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Bernanke's golden
heirloom
The rising price of gold is a market response to the US Federal Reserve's
exploding balance sheet and chairman Ben Bernanke's failure to stabilize the
economy. Come 2012, Fed credit could be measured in many trillions of dollars.
The gold price will continue to surge accordingly. - Hossein Askari and Noureddine
Krichene (Dec 10, '09)
EDITORIAL
Rupert, your slip is showing
The man perhaps answerable for the problems of the world's news media has the
answer to the problem: "produce the news that your customers want" (and make
them pay for it). So, for example, if you wanted to be told that Saddam Hussein
had weapons of mass destruction, Rupert Murdoch is your man. Trust him (and pay
up), he has your best interests at heart. (Dec 10,
'09)
US wealth gap gaping wider
Recent great shifts in wealth and income in the United States have yet to show
up in national data but are being felt around many kitchen tables. They will
have a profound impact on tens of millions of families and will drive American
political developments for the next few years. - Max Fraad Wolff
(Dec 10, '09)
The burden of being Summers
Harvard is still counting the cost of Lawrence Summers' insistence on taking a
hands-on approach to managing its vast assets when he was the university's
president. The ability of Summers, now the top White House economic advisor, to
be on the wrong side of every question helps explain why so little has been
accomplished during the first year of this administration. - Julian
Delasantellis (Dec 9, '09)
 CHAN
AKYA
'Good peg' illusion
Whether a currency peg is intended to address imbalances that are external or
domestic, it will likely be the source of significant volatility, with some
effects visible and others not quite so. Ignoring the basic truths of the
"unholy trinity" will always prove detrimental in the long run to the interests
of those who wish to take undue advantage of a currency peg.
(Dec 8, '09)
THE BEAR'S LAIR
Sliding back towards a gold
standard
Global foreign exchange reserves are at record highs, but there is nothing
solid for central banks to buy. A return to the gold standard is,
unfortunately, unlikely, but we may see something close to it and the end of
the fiat money floating exchange rate system that has prevailed since 1973. - Martin
Hutchinson
(Dec 7, '09)
 SPENGLER
Bah, humbug
and labor statistics
The latest United States jobless figures supposedly reflect an economic
recovery. Yet the continuing movement of prospective workers away from the
labor force is only part of the more revealing and worrying story. - Spengler
(Dec 7, '09)
Repo time-bomb redux
The US House Financial Services Committee proposes that creditors caught in the
failure of a large bank should lose up to one-fifth of the value of the debt.
Such a measure threatens directly the working and value of the repo, or
repurchase, market. The Lehman Brothers collapse and subsequent global
financial crisis should demonstrate only too vividly the risks of messing with
that. - Henry CK Liu (Dec 4, '09)
DERIVATIVE REFORM, Part 2
The courageous Brooksley Born
Brooksley Born's efforts to bring over-the-counter financial derivatives under
the regulatory control of the US Commodity Futures Trading Commission, which
she chaired, won her the prestigious John F Kennedy Profile in Courage Award -
11 years after those efforts failed. Had she succeeded, the present financial
crisis would likely have been radically different. - Henry CK Liu
(Dec 3, '09)
This article concludes a two-part series.
Part 1:
The folly of deregulation
DERIVATIVE MARKET REFORM, Part 1
The folly of deregulation
A United States congressional hearing on reform of the over-the-counter
derivative market would do well to recall that derivatives are not in
themselves weapons of mass destruction, even though their presence is found
suspiciously close to the wrecked heart of most recent financial meltdowns. - Henry
C K Liu (Dec 2, '09)
This is the first article in a two-part series.
Wall Street's great escapers
A wonder of the present financial crisis is the muted nature of protests at the
theft involved, at the intimacy between the Wall Street perpetrators and their
political chums, and at the myths this elite uses to justify their actions. The
people of the United States must hold their financial industry accountable or
the consequences will be unthinkable. - Hossein Askari and Noureddine
Krichene (Dec 2, '09)
Out with this idolatry
Each business cycle, the airwaves are alive with the sound of in-fashion
pundits of economic esoterica. Right now, the dominant sound is bear growls,
notably the voices of new media darlings Nouriel Roubini and Meredith Whitney.
