Still busy with the tail end of brush clearing around here. The dry conditions have impelled many folks hereabouts to doing much the same thing, and I noticed yesterday the Highway Department (or some state agency) has put a number of those big flashing road signs at strategic points along the highway declaring “High Fire Danger! No Open Fires!” Good for them, though shit like that will bring out the pyromaniacs like nothing else could. Still, what can you do?
Anyway, while skipping around with the chainsaw I took to thinking about the economic situation again, and was kinda composing a rant about it all in my head, but something was bugging me and I couldn’t quite figure out what it was. Then just now I was scanning some punditry on economic affairs generally but especially the Eurozone kabuki, and it struck me something’s just kind of odd. After about eight or so articles it finally hit me that what’s missing is any reputable (or any at all, really) punditry suggesting than any of the measures currently being deployed are likely to help. Quite the reverse in fact.
It’s actually quite startling. The Keynesians have been going nuts for ever, naturally, about the foolishness of imposing “austerity” measures at the height of a contraction, but then that’s what they do. They have a point of course, but it’s expected anyway. But where’s the Other View? The Austrian School advocates are not unhappy to see government expenditures slashed, to put it mildly. They don’t like the government being such a big piece of the economic pie to begin with, so “starving the government beast” is OK with them in general, but they’re not fans of bailing out failing private institutions, which is what’s happening of course, so they don’t think it’s going to “work” either. The IMF is even warning about dire consequences of pursuing “too much austerity”, whatever that might mean. Obama, naturally, is shitting a blue light and hoping it all holds together enough through November. About the only resolute cheerleader for slashing spending come hell or high water, and also reducing taxes is Norquist. Even Paul Ryan has started to crawfish a little, and a small but steady stream of GOP functionaries are backing away from Norquist’s “pledge” thing.
So here we are with the “left” and “right” economic prognosticators in agreement about something. It won’t work, and will make the situation worse. Let’s remember that none of these people actually know the situation directly—there is no way to know that without bugging the executive suites of every bank and finance house in the world. There is no transparency at all, nor any requirement for any, regarding the level of toxicity in the system. Banks don’t have to mark their assets to market value, nor must they disclose how they are being valued. Not even to shareholders. All that can be known with any real certainty is that there’s a shitload of debt, a massive accumulation of toxic derivatives, a whole universe of hedges and short bets all rolled together with popping bubbles, massive (in Southern Europe, for now) unemployment, declining wages, disappearing pensions and healthcare funding, and governments digging behind the couch cushions to pay teachers and cops.
And nobody is saying that what’s being done will solve any of this. Massive amounts of public money being sluiced into the private sector, which is being hoarded there against the day when the shit really does hit the fan, and the only real collateral for any of that money is the taxable future earnings of shmucks like you and me. Thus, hey presto, private debt and risk becomes public debt and risk;
Last year I started to label the money used to allow zombie banks to continue to extend and pretend, zombie money. It’s conjured up out of thin air, the thinnest air on the planet. The only thing that serves as collateral is the future taxability of the future citizens of bankrupt nations.
In the end, the only truth that remains, though people are seemingly completely blind to it, is this:
The banks that are kept alive with the zombie money will use it to do what they will see – rightfully, in the present economic model – as the most profitable thing to do: bet against, and ultimately bring down, the very system that has “saved” them. This is how perverted the entire scheme has become. The money taken from you by your “leaders” will be, and already is, used to bring you to your knees.
The €100 billion for Spain agreed on last weekend evaporated in two days. 18 Spanish banks were downgraded this week, and Spain’s 10 year bonds are at 6.69% as we speak, reflecting, among other things, that the Spanish government, re: – future – population, is on the hook for that €100 billion. 6.69% is close enough to the 7% threshold that it effectively means Spain has no access to the markets. In the same way, Italy’s 10-year 6.20% is a big red alarm flag, and Italy today paid 3.79% for €6.5 billion in 1-year debt, up from 2.34% last month, a 62% raise.
Moreover, the €100 billion for Spain will by default have to be the model for other bailouts. New lines have been drawn in the sand, and Greece, after the June 17 election, Portugal, and soon Italy, will not accept different, stricter, terms than Spain has gotten.
Not that any of it truly matters; it all just prolongs the agony. It does so, however, at a very steep price for the woman in the street, and even more so for her children.
This is not going to end well. Nobody thinks that.
And it is spreading. In the birthday post I mentioned how Spain had acquired its own neologism—”Spailout”—for the latest transfer of the people’s future earnings into the present private coffers, and of course we already had “Grexit” for when Greece exits the Eurozone. Now comes “Spanic” and “Quitaly”.
At least someone has a sense of humor, even though where all this is headed is not going to be funny at all.
