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America. By the balls?

by r------ Wed Apr 2nd, 2008 at 11:54:54 AM EST

It's funny, living in America, I seldom get the impression, watching the news, that anything is fundamentally and severely wrong with the state of Anglo-American capitalism in the US. The candidates are not really talking about it. The business pages, to be sure, talk about the housing crisis here, the credit crunch there, but you have to listen hard because every other day, we also hear about a rally which shows that the fundamentals are really strong, corporate profits as a percent of GDP are really quite good and so on.

So as you crane your neck and listen hard, you can and do hear about different dots in the matrix of the unfolding financial crisis in US markets, but rarely does anyone in America connect those dots.

Fortunately, we have the IMF to cut through the American press bullshit...


The International Monetary Fund cut its forecast for global growth this year and said there's a 25 percent chance of a world recession, citing the worst financial crisis in the U.S. since the Great Depression.

Hmmm, my teevee over here never uses that Great Depression phrase. Why is that?

Instead, the US press refers to what's going on as the worst in the post-war era. Obviously, the memo went out and the American 4th estate got it and is busy stenographically reproducing it in major news outlets across the land. (And note, when I say American 4th estate, I'm being sarcastic, fully aware that it is appendage of the 2nd estate, though noting nothing particularly noble about America's version of it...)

Depression, post war, what's the difference, America?

``The financial shock that originated in the U.S. subprime mortgage market in August 2007 has spread quickly, and in unanticipated ways, to inflict extensive damage on markets and institutions at the core of the financial system,'' the statement said. ``The global expansion is losing momentum in the face of what has become the largest financial crisis in the United States since the Great Depression.''

Ahh, that d-word again. Thank god for French social democrats, and DSK, there's some truth coming out of Washington today.

But what's that, I hear? A french social democrat calling for looser ECB monetary policy? I think Jerome will be disappointed...

The reduction is the third by the Washington-based lender since last July, when it predicted the world economy would cope with the U.S. credit squeeze and grow 5.2 percent this year. Central banks will need to conduct policy ``as flexibly'' as the circumstances warrant, the statement said, adding that the European Central Bank has room to lower borrowing costs.

Ever the contrarian, I think perhaps it might be time to stand pat. Lowering the target rate in effect helps the US monetize its way out of a mess of its own doing. A mess of a big shitpile, incidentally, which is ending up on the shoes of European banks...

Maybe helicopter Ben can print some dollars to bail out UBS, he's got the printing press. Why should tricky Trichet do it?

Perhaps the IMF might do well to prepare a financial rescue plan for Amerika and present it to its member banks for approval (or not). Because it's becoming clearer and clearer...we may actually have them, monetarily at least, by the balls, and we may be seeing, like Bretton Woods in its day, a very key turning point in monetary policy history.

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Europe (outside of maybe Italy - hey guys, you have to pay for all those years of Berlusconi!) perhaps Mr Trichet will have to move.

We could also use this opportunity to revisit the Growth and Stability Pact (which accomplishes the latter to the detriment of the former...)

Oh, and, for purposes of analysis, the UK is not in Europe.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Apr 2nd, 2008 at 11:58:05 AM EST
If UK is not Europe, I guess Switzerland is as well not Europe.
So maybe one should ask the Swiss CB to deal with UBS and neither the Fed nor the ECB.

Bloomberg has a list with the announced losses by bank. Roughly 50% of all losses are from US based banks, a bit more than a 6th by UBS and Credit Suisse. About 10% by German banks, about 5% by French banks and in the same order UK banks.
Interestingly the more than 44 bn dollar losses of Swiss banks are of course the biggest compared with the GDP of the country where they are based.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Wed Apr 2nd, 2008 at 12:39:58 PM EST
[ Parent ]
world to quit overweighting CHF in their reserve allocations. EUR certainly makes more and more sense every passing week.