It is time the networks ditched this idolatry and turned to discussing how
finance-dependent economies can avoid blowing any more bubbles. - Julian
Delasantellis (Dec 1, '09)
THE BEAR'S LAIR
Pockets of rot
Dubai World's collapse is not too surprising - unless you are an HSBC
executive; its public excesses were only one early indicator of what would
surely follow. But its failure raises the question of where else are such
rotten, overblown economic fantasies waiting to disintegrate. We can start with
China, then London ... Martin Hutchinson (Dec
1, '09)
CHAN AKYA
Dubai, debt and a return to
reality
The trouble with debt-burdened Dubai isn't that its woes could trigger serious
shocks around the global financial system. Rather, irrespective of liquidity
conditions, the world remains an unforgiving place for those who borrowed too
much and gave up too little in return. Various other notions, such as "too big
to fail" and "implicit guarantee", will soon fall by the wayside.
(Nov 30, '09)
Duty calls for Congress
The United States Congress next week has the opportunity to question the wisdom
of President Barack Obama's decision to keep Ben Bernanke - who played a key
role in bringing about the global financial crisis - as Federal Reserve
chairman for another four years. Congress has the opportunity to recognize its
solemn duty and not serve as a rubber stamp for the administration. - Hossein
Askari and Noureddine Krichene (Nov
25, '09)
Bernanke's neck on the line
Critics of the US Federal Reserve are growing in number and volume as normal
folk see little of the vast amounts of money it dispenses going into their
pockets. That, and Congressman Ron Paul's move to have the Fed's books opened
for audit, may cause more than severe discomfort for chairman Ben Bernanke at
his renomination hearings. - Julian Delasantellis
(Nov 24, '09)
CHAN
AKYA
Hollywood, the macabre
The latest and most popular releases from Hollywood present disturbing
vignettes of where the West in general and the United States in particular are
headed. Teenage vampires in New Moon represent the age-old quest for
immortality, even as 2012 plays truant with Armageddon. Both represent a
grudging acceptance, if not adulation, for unattainable elite status.
(Nov 24, '09)
THE BEAR'S LAIR
Wanted: Iconoclasts
Sarah Palin's popularity as an "outsider", and the US government's failure to
overhaul institutions that led to the current financial crisis, point to
possible White House victory, if not for the former Alaska governor then for
the growing number of iconoclasts like her. The US cannot economically afford
for them to lose. - Martin Hutchinson (Nov
24, '09)
Goldman Sachs and US demise
Goldman Sachs showed only contempt in offering an annual US$100 million to help
small business while setting aside $16.7 billion for bonuses. The US government
must stop frightening Americans by saying that the sky will fall if they take
action against the financial institutions that have been responsible for the
country's economic crisis. - Hossein Askari and Noureddine Krichene
(Nov 23, '09)
US should regulate
cross-border cash
Criticism of Malaysia's imposition of currency controls early in the 1997 Asian
financial crisis eventually turned to recognition that it was the correct
action to take. The United States should take similar action to regulate the
cross-border flow of speculative funds - it is the only way a low Fed funds
rate will help the US economy. - Henry CK Liu
(Nov 23, '09)
US at a crossroads
Amid a boom in financial assets and soaring unemployment, the United States
authorities face a moment of truth. But the public, investors and foreign
governments, all concerned and confused by US policy, know that those with
their hands on the tiller cannot be trusted to make wise choices over expedient
ones. - John Browne (Nov 19, '09)
Dollar doing the right thing
The US dollar's decline has conservative media bewailing the currency's and the
country's fate. Yet its 18% recent fall is against the euro, with little change
against currencies of leading trade partners China and Japan. And given that
the US is in economic distress, and has $30 billion a month trade deficits
and zero interest rates, the dollar very much should be falling. - Julian
Delasantellis (Nov 18, '09)
THE BEAR'S LAIR
Waiting for the train wreck
Central banks have lost the opportunity to change policy, indicated by gold's
breakout above US$1,100. The huge weight of global stimulus money ensures that
the gold and commodities bubble will now run to its full extent, with the world
heading towards another train wreck. - Martin Hutchinson
(Nov 17, '09)
CHAN AKYA
No country for gold men
People of all nationalities should now look to gold as the ultimate hedge
against inflation as well as globally irresponsible monetary policy, as the
absence of an exit strategy from central banks combined with an explicit
targeting of inflationary increases would create the ideal conditions for
wholesale destruction of savings stored through financial instruments.