I think i’m just weary of it all. Not expecting any help whatsoever from the administration that we have. Think maybe i’ll just say hang it all and find a bunker somewhere.
http://www.huffingtonpost.com/2012/06/13/obama-trade-document-leak_n_1592593.html
http://www.huffingtonpost.com/2012/06/13/jamie-dimon-senate-hearing_n_1594130.html
I can at least help with an explanation of what ‘too much austerity’ means to anyone from the IMF. It’s simple. If the masses rise up and burn down the mansions of the rich and the headquarters of the multinationals and actually hang big people (ie rich people) form lampposts, that is too much austerity. Anything short of that, up to and including mass unemployment, tent cities, bread lines, increased crimes of violence -so long as they are perpetrated, in the main, on fellow poor people or the grubbier class of shopkeeper- is Not Too Much Austerity.
Looked at from the top of the heap, the coming shit storm is, well: either going to cause a serious dent in profits, or even mean a little less swanking in public view… But it’s probably not going to change life in any categorical or threatening way. Sure you and your cronies could all pay another ten percent in tax and that would ease a lot of pain for a lot of people you will never have to meet and don’t give a shit about, but if you don’t have to pay it, and they have to suffer a bit more… meh… in ten years time you’ll be in the same (pretty) place and they’ll still be mostly in the shit one way or the other. So what’s the real point? Okay you want to preserve your markets, but even poor people still buy a lot of shit. They have to. The only outcome you are really worried about is something that looks like serious social unrest, proper kicking over of the table. And if that ever looks like it might be even approaching likely, well… that’s what all these guys in paramilitary gear we’ve been banking up -at a significantly cheaper price than funding civil society, mind you- that’s what they are for.
Porn, I was kinda thinking we all might make our way, al la the Road, pushing shopping carts full of canned goods and ammo, until we reached the safety (and greenhouses) of Ninethousandfeet
Bluth -
I have never visited Colorado (except for passing thru on a train and making a brief stop at Denver) becuase i was always afraid that i’d just kind of permanently park there. I’m a mountain and woods person, not an ocean person. So yeah, that sounds good, except for the satellite problems. If they ever get proper internet service out that way, it could be a go.
Then again if i wanted to try to dig up some optimism, i could think about all of those cases of Top Ramen my brother still has bunkered from the Y2K.
As my Bill says, the world’s going to hell in a hand basket…
I read recently a many banks are actually bankrupt but they fiddle their figures.
Spain’s bailout is going to be useless.
Greece is crippled. Other countries will follow.
Cameron and his cohorts are pushing us to the brink and doing a brilliant job dividing the country.
Today we read the British Government are pushing to implement a huge eavesdropping operation via the internet and phone calls which will cost millions.
They say it’s to catch criminals…I say it’s because there are a lot more of us than them.
Try this resilience test
An amusing thought experiment: when the bubble burst in 2008, what would Henry Paulson have done if a believable — believable is the impossible part of this fantasy, but after all I’m just playing here… — what would he have done if a believable fortune teller had convinced him that the banks would just take the bailout money and sit on it?
I’m not saying he’d have come up with a different plan; I think that would have been too much to expect. But at the very least his head would have exploded. Because he would have understood that in many important respects the banks would already have failed. Depositors’ money would have remained safe (in most senses) but the banks’ vital function as distributors of cash to the economy would clearly have stopped.
As a banker himself, he’d have known what that meant. We now know that about 40% of the public’s net worth was based entirely on other people’s ability to borrow money. He might not have been able to quantify the exact loss of equity way back then, but he’d have clearly seen that consumer spending would not be driving the economy for a long, long time to come.
He’d also have seen something else. He’d have known (as any banker would) that a whole lot of established companies, profitable companies that hadn’t missed a payroll in fifty years, depended on short-term lines of credit to smooth out lumpy cash flows. He’d have known what would happen when those lines of credit were called in; he’d have known as well as anybody that businesses that can’t make payroll are dead, never mind what the economy does in a couple of months.
And really, it does seem that he ought to have foreseen all this, instead of expecting (as he and a whole lot of other people clearly did) that bankers would decide that, just this once, their responsibilities to keep the economy going outweighed their duty to turn a profit. Maybe he was misled by the enormous sweep of his view of the economy as a whole, maybe that made him forget the parochial fate of any individual banker who says, “Business decision be damned, this time I’m doing what’s right for my neighbors.”
Whatever the reason, he (and, to a marginally lesser extent, Geithner after him) forgot that bankers get to be bankers because they always make the correct business decision for their own bank, which in this case meant piling up every dime they could get under their mattresses while urging everybody else to invest.
Somebody needs to remind me one more time why a lifetime of habitually making good business decisions is the best conceivable preparation for running the country.
….or why expecting 300 million free individuals to follow a particular macro economic model does for that matter?
I’ve become an agnostic on all this. “And nobody is saying that what’s being done will solve any of this.”
No, they have not been, and no they aren’t. The southern part of the EU has been used as a kind of forced experiment, because (thanks to the ECB sticking so closely to its only rule, which is “keep down inflation” and do bugger all else, the markets have been playing around. There is, actually, no real economic reason that Spain, Portugal, Italy, Ireland (and within a few months probably France, too) have been/will be taken down to ‘junk’ status. Except that it inevitably increases the potential short-term profits for some exploitative banks.