CHF - worth a US Dollar today. Perhaps in more ways than one.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Apr 2nd, 2008 at 12:57:15 PM EST
[ Parent ]
European Tribune - America. By the balls?
But what's that, I hear? A french social democrat calling for looser ECB monetary policy? I think Jerome will be disappointed...

Or perhaps not.  Reducing interest rates in response to risks to growth is not the same thing as deregulation, and to date the ECB has done neither.  The threat of a world recession is another matter entirely - I have been wondering how badly the oil price increase has been hitting poorer economies.  

I must be the only one here who thinks that Oil prices may actually go DOWN in the next couple of years because of the fact that poorer economies will simply collapse at current price levels.  That is not to say, of course, that the medium and long term trend will not be inexorably upwards.

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Apr 2nd, 2008 at 12:13:36 PM EST
A price drop is certainly within the range of possibilities, and would be a horrible disaster, discrediting the whole idea of peak oil in the popular media.
by Colman (colman at eurotrib.com) on Wed Apr 2nd, 2008 at 12:20:10 PM EST
[ Parent ]
Frank Schnittger:
I must be the only one here who thinks that Oil prices may actually go DOWN in the next couple of years because of the fact that poorer economies will simply collapse at current price levels.

Ummm... yes, but down in relation to what?

I think that we may already be seeing the beginning of oil becoming the de facto global reserve currency.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Apr 2nd, 2008 at 12:20:23 PM EST
[ Parent ]
Back down to c. $70-100 - no where near $20 obviously - and not enough to discredit peak oil discourse in the popular media as Colman fears.  However if it does become the reserve currency, and it keeps getting scarcer, and subject to ongoing large scale speculation, then it could also become an even more volatile commodity.

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Apr 2nd, 2008 at 12:59:33 PM EST
[ Parent ]
We don't think of peak oil as pumping more oil right now than any time in world history. There is no price floor if demand falls.

you are the media you consume.

by MillMan (millguy at gmail) on Wed Apr 2nd, 2008 at 12:59:50 PM EST
[ Parent ]
I think we'll need to keep talking about $100 oil in the foreseeable future.

Not because the price won't go down (and I agree with you on what may well be happening in the ldc's), but because the USD will go down.

Thus the need to speak of EUR100 oil.

I can't wait to move back if only so I get a damn EUR sign on my keyboard.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Apr 2nd, 2008 at 01:03:09 PM EST
[ Parent ]
Some US media are using the D word...

The Nation: Is This the Big One? (Jeff Faux, 2008 March 27)

For more than a decade, we Americans have been living on an economic San Andreas fault--a foundation of fracturing competitiveness covered by unsustainable consumer spending with money borrowed from foreigners. A financial earthquake was inevitable. We don't know how high on the recession Richter scale the current crisis will take us, but it increasingly looks like, as they say in San Francisco, "The Big One."

Since the last Big One, the Great Depression of the 1930s, we have had eleven small to medium recessions, lasting an average of ten months. The most severe--two back-to-back downturns that began in 1979--drove price increases and the unemployment rate to double digits.

We're not at those levels yet. But the structural supports underneath our shop-till-we-drop economy are considerably weaker. For starters, we have a historic depression in the housing market. Americans' total mortgage debt now exceeds their home equity, for the first time since 1945. Housing prices have dropped 10 percent since last spring, followed by record foreclosures. Most economists expect them to drop at least another 10 percent, which could leave more than 14 million households--at least 16 percent of the total--better off if they just walked away from their homes. Prices could go even lower.



It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris
by Migeru (migeru at eurotrib dot com) on Wed Apr 2nd, 2008 at 02:14:57 PM EST
I've seen the D word mentioned in articles on cnn.com and large papers. Most of the time the wording is as he describes, though. There is a conflict between pandering to advertiser expectations and an easy opportunity to scare the public into buying the paper.

you are the media you consume.

by MillMan (millguy at gmail) on Wed Apr 2nd, 2008 at 02:22:02 PM EST
[ Parent ]
marginalized new source in the US. It tells the truth too often.

