Tuesday, September 27, 2011

It may not be Tahrir Sq on Wall Street

But it's a YouTube event nevertheless. The write up and the comments suggest things are bubbling. Undoubtedly the Tea Party of the Left will continue to get special treatment. But cellphones are dramatically changing things in these kinds of events which will be increasing in our own upcoming low dishonest decade.

Sunday, September 25, 2011

Multi-trillion Euro Bailout -- Ambrose Doesn't Mince Words

"There is no plan, and we don't need one. The banks are very solid. None of them is hiding any toxic assets," he said.
What is the point of uttering such rubbish? The markets know this is untrue, and so does the IMF. It is an almost surreal refusal to recognize that investors are - for good reasons - terrified about French bank exposure to Italian sovereign debt. Mr Noyer encapsulates the mixture of stubborness and amour propre now threatening the world with disaster, and which is so like the French reflex as everything collapsed in mid-1931. Funny how they never change.

The rest here.

The interesting thing will be how the cultural and political differences between Europe and the US will be reflected in the structure of the bailout.

Ambrose talks of the French "seizing" banks to recapitalize them. Taxpayer bailouts or "recapitalizations" of the banks really warrant public control, especially if the banks are insolvent and the remaining equity is zilch -- new money should own 90%+.

Now in the US, given Obama's disgusting worship of financiers, the idea of actually forcing through some serious change never was really on the table. But with the FDP's electoral loss in Berlin, and the potential revolt of the backbenchers, a government of national unity with the Social Democrats is a possibility; and the Social Dems support the European project, but I'm not sure that they are going to be as banker friendly as all the Goldman Sachs alumni running things in the US. So we may actually see a publicly funded bailout in Europe that reflects the public interest a bit more.

If they really go down that path, forcing the bondholders (banks) to take their losses, and then printing to neutralize the deflationary impact, then the Eurozone may actually emerge stronger than anyone imagines.

Saturday, September 24, 2011

Thursday, September 22, 2011

Nice tune from the Global Now

Wednesday, September 21, 2011

Train Wreck Dead Ahead?

The latest missive from GEAB 2020.

The key thesis is that the market turmoil in Europe represents a struggle by the Euroland polity to leash the banks and force them to take losses. These guys seem to think that greater integration is inevitable and that the Euro will survive. The results of the recent elections in Berlin certainly support the view -- with a "Leftward" rejection of the euroskeptic position of the FDP -- that the public wants to continue the integration project, but presumably not being held hostage by finance capital.

But if taxpayers have to bailout sovereigns and private capital takes massive haircuts, the effect on growth will be severe unless interest rates are cut drastically and the ECB prints. This would send the euro towards dollar parity, at least until the federal budget talks crash in Washington. And export more of the strain to China.

So it looks like a race to the bottom. Maybe the Europeans are biding their time waiting for the Anglo-American train wreck to become visible to all. Certainly GEAB's view that November-December in Washington will be chaotic as the supercommittee takes over the stage sounds about right.

Monday, September 19, 2011

Left-Right Pro-Euro Alliance in Germany?

An interesting idea, but without some serious leashing of the German banks, will the electorate actually go for a bailout and print run?

From the blog Notes from the Underground

I caution that the rise in the SPD may mean that Merkel moves to form a coalition with the PRO-EURO labor group as the EUROPHOBIC FDP is losing its standing in Germany. As the German electorate becomes more disillusioned with the DEBT CRISIS, it is not moving toward the anti-European FDP but rather to the SPD and Greens. The movement is paving the way for Frau Merkel to get the legislation necessary to enhance the EFSF that she has promised others in the EU. Even though Geithner was rebuffed it doesn’t mean that Europe–under the protective umbrella of Chancellor Merkel–won’t do the bailouts that will support the banks in Germany and France. Isn’t it IRONIC that the more Merkel loses the more probable the bailouts?

Can't Wait to Get My Hands on This Book

The juicy info in it is evidence that we're still a democracy. Clearly a lethally dysfunctional one, however.

Sunday, September 18, 2011

Radio Silence due to Blogger Issues

I've been unable to access blogger through my old safari bookmarks for about 2 weeks now, but just discovered that Firefox on my WIndows machine lets me in. I was just about ready to integrate my personal and professional identities when this happened and was considering a new blog anyway. Now I will reconsider.

Sunday, September 4, 2011

Rethinking Austerity

The Powers That Be are now facing the abyss (To borrow from the wizened old stock broker in "Wall Street").

Christine Lagarde this weekend warning of a downward spiral and now Bill Gross urging the UK govt to soften its austerity

Gross, the world's bond king made a seriously wrong bet that the deficits would cause a rise in interest rates, and so famously exited Treasuries recently, when in fact rates have plunged due to fears of another financial crisis and return to recession. He recently admitted his error.

More to the point he and Lagarde are suggesting more stimulus from the US -- something that Obama will likely offer this week.

The question is whether the Tea Party Republicans or the stubborn Germans will listen to this Keynesian advice. If not, back to the liquidationist policies of Mellon.