Private Sector Debt is the Problem. Much Higher Government Deficits are the Solution. Except in the Eurozone where Euro is the problem and no Euro the solution.Notes on the Next Bust
One of the ‘problems’ besetting the world at present, if the commentary in the mainstream press is anything to go by, is the existence of chronic skill shortages. Survey studies of the shifting demographics in Japan, for example, have produced ‘alarming’ results from a mainstream perspective. See for example, this OECD Report from 2021 – Changing skill needs in the Japanese labour market. I was at a meeting recently in Kyoto and it is clear that many firms in Japan are having trouble finding workers and many have even offered wage increases to lure workers to their companies. Further, many small and medium-size businesses are owned by persons who are over 70 years of age and that proportion is rising fast. The skill shortage scenario is tied in with the ageing society debate, where advanced nations are facing so-called demographic ‘time bombs’, with fewer people of working age left to produce for an increasing number of people who no longer work. The mainstream narrative paints these trends as major problems that have to be confronted by governments, and, typically, because of faulty understandings of the fiscal capacities of governments, propose deeply flawed solutions. I see these challenges in a very different light. Rather than construct the difficulties that firms might be facing attracting sufficient labour (the ‘skills shortages’ narrative), I prefer to see the situation as providing an indicator of the limits of economic activity or the space that nations have to implement a fairly immediate degrowth strategy. In the following two blog posts I will explain how this inversion of logic can become a crucial plank in the degrowth debate.…Bill Mitchell – billy blog
If I were God, I would make it so NO …. ONE ….. and I mean NOOOOOOO… OOONNNNE…. would ever win the f-ing lottery … and then… ALL the f-ing munnie … and I mean ALLLLLLL the f-ing munnie.,,, ended up in the f-ing lottery!!!
😂😂😂😂 now THAT would be f-ing funny!
#goldenhemorrhoids #fuckthemonetarists
https://whyevolutionistrue.com/2012/06/29/more-bible-lolz-gods-golden-hemorrhoids/
POWERBALL JACKPOT REACHES $1 BILLION AFTER NO WINNING TICKET
— FXHedge (@Fxhedgers) October 30, 2022
The foundation for evolving multipolarity has in fact been presented
by the Russia-China strategic partnership only three weeks before imperially-ordered provocations forced Russia to launch the Special Military Operation (SMO).
In parallel, the financial lineaments of multipolarity had been proposed since at least July 2021, in a paper co-written by Professor Michael Hudson and Radhika Desai.
Imagine a new democracy imposes taxes on itself; the tax-credit is then spent, taxed back, thus provisioning public goods in the process.Not all spending is taxed back, thus the public has savings of tax-credits.Why would it make sense to pay more tax-credits to those holding tax-credits?....
Boris Johnson has dropped out of the leadership race in Britain. Word on the street is that this means that Rishi Sunak has all but gotten the job. Sunak has long been the City of London’s candidate, having held a career in finance before he became an MP. He started as an analyst at Goldman Sachs and then moved into hedge funds. By all accounts, Sunak is a smart chap who understands markets.
Already the chatter has started that Sunak’s tenure is going to be less a government than a transitionary period where Britain enters into receivership. Sunak’s rule will therefore resemble many of the ‘technocratic’ governments that we have seen pop in and out of existence in the Eurozone since the debt crisis of 2011. Yet, Britain’s time in the debtor’s prison will look very different to what happened in Europe in key respects.…
There were two headlines on Australia’s national broadcaster, the ABC’s news site this morning that tell us that there has been little progress made in helping people better understand the way the monetary system operates and the capacities of the currency-issuing government within it. Both articles merely rehearsed the standard mainstream fictions, which makes them dangerous, in that they perpetuate the system that has held the world back from addressing its major challenges. By creating false ‘challenges’ and false ‘probabilities of crisis’, these stories delay action that is necessary to deal with the real problems of climate change, inequality, degradation of public infrastructure and services, the health crisis, etcBill Mitchell – billy blog
The other problem is that these ‘analysis’ columns pretend to be balanced with is a ruse to bestow legitimacy or authority on themselves. ‘Experts’, who are wheeled out to ratify the fiction, are just part of the Groupthink. It is a circular system of nonsense. Very disappointing....