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Wed Apr 2nd, 2008 at 02:34:13 PM EST
[ Parent ]
Not as much as it once was. Interestingly, the current editor has pushed some of the more inflammatory ranters off the front page. Shame--I liked some of them. But Christopher Hitchens' attack journalism really put off some good people- along with his apparent mental disintegration, IMO.

The label of "lefty rag" still sticks, though it's circulation is up, and it has sponsored a slew of interesting media projects, internship programs, discussion forums and conferences.

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Thu Apr 3rd, 2008 at 10:40:57 AM EST
[ Parent ]
FOXNews.com - The 'Recession' Is a Media Myth - Opinion
During the 2000 election, with Bill Clinton as president, the economy was viewed through rose-colored glasses. According to polls, voters didn't realize that the country was in a recession. Although the economy started shrinking in July 2000, most Americans through the entire year thought that the economy was fine.

But over the last half-year, the media and politicians have said we were in a recession even while the economy was still growing.

[A] Nexis search on news stories during the three-month period from July 2000 through September 2000 using the keywords "economy recession US" produces 1,388. By contrast, the same search over just the last month finds 3,166. Or, even more telling, take the three months from July through September last year, when the GDP was growing at a phenomenal 4.9 percent. The same type of Google search shows 2,475 news stories.

Talking about fair and balanced... Phenomenal growth just before a financial collapse... yeah, yeah, like a Ponzi Scheme. Maybe recession should not determined by a couple of favourite numbers, after all.

Anyone remember 2000? Would you rather live then or now? Hey, that's a good question for a Gallup poll.

by das monde on Wed Apr 2nd, 2008 at 08:59:23 PM EST
[ Parent ]
Actually, Fox News is lying. 2000 was not a recession year. The recession didn't come to the U.S. until W's watch. I guess that's why they call it an opinion, since it sure the heck isn't the truth.

Here's what the National Bureau of Economic Research, a large private economic research organization, has to say about US Business Cycle Expansions and Contractions: March 2001 to November 2001. Previous recession was under W's Daddy's watch: July 1990 to March 1991. There was no Clinton recession.

The whole myth of a Clinton recession was Republican political strategy according to this 2004 Business Week analysis, Inventing The "Clinton Recession".

President George W. Bush's Council of Economic Advisers, chaired by Harvard economist N. Gregory Mankiw, is trying to get away with exactly such revisionist history. The CEA's Economic Report of the President, released Feb. 9, unilaterally changed the start date of the last recession to benefit Bush's reelection bid. Instead of using the accepted start date of March, 2001, the CEA announced that the recession really started in the fourth quarter of 2000 -- a shift that would make it much more credible for the Bush Administration to term it the "Clinton Recession." In a subsequent press conference, Mankiw said that the CEA had looked at the available data and "made the call."

...

To be fair, even if the latest recession did begin after Bush took office in January, 2001, no one can say he caused it.

I can. Bush caused the recession. He caused a fundamental shift in the direction of the United States from the Clinton administration. The selection of Bush caused the recession. In fact, I'd argue that if Gore became president, the U.S. and the world would have missed a recession by a massive move toward a green economy. Instead the U.S. Supreme Court made the choice to disaster capitalism and the looting of the U.S. economy began in earnest. Additionally, Gore likely would have focused on counter terrorism and the attacks in the U.S. on 11 September 2001 may have been thwarted.

Bush caused two recessions. His first recession, in 2001, will be considered mild compared to the abyss he's opened up beneath the U.S. economy in his final term.

by Magnifico on Wed Apr 2nd, 2008 at 10:16:23 PM EST
[ Parent ]
They keep reinventing Clinton recession. 2000 or 2001, "who cares"...