(Nov 13, '09)
JP Morgan's $80 million bill
spills into court
JP Morgan's US$80 million bill for its failed defense of Australian miner
Consolidated Minerals against a hostile takeover attests to the cost and profit
of such battles - won or lost. The decision of the successful bidder, Ukrainian
magnate Gennady Bogolyubov, to oppose the claim is opening the lid on how such
sums add up - right down to the price of a burger. - John Helmer
(Nov 11, '09)
Oil floats high on easy money
Conspiracy theorists need only look at the number of tankers berthed over the
horizon from Singapore to find support for the notion that speculators are
helping to drive up the cost of oil. Media pundits favor the "China demand fits
all" approach. Reality seekers in the United States should delve a bit deeper,
and look a bit closer to home. - Julian Delasantellis
(Nov 10, '09)
THE BEAR'S LAIR
Which big country will default
first?
No leading economy has defaulted on its debt since the 1930s, yet conceivably
that could be the fate of the United States, Britain and Japan, an indication
of the wrong-headedness of policies taken to address the downturn. The world
should hope that the urge for fiscal responsibility hits London, Washington and
Tokyo pretty soon. - Martin Hutchinson (Nov
10, '09)
Failure written into 'too big'
policy
Even as Washington tries to ensure limited damage from any future collapse of
"too big to fail" financial institutions, its own policies are helping the top
US banks tighten their market dominance. Nor is Washington addressing the
inherent risk from small entities failing in large numbers. - Henry C K Liu
(Nov 9, '09)
CHAN
AKYA
Leverage not level
The picture is familiar - higher oil prices, a lower US dollar, and rising US
stocks. Missing from the picture is the leverage taken in China and related to
monetary expansion there - and what happens once that expansion is removed.
(Nov 6, '09)
Empty boasts of glory
Celebrations of the much-welcomed emergence of the United States economy from
recession are premature, given that the only force driving this apparent
recovery is increased government spending. The performances of Australia, New
Zealand, China and India stand in marked contrast. - John Browne
(Nov 5, '09)
Bernankeism - the art of
spreading starvation
Ben Bernanke, from well before he was appointed United States Federal Reserve
chairman, guided the US and global economies increasingly towards a world in
which speculators profited and the masses went hungry. Worse is still to come.
- Hossein Askari and Noureddine Krichene
(Nov 4, '09)
Power shift
 The
vast amounts given to banks since the global financial crisis broke have not
altered the deflationary forces of contracting credit in the US economy. If
business continues to slow amid record government deficits, doubts legitimately
grow over the safety of US debt - and raise the possibility of even greater
expansion of the International Monetary Fund's political and financial clout. - Doug
Wakefield with Ben Hill (Nov 4, '09)
Financial reform next for Obama
No real financial reform proposals are even near enactment in the United
States, despite much hot air about somehow reining in "too big to fail"
institutions. President Barack Obama, emerging from the battles of healthcare
reform, must now steel himself for the fire of financial institutions defending
their right to unfettered greed. - Julian Delasantellis
(Nov 3, '09)
THE BEAR'S LAIR
Bernanke learns from the wrong
crash
United States Federal Reserve chairman Ben Bernanke, noted as a specialist on
the 1929 market crash and the Great Depression, would be better off looking at
other financial disasters over the centuries for lessons more pertinent to the
present crisis. - Martin Hutchinson (Nov 3,
'09)
Hair of the dog
The increasingly deep involvement of the United States government, senators and
congressmen in business decisions is not in taxpayers' best interests. The
resulting recession will be even bigger than the one that everyone assumes has
just ended. - Peter Schiff (Nov 2, '09)
CHAN AKYA
Time to go Dutch
The ruling by the European Union Commissioner for Competition that Dutch bank
ING Groep should sell its insurance unit and US banking arm demonstrates that
the Europeans, unlike their US counterparts, are taking the right route
regarding stewardship of the global financial system.
(Oct 30, '09)
Inflation by stealth
The very fact that prices for most goods in the United States are holding
steady when the economy is in its present black hole indicates that inflation,
far from being absent, is all too present, lurking in the shadows like a ninja.
Once it strikes, price rises will be fast and deadly. John Browne
(Oct 29, '09)
Lesson unlearned
Eighty years after the market crash in the United States that led to the Great
Depression, the "lessons" learned from that grim period have since been
accepted by central bankers, in particular the role of monetary policy. They
have also given birth to an economics of instability. The real lesson is that
weak national economies must seek redress through economic nationalism. - Henry
CK Liu (Oct 29, '09)
Bring on the banking dullards
Is it fair that a banker comfortable with annual income of US$30 million should
now, under government dictat, earn only one-third of that? When the competence
hitherto rewarded helps bring about a financial crisis on the scale recently
witnessed - yes. If such lower rewards bring back banking dullards - again,
yes. - Julian Delasantellis (Oct 28, '09)
COMMENT
Abolishing risk destroys wealth
When government interferes with crucial elements of the American economy,
notably by regulating away risk, it is destroying the nation's growth engine.
