leistb
03-28-2009, 12:37 AM
March 27 2009: So There (http://theautomaticearth.blogspot.com/2009/03/march-27-2009-so-there.html)
http://1.bp.blogspot.com/_9ZzZquaXrR8/Sc1HFoajnfI/AAAAAAAADJs/tL10_Ot1tZE/s640/HistoryRepeats.jpg (http://1.bp.blogspot.com/_9ZzZquaXrR8/Sc1HFoajnfI/AAAAAAAADJs/tL10_Ot1tZE/s1600-h/HistoryRepeats.jpg)
Lewis Wickes Hine History repeats and rhymes November 1908
Wylie Mill, Chester, South Carolina. Tommy Ashville (right), has worked two years in mill. "Specks I'm about 11."
Arthur Shelly, eight years in mill, 14 years old. Other boys agreed he had been in mill eight years
Ilargi: The coming week will be interesting to watch. The G20 meeting in London comes with a threat of exploding protests in the streets. There’s also the threat of deepening rifts between the Anglo world and continental Europe. Czech EU president-of-the-day Mirek Topolanek, whose government had dissolved the day before, felt free to speak his mind for once, and called Obama's economic policies on stimulus and toxic assets "the road to hell". He didn't just speak for himself, many Europeans leaders see the situation in a similar fashion. And the more American and British politicians like Summers and Brown, and pundits like Krugman and Evans-Pritchard, holler about the disastrous manner in which Europe's leaders deal with their crises, the more they will defend it. So Obama has no choice but to hush the issue, and retrace his earlier -loud- steps.
Both sides clamor for changes to regulatory laws for the financial systems. But they don't mean the same changes. Europe wants to get rid of all the excesses caused by lax regulation induced by the political influence the banking system has, especially in the Anglo countries. The US wants to give more power to its own governmental bodies, that are essentially run by that very banking system. Europe will never ever accept anything of the kind. That's the second point Obama doesn't even have to try bring to the table. And of course it's the G20, it's not just Europe and the US/UK exchanging punches. China has launched a few trial-balloons in the past week on the topic of reserve currencies, and Russia and India would like a piece of that pie. None of these countries experience great benefits of the US dollar's special status, and they see a re-weighting of the IMF’s Special Drawing Rights as a first step towards a remake of the entire global finance system. And eventually they'll get it, but for now the risks for the US are so enormous that America will fight like a cornered feral cat.
The G-20 takes place next week, April 1-2, in London England. And that city is fast becoming a truly ironic stage for an event where world finance is discussed. There is probably still a vast majority of people out there who think it's ridiculous to even contemplate the idea of England being rescued by emergency IMF loans, but I wouldn't be so sure abut that anymore. Early in the week a UK sovereign debt auction failed, and though a second one went better -for shorter term bonds-, such an outcome would have been unthinkable until recently. And the UK depends on a whole lot more of these auctions succeeding throughout 2009. What if that doesn't work? The US, with it special status and all, relies on record amounts of bond issuance, which, for one thing, will threaten to crowd out Britain, as well as US states and municipalities, and then still have huge problems finding buyers. Sometime during the summer it may all come to a head. There's a limit on those markets, and we’ll see it loud and clear before this year is over.
What's more, another report was published yesterday saying the UK recession turns out worse than expected. That must be number 1001. You have to wonder why all these people get it so awfully wrong every time they look at a bunch of numbers. I mean, there's a ton of voices calling for recovery and economic growth starting later this year. What are these folks on? What drives them? Recovery to what levels? One week of desperate losers buying into last hope or a piece of rope markets and we're all back on the parade floats? Even if Summers and Geithner can entice a class of billionaires to put up 5 bucks to buy $100 worth of toilet paper, and even if they can stretch that into a $900 billion loss for the American people, there's so much more toilet paper waiting in the marble wings of Wall Street that any thought of recovery or growth can only be based on prolonged cheating and hiding. And that, in turn, is disastrous for the confidence in the markets that everyone says is crucial for any sort of recovery.
One more country that will feature prominently in next week's meetings is Japan, which looks to be on an equal plummeting level with the UK, fast approaching the likes of Latvia, Hungary, Thailand and Iceland. Japan today became the first country to admit it's set to drown itself in years of deflation. Despite an avalanche of feel-good messages we are bombarded with by media, politicians and even serious bloggers, underneath our feet things are shifting on a tectonic scale. Or do you really think that Romania and Serbia will be the last countries that need IMF emergency financing?
There are obviously lots of numbers and data and stats that I have no access to. But it's not that hard to figure that throwing trillions of dollars of your already suffering people's money into saving banks that are in reality insolvent, -re: bankrupt-, and into saving carmakers that need a market twice as big as the present one just to play even, and propping up a housing market that needs to come down another 50% just so ordinary people can afford to buy a home, and so on etc., is a dead end way of governing a country and an economy. When we get to the end of that dead end, the banks will inevitably fail, the carmakers will close up shop, and housing prices will plunge to levels where people can afford them. Only now, they can’t afford them any longer, because their money has been taken away and spent on dead ends. For the moment, I am with Europe on this one. And I'm starting to consider any and all talk about recovery and resuming growth to be borderline criminal behavior. So there.
http://theautomaticearth.blogspot.com/2009/03/march-27-2009-so-there.html
http://1.bp.blogspot.com/_9ZzZquaXrR8/Sc1HFoajnfI/AAAAAAAADJs/tL10_Ot1tZE/s640/HistoryRepeats.jpg (http://1.bp.blogspot.com/_9ZzZquaXrR8/Sc1HFoajnfI/AAAAAAAADJs/tL10_Ot1tZE/s1600-h/HistoryRepeats.jpg)
Lewis Wickes Hine History repeats and rhymes November 1908
Wylie Mill, Chester, South Carolina. Tommy Ashville (right), has worked two years in mill. "Specks I'm about 11."