Ideologically blinded Western analysts and officials consistently miss the point. China’s state is the least ideological, most ruthlessly pragmatic entity in the world. To the extent its leaders succeed, they do so by achieving prosperity and security by whatever means necessary to meet their objectives....Asia Times
In the second and last part of the interview, MMT economist Fadhel Kaboub explains why and how India should urgently work on an alternative framework of development that leaves no one behind.News Click
The government borrows at a price of its choosing.New Wayland
In modern states, demand for currency comes from the ongoing self-imposed liability for the currency. There is no need to pay savers in order for them to desire to hold the currency (interest on sovereign bonds issued for “deficit spending”). Any justification for doing so must rest on some other perceived benefit of paying savers....ClintBallinger.com
The economic crisis in Britian, the war in Ukraine, and the disorder in the Eurozone are all intimately connected. Chris Bambery spoke to Wolfgang Streeck, an economic sociologist at the University of Cologne and a leading commentator on European capitalism, about the crisis in the EU and the implications for Scotland....Conter
Yves here. We’ve repeatedly challenged various brave green future schemes as rearranging deck chairs on the Titanic. Advanced and major emerging economies need to engage in radical conservation to have any hope of preventing the worst climate change and mass species dieoff outcomes. Instead we have a host of cleverly branded proposals that are at best hopium and at worst conventional energy producer devices to forestall change and most importantly, cutbacks.
This interview does the important service of identifying ten key greenwashing phrases and explaining why they would be regarded with prejudice....
Turkish gas hub supplied by Russia to replace Nord Stream. The energy scene is hotting up.
India Punchline
Russia’s homage to Nord Stream pipelines
M.K. Bhadrakumar | retired diplomat with the Indian Foreign Service and former ambassador.
See also
EU foreign-policy chief Josep Borrell confessed the West’s neoliberal economic model was “based on cheap energy coming from Russia,” “access to the big China market,” and low-paid Chinese workers. Europe has now lost that, and is thus in crisis....Anyone taking bets on how long the governments in Europe will la…
Modern Monetary Theory (MMT) is an alternative economic framework that challenges the conservative neo-liberal narrative of ‘free trade’ and ‘competition’ which has held sway for many decades as the way to global prosperity. In simple terms, MMT makes us see that money is completely a creation of the State, and hence, a sovereign government does not need our money (either through taxes or borrowing) in the first place to strategically spend it, that is, without causing inflation. And that frees the ‘fiscal’ constraint to address the most pressing problems of our times: socio-economic inequality, exclusion and climate change.News Click (India)
Fadhel Kaboub, Associate Professor of Economics at Denison University, Ohio (US), and President of the Global Institute for Sustainable Prosperity, is a leading voice in the global MMT community and among a handful of economists who speaks of MMT’s relevance for emerging countries like India. In this first part of a two-part ilong-distance nterview with independent journalist Sowmya Sivakumar, he explains how MMT is slowly shifting the debate in the US, with important lessons for India and rest of the world. Edited excerpts:
Recent discussions about bank runs in economics has led me to the conclusion that economists want to lump practically all behaviour around default as a “run,” which is not helpful. In order to have a better grasp of the situation, we need to distinguish various possibilities — runs, cascades, squeezes, and good old fashioned financial crises.…Some useful definitions.
