rights (SDRs), often referred to as "paper gold." Nobel laureate and former World Bank chief economist Joseph Stiglitz describes SDRs as "a kind of global money, issued by the IMF, which countries agree to accept and exchange for dollars or other hard currencies" For several years, Stiglitz has proposed that SDRs -- or a new "global greenback" along similar lines -- be used to supplement other reserve currencies. They would be issued for investment in developing countries and for "global public goods" like environmental projects, health initiatives, and humanitarian assistance. They would simultaneously counter global deflation and help countries with trade deficits to avoid ruinous devaluations and runs on their currencies. In today's converging economic and environmental crises, why not issue "green SDRs" to help finance the global war on global warming? Surely nothing could better qualify as a "global public good" than saving the planet from ruinous climate change. And at the same time, green SDRs could provide some of the stimulus needed to move the global economy out of its deepening stagnation. A New Trust Fund Since many countries have reservations about the IMF, and since it's not well-suited to run environmental programs, the IMF could issue the green SDRs to a global climate protection trust fund. The appropriate overseer for such a fund might well be the United Nations Environmental Program (UNEP). Its authoritative scientific committee, the Intergovernmental Panel on Climate Change (IPCC), should certainly play a major role in setting criteria and evaluating the results.
In 1969, national governments gave the International Monetary Fund (IMF) the right to create Special Drawing Rights (SDRs), often referred to as "paper gold." Nobel laureate and former World Bank chief economist Joseph Stiglitz describes SDRs as "a kind of global money, issued by the IMF, which countries agree to accept and exchange for dollars or other hard currencies"
For several years, Stiglitz has proposed that SDRs -- or a new "global greenback" along similar lines -- be used to supplement other reserve currencies. They would be issued for investment in developing countries and for "global public goods" like environmental projects, health initiatives, and humanitarian assistance. They would simultaneously counter global deflation and help countries with trade deficits to avoid ruinous devaluations and runs on their currencies.
In today's converging economic and environmental crises, why not issue "green SDRs" to help finance the global war on global warming? Surely nothing could better qualify as a "global public good" than saving the planet from ruinous climate change. And at the same time, green SDRs could provide some of the stimulus needed to move the global economy out of its deepening stagnation. A New Trust Fund
Since many countries have reservations about the IMF, and since it's not well-suited to run environmental programs, the IMF could issue the green SDRs to a global climate protection trust fund. The appropriate overseer for such a fund might well be the United Nations Environmental Program (UNEP). Its authoritative scientific committee, the Intergovernmental Panel on Climate Change (IPCC), should certainly play a major role in setting criteria and evaluating the results.
During Alan Greenspan's tenure at the helm of the Federal Reserve, he was often accused of using monetary policy to target asset markets so as to keep the party going. In short, Alan Greenspan was seen by many, including myself, as the bubble blower-in-chief. All of this came to an end with the very hard landing we have experienced after the global housing bubble. However, despite the economy being in tatters and debt deflation looming as a threat, many asset markets have zoomed ahead. The cause: easy money in the U.S. and elsewhere. In the U.S., we have zero percent rates with Ben Bernanke at the helm. So, naturally, you should ask yourself: Does Ben Bernanke blow bubbles too? To get at an answer to that question, I want to highlight a recent post on MoneyWeek called "The next big investment bubble - green energy." In this article, research from James Montier of SocGen about investor attitudes in bubbles is quite enlightening. James Montier at Societe Generale is a specialist in 'behavioural finance'. This basically takes psychology and applies it to the field of investment and economics. As someone who's studied psychology in the past, I'd be the first to admit that it's a pretty 'soft' science compared to something like physics, for example. But compared to the pseudo-science that is economics, it's positively respectable.
However, despite the economy being in tatters and debt deflation looming as a threat, many asset markets have zoomed ahead. The cause: easy money in the U.S. and elsewhere. In the U.S., we have zero percent rates with Ben Bernanke at the helm. So, naturally, you should ask yourself: Does Ben Bernanke blow bubbles too?
To get at an answer to that question, I want to highlight a recent post on MoneyWeek called "The next big investment bubble - green energy." In this article, research from James Montier of SocGen about investor attitudes in bubbles is quite enlightening.
James Montier at Societe Generale is a specialist in 'behavioural finance'. This basically takes psychology and applies it to the field of investment and economics. As someone who's studied psychology in the past, I'd be the first to admit that it's a pretty 'soft' science compared to something like physics, for example. But compared to the pseudo-science that is economics, it's positively respectable.
As someone who's studied psychology in the past, I'd be the first to admit that it's a pretty 'soft' science compared to something like physics, for example. But compared to the pseudo-science that is economics, it's positively respectable.
Here are some more interesting charts. And they worry Citigroup's lead strategist Robert Buckland because they could create the next mania - an emerging markets bubble.
And they worry Citigroup's lead strategist Robert Buckland because they could create the next mania - an emerging markets bubble.
I wonder if Bernanke read the article? As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
The Great American Bubble Machine From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again
From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again
The stories of the Goldman Sachs' scope of influence are boiling quite for some time. At the moment, they seem to be having best times ever...
Published in June 24th, 2009 Posted by Cassander in Debtwatch
Economic historians Barry Eichengreen and Kevin H. O'Rourke are using empirical data to compare this downturn to the Great Depression. I'll be referring to and adding to their comparison in the next Debtwatch (which will be published late next week, before the RBA's July meeting), but the research is so good that it deserves to be highlighted now. Their conclusion is compelling: To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30. Click here to see the full post; below I simply link to some of the figures.
Their conclusion is compelling:
To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.
Click here to see the full post; below I simply link to some of the figures.