Arthur Shelly, eight years in mill, 14 years old. Other boys agreed he had been in mill eight years
Ilargi: The coming week will be interesting to watch. The G20 meeting in London comes with a threat of exploding protests in the streets. There’s also the threat of deepening rifts between the Anglo world and continental Europe. Czech EU president-of-the-day Mirek Topolanek, whose government had dissolved the day before, felt free to speak his mind for once, and called Obama's economic policies on stimulus and toxic assets "the road to hell". He didn't just speak for himself, many Europeans leaders see the situation in a similar fashion. And the more American and British politicians like Summers and Brown, and pundits like Krugman and Evans-Pritchard, holler about the disastrous manner in which Europe's leaders deal with their crises, the more they will defend it. So Obama has no choice but to hush the issue, and retrace his earlier -loud- steps.
Both sides clamor for changes to regulatory laws for the financial systems. But they don't mean the same changes. Europe wants to get rid of all the excesses caused by lax regulation induced by the political influence the banking system has, especially in the Anglo countries. The US wants to give more power to its own governmental bodies, that are essentially run by that very banking system. Europe will never ever accept anything of the kind. That's the second point Obama doesn't even have to try bring to the table. And of course it's the G20, it's not just Europe and the US/UK exchanging punches. China has launched a few trial-balloons in the past week on the topic of reserve currencies, and Russia and India would like a piece of that pie. None of these countries experience great benefits of the US dollar's special status, and they see a re-weighting of the IMF’s Special Drawing Rights as a first step towards a remake of the entire global finance system. And eventually they'll get it, but for now the risks for the US are so enormous that America will fight like a cornered feral cat.
The G-20 takes place next week, April 1-2, in London England. And that city is fast becoming a truly ironic stage for an event where world finance is discussed. There is probably still a vast majority of people out there who think it's ridiculous to even contemplate the idea of England being rescued by emergency IMF loans, but I wouldn't be so sure abut that anymore. Early in the week a UK sovereign debt auction failed, and though a second one went better -for shorter term bonds-, such an outcome would have been unthinkable until recently. And the UK depends on a whole lot more of these auctions succeeding throughout 2009. What if that doesn't work? The US, with it special status and all, relies on record amounts of bond issuance, which, for one thing, will threaten to crowd out Britain, as well as US states and municipalities, and then still have huge problems finding buyers. Sometime during the summer it may all come to a head. There's a limit on those markets, and we’ll see it loud and clear before this year is over.
What's more, another report was published yesterday saying the UK recession turns out worse than expected. That must be number 1001. You have to wonder why all these people get it so awfully wrong every time they look at a bunch of numbers. I mean, there's a ton of voices calling for recovery and economic growth starting later this year. What are these folks on? What drives them? Recovery to what levels? One week of desperate losers buying into last hope or a piece of rope markets and we're all back on the parade floats? Even if Summers and Geithner can entice a class of billionaires to put up 5 bucks to buy $100 worth of toilet paper, and even if they can stretch that into a $900 billion loss for the American people, there's so much more toilet paper waiting in the marble wings of Wall Street that any thought of recovery or growth can only be based on prolonged cheating and hiding. And that, in turn, is disastrous for the confidence in the markets that everyone says is crucial for any sort of recovery.
One more country that will feature prominently in next week's meetings is Japan, which looks to be on an equal plummeting level with the UK, fast approaching the likes of Latvia, Hungary, Thailand and Iceland. Japan today became the first country to admit it's set to drown itself in years of deflation. Despite an avalanche of feel-good messages we are bombarded with by media, politicians and even serious bloggers, underneath our feet things are shifting on a tectonic scale. Or do you really think that Romania and Serbia will be the last countries that need IMF emergency financing?
There are obviously lots of numbers and data and stats that I have no access to. But it's not that hard to figure that throwing trillions of dollars of your already suffering people's money into saving banks that are in reality insolvent, -re: bankrupt-, and into saving carmakers that need a market twice as big as the present one just to play even, and propping up a housing market that needs to come down another 50% just so ordinary people can afford to buy a home, and so on etc., is a dead end way of governing a country and an economy. When we get to the end of that dead end, the banks will inevitably fail, the carmakers will close up shop, and housing prices will plunge to levels where people can afford them. Only now, they can’t afford them any longer, because their money has been taken away and spent on dead ends. For the moment, I am with Europe on this one. And I'm starting to consider any and all talk about recovery and resuming growth to be borderline criminal behavior. So there.
http://theautomaticearth.blogspot.com/2009/03/march-27-2009-so-there.html