This another way to look at it… Fed is transferring more USD balances to non-govt than Treasury would if the Fed owned zero assets…
~10B in accumulated operating losses. Will find out the last weeks amount of losses in about an hour. Lost $4B last week. pic.twitter.com/CdElJiNfqh
— Nothing (@whip_n_spur) October 20, 2022
Somewhat of a non Congress approved fiscal transfer…
where are these transfers going? To IOR and RRP… IOR going to Depositories as additional accrued Capital and RRP interest going to USD savers in Money Market Mutual Funds…
Should increase from $4b to $6b per week within a couple of months… 🤑🧟♂️
- European industries are struggling to stay competitive amid soaring energy costs.
- Surging natural gas and electricity costs have resulted in a jump in operational costs for all industries, from steelmaking and car manufacturing to textiles and clothing.
- Europe’s industry associations cautiously welcome the various EU proposals, but urge Brussels to take further action
Xi Jinping just offered the Global South a stark alternative to decades of western diktats, war, and economic duress. 'Peaceful modernization' will establish sovereignty, economy, and independence for the world's struggling states...The Cradle
Seems to be some confusion out there so here you can see in this Government Money Market Mutual fund prospectus that the Fed has created a new govt obligation for USD savers to save in…
They have $20b (fund’s largest holding) in a RRP with the FRBNY at the 3.05% RRP rate:
This is going to go up towards 4% in two weeks then towards 5% in December… 🤑🧟♂️🤑🧟♂️
This RRP asset has been created as an alternative to a depository account at a system Depository Institution for USD savers because those institutions don’t have a high enough value of regulatory assets to allow these USD balances to be on deposit there… due to the regulatory asset value reduction effects of the Fed’s own policy rate increases themselves…
Rube Goldberg arrangements but it’s still understandable…
It’s Wednesday and we have some snippets that really just make way for the music feature. Today, I consider the recent inversion of the US yield curve, which is typically a sign that recession is around the corner. We also learn that while most people are being hit with rising prices and flat wages, the banks are recording record net interest income as a result of their non-competitive, cartel like behaviour. And we wonder how more silly can the Swedish central bank prize in economics become. And then, after all that, we have the music feature to rescue the day.…
A post by Steve Waldman -- Peace as war by other means -- reminds me of a recent post by Big Serge: Politics By Other Means - Putin and Clausewitz. I highly recommend that post in its entirety. It is a tour de force, in my opinion. Both the Waldman and Big Serge posts zoom out to look at the long term interests for the two sides in the current war. Both recognize that “War is the mere continuation of politics by other means", as Clausewitz wrote.
The Waldman post suggests that we move from war back to non-violent politics. Russia and Ukraine have legitimate differences which can't be papered over. Since war is often lose-lose, it would make sense for the two countries to compete for hearts and minds in the political and economic arenas. May the best country win, but not at the expense of tens of thousands of soldiers and innocent civilians.
Big Serge, on the other hand, sees that Russia has the laid the groundwork for victory in an existential battle with the West. Russia has been losing politically for years or decades, and Russian leadership came to the conclusion that its very existence as an independent culture was at stake given the political trends and the positioning of the Western military. The Russian leadership therefore consciously chose to go to war in Ukraine in order to turn the political tide. The current war will be win-lose, and Russia will win in that their political objective of stopping Western encroachment will be achieved.