(It is absurd, isn’t it, that Spain only a few days agpo, actually got what it wanted in a bond issue, and the consequence was . . .that Spain’s credit rating, instead of stabilising, went down!) And this despite the fact that no EU country has yet even hinted it would default, unlike the politicians of a certain other country I could name.
Most of this, it seems to me is no longer about ‘sovereign debt’ and so on, and hasn’t been for months, it’s about currency speculation and destroying the Euro as a potential rival against the US doillar.
No US commentators, have ever acknowledged that most EU countries have some fundamental structural economic differences to the USA. The only EU country which has the sort of home mortgage commitment and housing-based debt as the USA is the UK, for example. Far more people in other EU countries rent, they don’t buy.
The ‘housing crisis’ in Spain, was nothing to do with homeowners or buyers: it was speculative building under the impression that SPain was on some sort of exponential rise as a tourist trap. And it was obvious years ago it was unsustainable and increasingly risky; and the only ones who didn’t give a damn were the banks.
there is a cure, I think, and it’s quite simple: The ECB turns itself into a kind of combination of the World Bank and IMF, the countries being consistently targeted say “OK, that’s enough, we will pay no interest, just the loan in future until you wankers fucking stop pissing about.” It’s been done before with far less fluid resources available than there are in the EU.
Yes, Rip/Pornstar, definitely higher quality here, which can, however, prompt feelings of inadequacy. (Half those idiots ATL at the Guardian – not to mention below – invariably make me feel just a little bit better about myself…
Anyway: Hello! Everyone!
I’ve just read that the eavesdropping bill will cost £1.8billion…We can double or triple that because they always under quote.
And they keep telling us there’s no money!
bim_ballace:
Good to see you.
Bim,
When I look at your mugshot, should I imagine the sheep or the sandwich?
Di: Thanks!
Natasha: The cute, innocent little lamb, I guess. (Been thinking of turning over a new leaf here…)
Greetings, bimballace, very nice to see you.
Thanks, Madame!
Natasha;
Heh heh. So when President Romney discovers all those red states in the south are actually devouring more Federal tax money than they are contributing, does he pitch a hissy fit, strip their assets, then sell them to Mexico or what?
———————-
Howdy Bim, good to see you.
Put your feet up and make yourself at home.
gunnison:
Thanks very much. Nice place here. May even drop the persona thing a bit and try to learn something – in addition to putting my feet up…
bimballace;
That reminds me.
Should you wish to become a sandwich, or a sheep, or anything at all, there’s a post on how to make that happen to be found here.
Holler if you have problems.
Hiya Bim!
I go by Amy sometimes on here too. I never did get the memo as to whether you were a dude or dudette. (I did get a headhunters fee for bringing you in here as a new recruit though).
I probably meant, are you a ram or a ewe?
Hi bim.
This is a nice place to spend some time. But Gunny has this habit of really scaring the shit out of everybody.
So its not always comfortable.
Anybody know how to blockquote here? I wanted to hightlight Natasha’s (ironic) comment about business experience being good preparation for running a country.
Agree entirely. It isn’t.
Unfortunately, will most people get that? Its like trickle down – one of those republican “ideas” which never seem to be proved in practice but are the bedrock of their entire economic philosophy.
Same way as before, highlight the text you want to blockquote, then click on the “quote” quicktag.
Unfortunately, since the last upgrade, all it does is italicize the quote—there is no indent and no quotation marks, but they can be added manually like I just did above.
I’m trying to educate myself to go into the stylesheet and change the code to fix all that, but with all the accumulating Things To Do that come with summer it’s likely to take a while.
Irritating, but it is what it is. Sorry.
Gunny, my quicktags have disappeared though.
It’s me, g.
Elena I don’t know why that would be—what browser etc are you using?
I just checked with FireFox and Safari, and they’re there, whether logged in or not.
They were obscured for a while right after the upgrade, but we thought we got that fixed.
Maybe not.
Are they just completely missing?
welcome, bim!
Nat, you nailed it re: Paulson and the banks.
Well, and I’ll go slowly here, say Alabama, as a department of USCorp, isn’t really turning much of a profit. Your average govt-schmo would just bumble along and not really solve the problem. Far too soft.
Whereas someone in business would know that you either shape it up – say, by renegotiating the employment contract with the employees in the AL department so they they have to reapply for their jobs under a subcontractor umbrella (say CanadaCo, for example) – or you ship it out: hive it off, sell it off, spin it out, or perhaps offer part-time citizenship to keep costs down.
It’s that out-of-the-box thing that your top-class businessman brings. Happy to help.
Quicktags working
Elena, I can’t find any reason for your trouble here at my end. I’m not saying it doesn’t exist, only that I can’t see anything.
Maybe you could empty your browser cache first, to see if that changes anything. Then, if necessary, try logging out, deleting the 9thousandfeet cookies, then logging back in.
See if that makes a difference.
Either way, let me know how it all plays out. If there’s a problem with your particular browser version, I should pass that along to the author.