The challenge for policymakers is to put the right incentives in place to
increase the odds that, for society as a whole, more good than bad results from
risk - and from greed. - Axel Merk (Oct 27,
'09)
THE BEAR'S LAIR
Where have the savers gone?
Numerous steps that could encourage a higher savings rate in the United States
are possible - but would prove unpopular. With the alternative a future along
the path taken by Argentina, the pain would be worth it. - Martin Hutchinson
(Oct 27, '09)
Inflation fears threaten US
creditworthiness
Anything that poses a threat to the large budget deficits being run up by the
United States is liable to worsen the economic slump. Inflation at present
appears to be benign, yet in itself the fear of rising prices does pose a
threat for the creditworthiness of the US as an international net borrower. The
fear will increase with global recovery. (Oct 26,
'09)
The truth about banks and dogs
Over-aggressive, yappy and totally incapable of fending for themselves -
today's banks are similar to small breeds of dogs created by man's manipulation
of nature. Banks know full well that any misstep will lead to a government
rescue, just as Chihuahuas and Pekinese turn into furry balls of trembling
fear without their masters. - Chan Akya (Oct
23, '09)
Gloating with Wall
Street's goodfellas
If the intention of United States economic mandarins was that tough regulations
would force the large investment banks that survived the crisis to adapt to
quiet, reserved suburban lifestyles, the reality is that they've acted more
like former gangsters placed into a witness protection program, taking over the
numbers racket on the Saturday pee-wee sports fields. - Julian Delasantellis
(Oct 21, '09)
IMF defends lending policies
A report by a Washington-based think-tank criticizes the International Monetary
Fund for failing to anticipate the global downturn and for recommending
pro-cyclical policies based on bad data and over-optimistic assumptions in
response. The IMF has hit back, saying it is certainly not its policy to harm
already poor economies. (Oct 20, '09)
THE BEAR'S LAIR
Rent-seekers' nirvana
The explosion in derivatives and trading volumes can be seen as a gigantic
smokescreen which has enabled Wall Street to extract larger and larger rents
from the remainder of the economy. - Martin Hutchinson
(Oct 20, '09)
Gold's true standard bearers
As the price of gold soars, its rise is accompanied by a constant drumbeat
hammered out on and around United States talk-show programs to persuade
over-anxious, middle-aged Americans to buy Keynes' "barbarous yellow relic". - Julian
Delasantellis (Oct 14, '09)
Great expectations
The mixed reaction to Barack Obama being awarded the Nobel Peace Prize is not
surprising, given the hopes of what he may achieve and doubt over what he has
done so far. To justify the confidence the award shows in him, the United
States president could begin by addressing the global financial system, global
policy on climate change, and global peace, through one simple unifying theme:
energy. - Chris Cook (Oct 14, '09)
THE BEAR'S LAIR
When money is worthless
The increasing attraction to hedge funds of physical commodities as an
investment rather than commodity futures raises the specter of supply
shortages, severe disruptions to industries, and worse. - Martin Hutchinson
(Oct 13, '09)
Climate protectionism on the
rise
Trade and technology protectionism on the part of the United States and other
industrialized countries is on the rise, threatening to take priority over the
threat of climate change, as part of negotiations with developing nations on
how to combat the threat to the world's future. - Martin Khor
(Oct 9, '09)
Bernanke works on as jobless
tally mounts
The number of jobless people in the United States has officially doubled as
Federal Reserve chairman Ben Bernanke has pursued his loose monetary policy,
with the real count much worse. With that policy unlikely to change in the near
future, the tally will keep rising. - Hossein Askari and Noureddine
Krichene (Oct 7, '09)
Follow the money
For US$200 million of public money we could take a walk in the footsteps of
Jesus Christ, curing millions of leprosy. Or we could just give Hank Paulson a
tax break. Then ask what else could have been done with the $4 trillion the US
government has committed to Wall Street and its already hugely rich denizens. - Matt
Bivens (Oct 7, '09)
Payback time
Efforts to cut back on the vast rewards to United States bankers whose
activities undermine society as a whole could be bad news for girls happy to be