War is indeed politics by other (violent) means. The West is engaged in a proxy war. Russia is engaged in an existential war. As Big Serge puts it:
Putin and those around him conceived of the Russo-Ukrainian War in existential terms from the very beginning. It is unlikely, however, that most Russians understood this. Instead, they likely viewed the war the same way Americans viewed the wars in Iraq and Afghanistan - as justified military enterprises that were nevertheless merely a technocratic task for the professional military; hardly a matter of life and death for the nation…What has happened in the months since February 24 is rather remarkable. The existential war for the Russian nation has been incarnated and made real for Russian citizens. Sanctions and anti-Russian propaganda - demonizing the entire nation as “orcs” - has rallied even initially skeptical Russians behind the war, and Putin’s approval rating has soared. A core western assumption, that Russians would turn on the government, has reversed. Videos showing the torture of Russian POWs by frothing Ukrainians, of Ukrainian soldiers calling Russian mothers to mockingly tell them their sons are dead, of Russian children killed by shelling in Donetsk, have served to validate Putin’s implicit claim that Ukraine is a demon possessed state that must be exorcised with high explosives. Amidst all of this - helpfully, from the perspective of Alexander Dugin and his neophytes - American pseudo-intellectual “Blue Checks” have publicly drooled over the prospect of “decolonizing and demilitarizing” Russia, which plainly entails the dismemberment of the Russian state and the partitioning of its territory. The government of Ukraine (in now deleted tweets) publicly claimed that Russians are prone to barbarism because they are a mongrel race with Asiatic blood mixing.Simultaneously, Putin has moved towards - and ultimately achieved - his project of formal annexation of Ukraine’s old eastern rim. This has also legally transformed the war into an existential struggle. Further Ukrainian advances in the east are now, in the eyes of the Russian state, an assault on sovereign Russian territory and an attempt to destroy the integrity of the Russian state. Recent polling shows that a supermajority of Russians support defending these new territories at any cost.All domains now align. Putin and company conceived of this war from the beginning as an existential struggle for Russia, to eject an anti-Russian puppet state from its doorstep and defeat a hostile incursion into Russian civilizational space. Public opinion is now increasingly in agreement with this (surveys show that Russian distrust of NATO and “western values” have skyrocketed), and the legal framework post-annexation recognizes this as well. The ideological, political, and legal domains are now united in the view that Russia is fighting for its very existence in Ukraine…All that remains is the implementation of this consensus in the material world of fist and boot, bullet and shell, blood and iron.
MAGA-GOP just using Biden/Summers own analysis against Democrats every day…
Expect the consequences to be grim
Mistaken assumptions and failure to think things through have consequences, not to mention ignoring the structure and function of the world system.
MacrocosmThe National Development and Reform Commission (NDRC), China’s top planning body, has told the country’s state-held LNG importers, including Sinopec, PetroChina, and CNOOC, that they should stop reselling LNG cargoes and keep them to ensure Chinese gas supply this winter, sources familiar with the development told Bloomberg on Monday....
Of course, this is a variant of the “bond/currency vigilantes” stories that neoliberals love, and so features prominently in market discourse.
The reaction in the bond market should have been predictable by the Chancellor. In the current environment, looser fiscal policy is going to be met with higher policy rates. The trickier part of the situation was the fragility of the liquidity situation of U.K. pension funds — which the Treasury should have been aware of, since they have an entire team dedicated to meeting investors to gauge demand along the yield curve.
Returning to the MMT wrangling, since none of this should surprise anybody, it tells us nothing about MMT. However, I want to push back against the “financial markets constrained the government” narrative.
The MMT argument is that inflation constrains fiscal policy, and that is what happened. Under current institutional arrangements, the central bank reaction function is to hike rates as inflation rises (modulo the growth outlook). The Truss government should have been aware of the potential of such a reaction, and so this is just telling us what happens when amateurs run fiscal policy.
Saying that anything else is the constraint runs into problems.
Even scarier is when amateurs run foreign policy and military policy. In this regard, Liz Truss doesn't even qualify as an amateur. Regarding fiscal policy, she is dangerous to Brits. Regarding foreign and military policy, she is a danger to the world. However, the reality appears to be that with respect to foreign and military policy, politicians are simply tools of the Deep State and oligarchy in the UK.
