Paul Krugman — Despicable Me

Funny, but you have to click though and read the links.

Mish quotes Austrian economist Hans Hermann-Hoppe explaining the Right Way To Debate Paul Krugman:

"It is very important in replies to people like Paul Krugman, that we don't get involved in technical details. Ask some questions almost like a child. Explain to me how increases in paper pieces can possibly make a society richer. If that were the case, explain to me why is there still poverty in the world? Isn't every central bank in the world capable of printing as much paper as they want? I am sure the guy cannot answer this type of question. Nobody can answer this type of question." Mish adds: "Krugman would respond with incomprehensible gibberish "for wonks only" as well as typical Keynesian nonsense about how paying people to dig holes and other people to fill them up would start a chain reaction of growth."

"A child would see the answer was preposterous, but not a trained economist, politician, or brainwashed academic. Paul Krugman, keynesian economists in general, politicians wanting a free lunch, and most academics are all incurable."

ROFLMAO

The New York Times | The Conscience of a Liberal
Despicable Me
Paul Krugman | Professor of Economics, Princeton University

Mish — Privatizing of Gains and Socializing of Losses; You Want the News? From Where?

Read it at MISH'S Global Economic Trend Analysis
Privatizing of Gains and Socializing of Losses; You Want the News? From Where? (with a video of Michael Hudson)
by Mike "Mish" Shedlock

Michael Hudson is really getting around these days.

Mish presents a contrarian Austrian view

Read it at MISH'S Global Economic Trend Analysis
Premature Dollar Obituaries and Mainstream Economists' Monetary Insanity; Keynes-Inspired Great Depression; Lessons Not Learned
by Mike "Mish" Shedlock

Mish — Population: The Elephant in the Room

Read it at MISH'S Global Economic Trend Analysis
Population: The Elephant in the Room; Peak Oil Implications on Population Growth; What Level of Human Population is Sustainable?

by Mike "Mish" Shedlock

Mish parses the unemployment numbers — "statistical mirage"

Read the whole post (long and detailed) at MISH'S Global Economic Trend Analysis
Unemployment Rate Dips to 8.6% as 487,000 Drop Out of Labor Force

by Michael "Mish" Shedlock

Conclusion:

The official unemployment rate is 8.6%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

While the "official" unemployment rate is an unacceptable 8.6%, U-6 is much higher at 15.6%.

Falling unemployment rate would normally be considered a good thing, but not if it is happening because 1,793,000 people stopped looking for work. 

Things are much worse than the reported numbers would have you believe. The entire economic picture is on very thin ice given the clear slowdown in the global economy.

Mish — more BOA shennanigans, with Fed approval

Bank of America, at the request of counterparties, just moved a Merrill Lynch derivatives unit to an Insured Deposits unit, under protest by the FDIC.

The FDIC does not like the move because it puts the FDIC at risk. Bernanke is fine with the move, which means the Fed and FDIC are once again in an open feud about risk management

Read the rest at MISH'S Global Economic Trend Analysis, Bank of America Moves a Merrill Lynch Derivatives Unit to an Insured Deposits Unit (Putting FDIC at Risk); Fed approves Move, FDIC Doesn't

Also, Yves Smith at Naked Capitalism, Bank of America Deathwatch: Moves Risky Derivatives from Holding Company to Taxpayer-Backstopped Depositors (h/t Kevin Fathi)

UPDATE: Trader's Crucible piles on, Can We Prevent a $100 Billion+ BoA Taxpayer Ripoff? There's an important comment of Beowulf originally posted at Yves' place reposted by TC.

Let the outrage begin, or better, increase.

Mish parses employment numbers

and concludes: "All things considered, I see no reason to change a forecast I made just over two years ago: Expect Structurally High Unemployment for a Decade.... The only reason the unemployment rate is not 11% (or higher) is because 4.5 million people dropped out of the labor force vs. expected demographic gains."

Read it all at MISH'S Global Economic Trend Analysis, Hypothetical Employment and Unemployment Charts from the Atlanta Fed; Mish "What If" Scenarios

The odd things is that Mish is consistently calling for reducing the number of federal, state, and local government workers in this the face of this, and he is also down on further stimulus and for austerity and "sound money."

Mish — China Unraveling?

Here is an interesting email from reader "Kevin" regarding the crashing loan-shark market in China....

Read the post at MISH'S Global Economic Trend Analysis

China Loan Shark Market Crashes; Scores of Chinese Business Owners Unable to Pay Black Market Loans Commit Suicide or Disappear

At the end of the post, Mish provides links to other posts that point to difficulties developing in China.

The Shanghai stock market depicts a credit bubble that collapsed in 2008, partially rebounded, and is sinking once again.

China did not decouple from the global economy, nor is there any reason to believe it will, or should. China's debt bubble, housing bubble, and copper Ponzi financing schemes are collapsing.

Copper Ponzi Scheme: See Ponzi Financing Involving Copper Trade Gone Wild In China for details of a copper financing scheme now gone bust.

Shark Loans: See Ponzi "Shark Loans" Fuel China's Housing Bubble; Home Sales Plunge 44% in Xiamen; Bubble Busts in Tianjinfor details on how loan shark operations fueled China's real estate bubble.

Ghost Cities: I have done many stories on China's ghost cities, most recently World's Biggest Property Bubble: China's Ghost Cities Revisited; 64 Million Vacant Properties

Property Loans Halted: Property Loans Halted in China's 2nd and 3rd-Tier Cities; Is China's Spectacular Real Estate Bubble About to Pop?

All of these schemes are starting to unravel in a major way.

Mish — Chinese exports only 2.7% of US consumption

"Made-in-China" Only 2.7% of U.S. Spending; Really? What Does It Mean? Inflationists Take Note

Mish parses the numbers for us. The figures show that the US is still alive and well, in spite of superficial appearances.

For one thing, China is chiefly an assembler rather than a producer. For example, I recall reading that the cost of an Apple iPhone out the door is about $125. Although it carries an "Made in China" label, the Chinese contribution is only a bit over six dollars. (Sorry, I've lost the link to that article.)

Mish v. The Inflationistas

Michael (Mish) Shedlock of Global Economic Trend Analysis does a good job destroying the hyperinflationistas:

Stack of Things Missed by Hyperinflationists

1. Trade math

2. Reserve currency math

3. Credit dwarfs currency and changes in credit and the value of credit are far more important than the changes we have seen in money supply.

4. Failure to understand pricing currency of oil is meaningless

5. Misconceptions about excess reserves (Please see Fictional Reserve Lending for a discussion).

6. Not understanding limits and restrictions on the Fed

7. Not understanding limits and restrictions on Congress

8. Failure to understand peak oil will not cause hyperinflation. Heck, peak oil will not even cause inflation.

9. Inflation in China, does not constitute inflation in the US.

10. Unfunded liabilities do not constitute debt

11. Myopia - The US is not the only country with massive structural problems. Let's stop pretending otherwise

12. Failure to understand the Fed will not destroy itself and the banks by allowing hyperinflation

Read the whole thing at Hyperinflation Nonsense in Multiple Places.

Mish — Bogus Threats to US Reserve Currency Status

Issuing the world's reserve currency is a mixed blessing. Mish agrees with Michael Pettis that the disadvantages outweigh the advantages and the US should lead the charge away from the dollar as the global reserve currency.

"The reality is the US would be better off (and so would the world), were the US to lose reserve currency status. Nonetheless, don't expect it any time soon. China is not ready and Europe is in the midst of a sovereign debt crisis that will not go away for years."

Read the whole post: Bogus Threats to US Reserve Currency Status: No Country Really Wants It!