named on the school "slut list" in up-market New Jersey - unless their folks
actually work for Goldman Sachs. - Julian Delasantellis
(Oct 6, '09)
THE BEAR'S LAIR
How to disarm the liquidity bomb
Policymakers in the United States talk of reversing the unprecedented liquidity
pumped into the financial system while signaling that interest rates will
remain near zero for some time to come. Yet it is essential to raise rates
before removing the liquidity. The other way around won't work. - Martin
Hutchinson(Oct 6, '09)
CHAN AKYA
Double or quits
As the employment picture in the United States grows ever more bleak, Keynesian
economists are producing their standard calls to government - spend more, and
the good times will come. This after seeing vast amounts already poured into
rescuing the economy come to little effect. It is the cry of despair of a
failing gambler. (Oct 5, '09)
SPENGLER
Obama's permanent depression
The toxic cocktail of fiscal stimulus combined with near-zero interest rates in
the United States allows financial institutions to profit while further
depressing the productive economy. The resulting deteriorating jobs market is
now instilling panic in Barack Obama's White House. The parallels with Japan in
1989 are uncanny. Japan, though, had one advantage: it knew how to export. - Spengler
(Oct 5, '09)
BOOK REVIEW
Named and shamed
Bailout Nation by Barry Ritholtz with Aaron Task
The United States government has thrown billions of dollars at rescuing
companies and their officers who should have been bankrupted, exposed as
charlatans, in some cases jailed, argues Ritholtz in a compelling and
devastatingly accurate indictment of the financial and political establishment.
- Muhammad Cohen(Oct 2, '09)
THE ROVING EYE
Jumpin' Jack Verdi, it's a gas,
gas, gas
Washington wants reluctant Europeans to wean themselves off Russian gas and do
more to protect Pipelineistan - that network of real and virtual routes
intended to channel from the planet's most fractured political landscape the
lifeblood of the world's richest industrial area. It's a new great game, and
it's still the Cold War. It's pure opera, on a grand, grand scale. - Pepe
Escobar (Oct 2, '09)
IMF beats gold-auction drum
International Monetary Fund announcements that it well sell some of its gold
holdings will depress the price and fool some speculators and gold bugs.
Others, less emotional, will keep the metal and see it re-emerge in value, as
it must. - Antal E Fekete (Oct 1, '09)
Off with their blinkered heads
The United Kingdom's Queen Elizabeth has seen many crises in her 57 years on
the throne, adding some weight, rather than ignorance, to her question of why
nobody noticed the financial crisis coming. "Ideological blinkers" is one short
answer. Failure to heed the great economist of the 21st century is another. - Julian
Delasantellis (Sep 30, '09)
Skewed up recovery
Surveys find that US consumers are feeling better about the economy, yet
unemployment, poverty and foreclosure facts tell a different story. The real
economic situation for the least affluent 80% of Americans continues to
decline, and real anger is building. - Max Fraad Wolff
(Sep 29, '09)
THE BEAR'S LAIR
Reality, where art thou?
Government responses to the 2008 crash prevented the failed financial system
from taking on a dose of reality capitalism. Markets that punish dodgy
accounting, or banks that impose no costs on taxpayers and treat even retail
customers with integrity, are still possible, but first the costs of fantasy
must manifest themselves. - Martin Hutchinson
(Sep 29, '09)
CHAN
AKYA
Running out of road
China, of all countries the best placed to mitigate an asset bubble, appears
the most concerned about the impact of government stimulus packages. Elsewhere,
the assumptions underlying hopes of better times ahead look all too flawed.(Sep
28, '09)
G-20 takes up reins from G-8
World leaders meeting as the Group of 20 agreed for that body to take over from
the Group of Eight as the top forum for economic diplomacy, and in a nod to the
poor, vowed to pursue a World Bank food initiative. Power at the International
Monetary Fund is also to move slightly in favor of developing countries.(Sep
28, '09)
Tariffs bill will rebound
The United States decision to impose tariffs against low-end tire imports from
China may indicate the White House considers a touch on the protectionist
tiller and a weaker dollar to its advantage. The eventual bill will fall to
Americans. - John Browne (Sep 24, '09)
Things are getting better?