Bond EconomicsIt's great to be able to share a really good MMT thread from Twitter here, written by Andy Verity, who is a BBC economics correspondent:
The British government has descended into high farce. It is rather embarassing to watch adults behave in the way they have conducted themselves in the last longtime. I also note that the usual suspects are out in force claiming (spuriously) that the economic turmoil that has beset Britain demonstrates categorically that Modern Monetary Theory (MMT) is deeply flawed and the real world is now teaching us that we should be discarded into the dustbin of history – or rather disgrace. These characters, which include so-called progressives think that hard core fiscal rules, like the British Labour Party took into the last election would have saved the day for Britain. I guess they are now mates with the IMF, who in their latest fiscal monitor – Fiscal Monitor – overnight (published October 12, 2022) – called for fiscal restraint. Also, central bankers who met in Washington over the last few days decided they had become the elected and accountable government making gratuitous threats that if fiscal policy wasn’t turned to austerity, they would punish citizens with further interest rate hikes. It is actually hard to find anything of sense in the current economic debate. It is despairing really....Interesting that MMT is now a topic of focus if not yet a household word.
The DBUs will help banks that are now looking to reduce their physical footprint with fewer brick-and-mortar branches, with a 'light' banking approach.Business Standard (India)
Arms race in progress. China is ramping up. Previously, China had set the date for developing a world-class military at 2035. Presently, the target date is 2027.
RT — Question More (Russian state-sponsored media)Fed rate increases crushing NPV of system regulatory capital:
They are doing the same thing they did in September 2008 ie putting their own Depositories and Dealers into violation of their own regulatory capital requirements… credit system is again getting close to failure mode:
Bank of America, $BAC, is worried about bond market volatility and says risk of a 'crash' is rising, per CNBC.
— unusual_whales (@unusual_whales) October 14, 2022
Why is the Swiss National Bank drawing $10 BILLION USD (last two days) from the swap line with the U.S. FED?! #CreditSuisse @SNB_BNS #Trouble
— 🇺🇸Kyle Bass🇺🇦 (@Jkylebass) October 14, 2022
Treasury might have to intervene directly again:
THE US TREASURY HAS ASKED MAJOR BANKS WHETHER IT SHOULD BUY BACK SOME US GOVERNMENT BONDS IN ORDER TO IMPROVE MARKET LIQUIDITY.
— Breaking Market News ⚡️ (@financialjuice) October 14, 2022
The U.S. should set a price cap on U.S. LNG going to Europe, as American gas is being delivered to Europe at prices four times higher than the price for domestic consumption, Russian Deputy Prime Minister Alexander Novak said in an interview with Russian state television.
“We would advise our US partners to set a certain cap price for the resources they are supplying to Europe. This only pushes Europe toward energy poverty,” said the Russian official who represents the country at the OPEC+ meetings.
Novak, commenting on the U.S.-proposed price cap on Russian oil, reaffirmed Russia’s stance that it would not deliver its oil to countries that will join the price cap, regardless of whether the cap is the recently aired $60 per barrel....
"Hey, guys, let's try this and see what happens."
The main plans that I discuss in these posts constitute two “families,” each with some antecedents and many subsequent related newer proposals. I think of them as Goudriaan/Graham/Hart-Kaldor-Tinbergen-type plans and Keynes/bancor/SDR-type plans....The world appears to be moving toward a set of conditions in which scarcity of real resources dominate for a variety of reason not the least of which is natural limitations on the use of carbon-based fuels owing to pollution and climate change. In addition, there also appears to be widespread dissatisfaction with the monetary regime is known as Bretton Woods I and II.
GOP playing this perfectly:
Biden's Latest Inflation Report Is The Worst Economic Data Seen In Our Lifetimes:
401k' are now 101k's:
Too much munnie printing:
[Sam] Taylor claimed: "Financial markets will punish fiscal irresponsibility, and Scottish independence would be fiscally irresponsible on a vastly greater scale.”
Unfortunately for both Ferry and Taylor the logic of their arguments was already debunked by various economic experts, including Professor Bill Mitchell, Professor Stephanie Kelton, Nathan Tankus, and Brian Romanchuk. Let's break it down.…
I ran across Carolyn Sissoko’s working paper “Financial dominance: why the ‘market maker of last resort’ is a bad idea and what to do about it” (link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4240857). Although I agree that non-bank finance (“market-based finance”) is going to be the source of financial instability under current institutional arrangements in the developed countries, I am not too sympathetic with her framing of the issues. Private sector balance sheets have been tilted towards non-bank finance as a result of institutional and demographic trends, and the traditional banking system has been de-risked courtesy of banks relying on tools provided by non-bank finance.