Though I still wondering how Bush ran into recession so fast. Markets apparently like his type of "dictatorship would be easier" leaders. How did Bush's election change overall economic activity so suddenly?

by das monde on Thu Apr 3rd, 2008 at 02:51:01 AM EST
[ Parent ]
Playing the devil's advocate, even though the real recession happened in 2001, not 2000, at leasst as per the NBER, it's still fair to say it was Clinton's recession, not Dubya's. The first asset bubble was inflated on his watch, and it started deflating on his watch again, and arguably it was this first bubble deflation which caused the recession. Not Dubya's fault.

Clinton got far more credit for his economic stewardship than he deserves; he was the beneficiary of a bubble, and the recession which resulted is also his. Note taken also that the hard-right ideologue at the time in the fed, increasing interests throughout 2000, probably to undermine public confidence in the economy and strip Gore of a key selling point.

Bush's bubble, of course, will have far more long-lasting and severe consequences.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Thu Apr 3rd, 2008 at 11:07:32 AM EST
[ Parent ]
WTF? I thought Mankiw had an academic reputation to protect.

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris
by Migeru (migeru at eurotrib dot com) on Thu Apr 3rd, 2008 at 03:11:37 AM EST
[ Parent ]
Why, yes, he does. But it's in Economics, the same academic discipline which celebrated Milton Friedman.

The target audience for that reputation isn't you and I, it's the pluucrats.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Thu Apr 3rd, 2008 at 10:57:19 AM EST
[ Parent ]
I seldom get the impression, watching the news

That's your problem - get rid of cable, problem solved, money saved.

by MarekNYC on Wed Apr 2nd, 2008 at 02:36:21 PM EST
Actually, it's the printed press I'm reading, not the US cable networks, I don't have cable, I have Bell Expressvu satellite (Canada).

Virtually no US news content on it whatsoever.

And you are entirely correct about what to read. Unfortunately most Americans get their news from TV...

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Apr 2nd, 2008 at 03:02:16 PM EST
[ Parent ]
My 'favorite' bit from the article:

Asked in a Bloomberg Television interview about the IMF's analysis, U.S. Treasury Secretary Henry Paulson said today ``that sounds overblown to me.''
by Magnifico on Wed Apr 2nd, 2008 at 03:22:04 PM EST
i watched bernanke on the grill today, under pretty softball questions from senators or congressmen, i forget which.

they'd dare to doubt him, but never pushed him too far, they'd tiptoe to wards the truth, then backpedal, it looked like no-one dared come out and say: 'this is bullshit'

it was there between the lines, and bernanke's eyelids grew ever more heavy and veiled, the more he wiggled and pretended to be the 'expert'.

an exercise in surrealism.

we had our grand devil last century with adolf, but he wasn't banal.

what we have with bush, gonzales, bernanke et al is a video file of human depravity, not kitschy, not dramatic, just the mindblowing banality of these slimepeddlers (and the nightmare consequences), redefining evil, refining its tools, creating chaos and destruction with deceptively mild-sounding weasel words and slippery evasions instead of ranting speeches and the cliche'd trappings of yore.

students of politics, sociology, anthropology and psychology will study these videos and teach the young to recognise the orwellisation embodied in these masters of chicanery.

now, come on honey, you're doing a bernanke on me!

you don't want to turn out like...cheney, do you?

nice guy, till he went bush on us

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Apr 2nd, 2008 at 09:41:41 PM EST
"Yeah. He went Gonzales--his memory got so bad he couldn't remember his address."

(McCain works pretty well here too--)

"Dad caught a fish, mom! Weird, fat thing- Ugly sucker. But he lost it--it was as slimey as Rove!"

And, to be fair,

"Officer, the guy asked for another double Sarko. I told him he'd regret it, but -would he listen? And then he started strutting up and down the bar, telling everyone he was Napoleon.

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Thu Apr 3rd, 2008 at 11:06:25 AM EST
[ Parent ]
lol!

crazy like a fox news commenter...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Apr 4th, 2008 at 06:21:06 AM EST
[ Parent ]
"An aphorism for our time:
To lie like a fundie." - khan, at Dispatches

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Apr 4th, 2008 at 11:02:06 AM EST
[ Parent ]


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