Leaders of the world's leading economies, including the United States, are
telling their voters that things are getting better. Unasked is which things,
and for whom are they improving. It is certainly not the pay and conditions of
the mass of US workers. - Max Fraad Wolff (Sep
23, '09)
Energy at the Xtreme edge
Renewable energy will have its day, but the world's addiction to fossil fuels
must first run its course, with recent oil discoveries off Brazil and in the
Gulf of Mexico demonstrating the increasing cost of what can - and will - be
extracted in the interim. - Michael T Klare (Sep
23, '09)
Lewis' choice
The weekend of the Lehman Brothers collapse also witnessed Bank of America
chief executive Ken Lewis' decision to buy Merrill Lynch for about US$50
billion - presumably knowing he could have bought it for billions less. Whether
Lewis was a corporate fool or hero supporting society's interests, he is now
very much an ex-CEO. - Julian Delasantellis (Sep
22, '09)
THE BEAR'S LAIR
Gross domestic fudging
Measures of gross domestic product need a rethink, but not along lines proposed
by Joseph Stiglitz. Required is a gauge of the genuinely valuable output of a
real economy, stripping out government spending - a negative to growth. The
public will then rapidly become aware that they are being impoverished. - Martin
Hutchinson (Sep 22, '09)
Autopsies miss Lehman lesson
The Lehman Brothers collapse was the result of a crisis that began years
before, not its cause. Subsequent political cowardice has helped bank
presidents become the world's highest paid civil servants and extinguished
capitalism in the United States. - Peter Schiff
(Sep 21, '09)
CHAN
AKYA
Moral hazard is back
There is clearly a class of people who do not face the full force of the law
because of who they happen to be. The same stunning level of corruption is also
true for banks, bailouts and financial systems. This will be the unsavory
legacy of the Lehman Brothers aftermath. - Chan Akya
(Sep 18, '09)
Scourge of commodity inflation
returns
Central banks continue to ignore commodity price inflation and to deny any link
between that and monetary policy. As a result, and as policymakers congratulate
themselves on low "core" inflation, consumers are again facing higher prices in
their most important purchases - food and fuel. - Hossein Askari and Noureddine
Krichene (Sep 17, '09)
'Tire war' strains US-China
relations
Some analysts worry that the war of words between Washington and Beijing over
recent tariffs imposed on Chinese tire imports could spark a trade war of
retaliatory measures and spur a protectionist trend in United States President
Barack Obama's trade policy. (Sep 16, '09)
POWER WITHOUT CREDIBILITY
Politics of the financial crisis
United States Federal Reserve chairman Ben Bernanke, already criticized for the
close relationship between the Fed and big lenders, now has to withdraw cash
from the financial system. The trick, giving banks even more cash so they can
buy back toxic debt, will leave the economy to rot with rising unemployment and
a damaged dollar. - Henry CK Liu (Sep 16,
'09)
This article concludes a three-part report.
Part 1: Bogged
down at the Fed
Part 2: A lost
decade ahead
A deluded G-20
The Group of 20's self-congratulatory tone in the run-up to their Pittsburgh
summit next week shows that governments have learned little from the financial
crisis, have no clear "exit" plan and are trapped in a populist demand
framework. Their goal of rapid economic recovery at any cost involves
unsustainable policies and will end with economic turmoil. - Hossein Askari
and Noureddine Krichene (Sep 16, '09)
Change? Yes, it can
One year ago, Lehman Brothers collapsed and the world changed, albeit at least
one way in an eminently predictable fashion. But even as unemployment mounts,
the corporatists are in charge in the US, and the anti-corporatists are merely
a vocal minority. What if that also changes? - Julian Delasantellis
(Sep 15, '09)
THE BEAR'S LAIR
The W is getting lazier
Sightings of the green shoots of recovery are turning into full-blown optimism.
Yet strip away the veneer of rising stock prices and housing data, add in
record federal deficits whose long-term effect we really do not know, and it is
clear another credit crunch must be gone through before the economy can enter
healthy recovery. - Martin Hutchinson (Sep
15, '09)
SPENGLER
Gold a hedge and no more - yet
Gold's re-emergence above US$1,000 indicates neither the early demise of the
United States nor of its currency. The world is stuck with the US - and wants
to be stuck with it, while even an indifferently managed reserve currency with
a broad capital market behind it is better than gold.
(Sep 14, '09)
POWER WITHOUT CREDIBILITY
A lost decade ahead
The US Federal Reserve faces an intractable unemployment problem. Households,
their wealth savaged by the financial crisis and their job security threatened,
are now paying off debts and cutting back on purchases. Until consumer spending
picks up, no recovery can come. - Henry CK Liu
(Sep 14, '09)
This is the second article in a three-part report.