In this article, I just want to respond to the discussion of money market funds from a technical standpoint, and will not address what Sissoko presents as the major concerns — a movement away from market-based finance. Even if we grant the argument that there should be a movement away from market-based finance, we need to look at how that is supposed to be implemented.…
On July 21, 2022, the Bank of Japan issued this – Statement on Monetary Policy – which outlined that it would continue to use its capacities to implement ‘Yield curve control’, whereby the “Bank will apply a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank” and “will purchase a necessary amount of Japanese government bonds (JGBs) without setting an upper limit so that 10-year JGB yields will remain at around zero percent”. Further, the Statement noted that “the Bank will offer to purchase 10-year JGBs at 0.25 percent every business day through fixed-rate purchase operations, unless it is highly likely that no bids will be submitted”. The only dissenter on an 8 to 1 vote, wanted even more easing of monetary policy! The BOJ has been implementing its yield curve control since March 2021. In the light of global trends in central banking, the Bank of Japan’s decisions are a standout and show how a sophisticated understanding of the monetary economy coupled with a desire by the Government to improve the lives of ordinary citizens expose the fictions of mainstream economics, which dominates policy making elsewhere....Bill Mitchell – billy blog
😂😂😂😂😂
Bubbe Janet too busy out climate nuttering to know what’s going on in her real job….
How it started vs how it's going a day later. pic.twitter.com/DgzudviEDu
— Lyn Alden (@LynAldenContact) October 12, 2022
It is important to note that the proposals for a supranational currency have been made with various, disparate goals. Some are primarily interested in some aspect of commodities, others primarily or completely the supranational-currency aspect. These can overlap in several ways. The primary possibilities:...ClintBallinger.com
It’s Wednesday and overnight there has been a Twitter storm, which like most of these Tweet Crazes, is about nothing at all and only serves to embarrass the Tweeters, not that they are aware of the humiliation. I refer to the statements made overnight by the Bank of England boss who reiterated press releases the day before in saying the Bank would not continue to prop up pension funds who had mismanaged their assets. The Twitterati seemingly didn’t really get the point. And while we are on central banking, the former IMF chief economist Olivier Blanchard was interviewed in the last few days (I won’t link to it) claiming in relation to the US economy that “the path to avoiding a recession is narrow because the economy is still overheating”. He then concluded that the Federal Reserve Bank “is no longer behind the curve but still has work to do to deal with stubborn underlying inflation pressures”. He thought the Federal Reserve’s funds rate (its policy rate) would go higher than 5 per cent. Planet Not Earth. To keep us on the straight and narrow after those contributions to public discourse, we end today with some piano music. Always a good idea to stay calm and reflective....Bill Mitchell – billy blog
Germany +200B imminent:
Germany plans to push a $93 billion spending plan to ease consumer gas prices.
— Gold Telegraph ⚡ (@GoldTelegraph_) October 10, 2022
$93 billion.
This will be paid for by the 200 billion euro spending package, which represents 5% of GDP.
A recession and a pile of debt.
What can possibly go wrong?
France +100B imminent:
JUST IN: 🇫🇷 France says it will spend €100 billion to protect citizens from inflation.
— Watcher.Guru (@WatcherGuru) October 10, 2022
🤑🤑🤑🤑🤑🤑
The question is: what do we do now? We can adjust, and build a fair and secure middle-class society, free of poverty and of oligarchy alike, with tools that are broadly familiar.…The Guardian (UK)
The currency of international trade has been on a lot of peoples’ minds in the last few years. The hierarchy of currencies literature, the related questions of reforming the international monetary and financial system (IMFS), the effects of US monetary policy on the rest of the world (ROW). Add to that the war in Ukraine and Chinese trade-related discussion on the role of the ruble, dollar, yuan, oil and natural gas, wheat etc.
These issues can easily lead to rethinking about the bancor or the role of SDR as a possible solution to some of these issues....Chartalism
Some humor in the info war from Alexander Lukashenko, President of Belarus.
21st Century Wire
@21stCenturyWire
• Belarus president #Lukashenko's epic troll of Europe, getting fire wood ready for the winter.
https://twitter.com/21stCenturyWire/status/1570354229872566273
It never works….
Raiders DB Robertson with awesome all pro quality game against the Broncos last week:
I’d watch this with dudes commentary every game! 😂🔥👀💪🏽 pic.twitter.com/r7uNUSPUTM
— DJ P👀H (@DJPooh) October 3, 2022
3Q GDPNow revised up twice to 2.9% which is higher than annual growth ever achieved under 14 years of ZIRP:
Tweet: On October 7, the #GDPNow model nowcast of real GDP growth in Q32022 is 2.9%. https://t.co/T7FoDcZmZS #ATLFedResearch
— Atlanta Fed (@AtlantaFed) October 7, 2022
Download our EconomyNow app or go to our website for the latest GDPNow nowcast. https://t.co/NOSwMkQ7XS pic.twitter.com/u6R1xLVvNK
T-Bill discounts now transferring over $3.5B per week with the Fed’s latest rate increase to 3.25% operative :
Going to be increased 23% to 4% in 3 weeks… 🤑🧟♂️🤑🧟♂️🤑🧟♂️🤑🧟♂️
Unemployment fell to 3.5% a multi year low:
U.S. employers added 263,000 jobs in September as a tight labor market gradually loosens. The jobless rate fell to 3.5%. https://t.co/Ht6QOUsv7X
— The Wall Street Journal (@WSJ) October 7, 2022
And last but not least …. Good week in the equity markets:
S&P 500, DOW INDUSTRIALS AND NASDAQ SNAP THREE-WEEK LOSING STREAKS
— *Walter Bloomberg (@DeItaone) October 7, 2022
FOR THE WEEK, UNOFFICIALLY, THE S&P ROSE 1.51%, THE DOW ADDED 1.99%, THE NASDAQ GAINED 0.73%
Not too shabby….
There’s a lot of concern that the Federal Reserve is going to keep raising interest rates until it forces something to “break.” I share that concern....The Lens
Musk “reckons that conflict over Taiwan is inevitable,” FT editor Roula Khalaf wrote after the magnate took her to lunch in Texas. The question about China occasioned “the longest silence” of the interview, she noted.
While such a conflict will impact Tesla – the Shanghai factory accounts for 30-50% of its total electric car production – other companies like Apple will be “in very deep trouble,” according to Musk. The global economy will take at least a 30% hit, he estimates.
“My recommendation . . . would be to figure out a special administrative zone for Taiwan that is reasonably palatable, probably won’t make everyone happy. And it’s possible, and I think probably, in fact, that they could have an arrangement that’s more lenient than Hong Kong,” Musk told Khalaf....
Whatever the modus operandi of Pipeline Terror, incompetence was part of the package. No explosive charges were placed or detonated on Line B of NS2....PressTV (Iranian state-owned news network)
Однако к благоразумию наших врагов на Западе взывать бесполезно. И не нужно. Врагов надо заставить просить о пощаде в проигранном экономическом сражении. И завершать его их полной и безоговорочной капитуляцией.
Translation: It is useless to appeal to the common sense of our enemies in the West. It is also not necessary. The enemies must be forced (by us) to beg for mercy in the lost economic battle. And we need to complete this battle with their full unconditional capitulation.
The US is having a hissy over the OPEC+ production cut. Not a good look.Some congress-critters are actually suggesting that the US seize Saudi assets in the US.