Part 1:
Bogged down at the Fed
Canary in the coal mine
Gold's nay-sayers point to quiescent bond markets and say the metal's recent
price gains have nothing to do with inflation. Yet inflation is the only reason
I buy gold, and recently I'm buying a lot. - Peter Schiff
(Sep 14, '09)
CHAN
AKYA
The Surreal Symphony
World governments have succeeded in postponing the reckoning for leverage and
asset prices, not to mention global real incomes, without any prospects of
avoiding a repeat of the very circumstances that led to the current financial
crisis. If this were a fairy tale, it would be both surreal and have a nasty
ending. It is not, so we are just left to ponder the latter ...
(Sep 11, '09)
POWER WITHOUT CREDIBILITY
Bogged down at the Fed
President Barack Obama's announcement of Ben Bernanke's reappointment as US
Federal Reserve chairman overlooked the economist's close involvement with
policies that landed the global economy in its current sorry state. It also
diverted attention from unwelcome new budget data. - Henry CK Liu
(Sep 10, '09)
This is the first article in a three-part report.
When Timmy met Sheila
With all the tension and simmering frisson in their relationship, it's no
wonder that US Treasury Secretary Timothy Geithner and Federal Deposit
Insurance Corporation chair Sheila Bair can't get together to agree on
proposals for financial reform - and as long as Geithner pushes his
super-regulator idea, he's unlikely to get to first base. - Julian Delasantellis
(Sep 9, '09)
COMMENT
Obama in showdown over Chinese
tires
United States President Barack Obama's attempt to be all things to all people
on trade issues has run its course, as his labor union campaign backers force a
decision on whether punitive tariffs should be imposed on tires imported from
China. The Chinese, though, have allies, in the shape of US tiremakers. - Patrick
Chovanec (Sep 9, '09)
THE BEAR'S LAIR
Possible October surprises
The inflation that might be expected in the United States from unprecedented
expansionary monetary policies has failed to appear, while huge budget deficits
have yet to produce higher interest rates. Far from being signs of a new
economic paradigm, this merely means new bubbles are forming. - Martin
Hutchinson (Sep 8, '09)
Doha deadlock seeks Obama line
The Doha round of trade talks has stumbled along for eight years without
resolution, and United States President Barack Obama has yet to make clear how,
or if, he might seek a breakthrough. Meetings in Delhi this week and Pittsburgh
later in the month should bring some clarification. (Sep
4, '09)
CHAN
AKYA
We are all Japanese now
The end of capitalism as the system du jour will happen not with a bang
but with a whimper. Lower growth, higher debt and more bank failures will
feature in the distant future; but for now, many people will celebrate the
death of laissez faire and the advent of Japanese capitalism in its place.
(Sep 4, '09)
BOOK REVIEW
Himalayan heights of
disingenuousness
The Anti-Globalization Breakfast Club by Laurence J Brahm
Very little in this corporate lawyer turned Tibetan Buddhist’s book is served
up as promised, undermining its Himalayan Consensus manifesto for international
development. The author’s penchant to play loose with facts also scars a
potentially stimulating read. - Muhammad Cohen
(Sep 4, '09)
More jobs on the scrap heap
The unemployment rate in the United States is likely to continue heading
inexorably towards 10%, even as the number of people being thrown out of work
declines. With recession-causing issues linked to banks, oil and China
unresolved, the jobs outlook remains bleak. - Peter Morici
(Sep 3, '09)
Bernanke still blind to danger
United States President Barack Obama's nomination of Ben Bernanke to a second
term as Federal Reserve chairman is politically safe. Yet Bernanke consistently
downplayed danger signs as the system came crashing down, and now, newly
emboldened, he's doing the same again. - John Browne
(Sep 2, '09)
Moron capitalism
"Invest in what you know" can be solid advice, especially when you know your
cash is going into institutions carrying a US government guarantee - such as
the five that dominated August's US stock price surge. This isn't deep science,
far from it. Call it "moron capitalism". - Julian Delasantellis
(Sep 1, '09)
THE BEAR'S LAIR
Wrong Swiss city
New Basel bank accounting guidelines fail to address the fundamental problems
that helped to get the financial system into its present mess. Something much
more stringent, a Geneva convention, is required, with the aim of preventing
the banking system from destroying itself. - Martin Hutchinson
(Sep 1, '09)
Central bankers stuck in a hole
Central bankers at their annual Jackson Hole, Wyoming, retreat celebrated their
"success" in rescuing financial institutions and in paving the way for global
economic recovery. By ignoring any responsibility for causing the continuing
financial disaster, they merely clear the path for an even more severe crisis.