The geoeconomic pathway away from the neoliberal order is fraught with peril, but the rewards in establishing an alternative system are as promising as they are urgent,...The Cradle
The reality is that the decision to cut production is completely rational from the point-of-view of OPEC+. With interest rates rising quickly and growth slowing, Europe, which makes up around 19% of total oil consumption, is almost certainly facing down a serious recession next year. There is also a risk that the United States and Canada will fall into recession at the same time — these countries make up a further 27% of total consumption.
OPEC+ does not want to see history repeat itself. In the 2008 recession, European oil prices fell from just over $140 a barrel to just under $40 a barrel — a massive decline of over 71%. So, the likely reason that they are cutting production is to try to firm up the market in case there is economic turbulence ahead....
Decolonization.
Once it starts, it can cascade quickly. Has the West overplayed its hand?
Well things are going to get messier with the decision yesterday by the OPEC+ cartel to significantly reduce the oil supply and push up prices. On the one hand, when OPEC was first formed and pushed prices up, while there was significant disruption to oil-dependent nations, the substitution that followed (home oil heating abandoned, larger cars replaced by smaller cars, etc) was ultimately beneficial. So given that we need less cars on roads and less kms travelled by cars, one might consider the move to be fine. But given the way the central banks and treasury departments around the world are behaving at present, the short term impacts of the OPEC+ decision will be very damaging. How citizens endure whatever extra inflationary pressures that might emerge will depend on the fiscal and monetary policy responses. We have two diametrically opposed models: the one that most nations are following (hikes and austerity) versus the Japanese approach. I explain the difference below and predict that the latter will deliver much better outcomes for the people....
Here she actually exhibits a better introductory understanding of these flows than most Art Degree PhD economists and Jurist Doctorates:
Your move, IRS pic.twitter.com/q5PrD1vaWO
— Not Jerome Powell (@alifarhat79) October 5, 2022
Doesn’t give herself enough credit and gives up too easily but she’s starting to exhibit a better understanding than the morons in charge we see out there everyday...
Mostly about energy and the stupidity of imposing an oil price cap.
Moon of AlabamaIt’s Wednesday where I examine in short a few items that came to my attention in the last week and then retreat into the music segment. Yesterday, the Reserve Bank of Australia raised interest rates for the sixth time since May 2022. This time the increase was 0.25 per cent and the current cash rate target is 2.6 per cent. The below-expected increment has been hailed as the first central bank to ‘turn’. It tells me the RBA is now scared it has gone too far in its ridiculous show of power. It is also obvious that spending is not really responding yet to the RBA move which means that they have no real idea of what the impact of their shift in rates has been. That is the problem with relying on monetary policy as a counter-stabilising tool – it works (if at all) with long lags and by the time you see any impact it might be too late....The countercyclical effect of interest rate increases is lagging as rate increases work through the economy, e.g., depress RE sales owing to increased carrying cost. In fact, there is evidence that interest rate rises dampen the economy through the housing channel.
Biden/Summers rate increase jihad is causing them to become increasingly isolated from:
The academe:
Greg Mankiw endorses Paul Krugman’s view that the Fed might be tightening policy too aggressively https://t.co/Cl4VFonPLd pic.twitter.com/tcEXqVdLf4
— Nick Timiraos (@NickTimiraos) October 1, 2022
International community:
This is real. Not the Onion.
— Stephen Geiger (@Stephen_Geiger) October 3, 2022
The U.N. is asking the Fed and other central banks to stop tightening.
Noone had an issue on the way up. (Even though the outcome was obvious)
https://t.co/fAtHMMS1gm
Wall Street:
Correction: The Fed is going to cause 'unbelievable calamities' if they keep hiking, according to Barry Sternlicht https://t.co/rQL77wKxwS
— CNBC (@CNBC) October 4, 2022
And perhaps voters we’ll see on November 8th…