- Hossein Askari and Noureddine Krichene
(Aug 31, '09)
CHAN
AKYA
Prada to Pravda
European luxury brands championed the consumerism of the United States and
European countries that led to the global financial crisis; that situation is
now being replaced by a pseudo-reality straight from the pages of old Soviet
newspapers. Now, governments dictate market movements, even as they slant news
coverage to suit specific requirements. (Aug 31,
'09)
Bernanke, the patch-it banker
The reappointment of Ben Bernanke as US Federal Reserve chairman is good news
in that the world knows what it is getting. The bad news is that it will now
get more of the same. - Axel Merk (Aug 27,
'09)
THE ROVING EYE
The glitzy face of Eurabia
Qatar's Sheikh Hamad bin Khalifa al-Thani enjoys his French connection - and
the feeling is mutual. The emir has big plans for his tiny emirate and its huge
oil and gas reserves, while France's president enjoys cozying up with a key
Persian Gulf actor. Expect Qatar to buy more Paris real estate, as more French
arms and passenger jets go in the opposite direction. - Pepe Escobar
(Aug 27, '09)
A country dividing
Stock-market gains, positive home-sales figures and a strong response to
the cash-for-clunkers program mask the grim and worsening reality facing most
United States citizens. A yawning gap is developing between two national
economies forming inside America. - Max Fraad Wolff
(Aug 26, '09)
Clippers kept happy
The United States and other leading capitalist countries have developed a
"goulash" economy - unencumbered by government influence at the consumer level,
but with a new, public/private hybrid arrangement at the commanding heights.
The bond market's behavior tells the story. - Julian Delasantellis
(Aug 25, '09)
THE BEAR'S LAIR
How will we pay for it all?
With the US Congressional Budget Office set to confirm the unprecedented scale
of the federal budget deficit, the harrowing question of how to pay for it
becomes harder to escape. "Tax" is the sole realistic answer. The politicians'
choice will surely be the wrong tax. - Martin Hutchinson
(Aug 25, '09)
IMF adopts irrigation plan
during a flood
The International Monetary Fund, despite having been blind to the impending
global financial crisis, has been granted a lease of life as the world seeks to
recover. This evades the need for genuine reform while preserving the
privileges of countries serving as reserve currency centers. It may also result
in the default of fragile countries. - Hossein Askari
(Aug 24, '09)
American spirit emerging
The public hostility seen in US town-hall debates on healthcare reform may
start to embolden ordinary people to pressure Congress to stop the train of
ever-bigger government. Then could begin the painful road towards economic
restructuring. - John Browne (Aug 20, '09)
MONEY AND COMMODITY MARKETS
Integrity deficit has its price
The role of a reserve currency in international trade is to keep all trading
nations monetarily honest. A reserve currency issuer, such as the United
States, can violate the laws of monetary integrity to finance fiscal and trade
deficits - but not forever, and not with impunity. - Henry CK Liu
(Aug 19, '09)
This is the first article in a series.
US healthcare debate sick to the
heart
Members of the US Congress descending from the Hill to hear
the people's voice regarding US healthcare reforms are being met by screams of
ill-informed opposition rather than tempered debate. They should not be
surprised, but Democrats among them should be concerned. - Julian Delasantellis
(Aug 18, '09)
THE BEAR'S LAIR
Tax is cure to 'insider' scourge
Insider trading, institutionalized with the help of computer software, now adds
billions of dollars in profits to the likes of Goldman Sachs. Prosecution is
not the solution; better a tax that cuts Wall Street's rent-seeking and spreads
the spoils. - Martin Hutchinson (Aug 18, '09)
CHAN AKYA
Crisis hindsight
As the storm recedes, at least for a while, from the worst financial crisis
since World War II, bookshelves are littered with accounts claiming insight
into how and why it happened, if not why so few saw it coming. Whether you opt
for the views of PIMCO's Mohamed El-Erian, famed investor George Soros or the
insightful but relatively obscure Thomas E Woods - choose with care. Not all
are what they seem, as with ex-bond salesman Michael Lewis.
(Aug 14, '09)
Foundations undermined
The sudden toppling of a Taiwanese hotel undermined by a water torrent serves
as a graphic warning of the fate awaiting the US economy, where the upper
reaches are the focus of repairs as its ignored foundations rot away. - John
Browne (Aug 13, '09)
The bill will fall due for
crisis failures
Two years after the onset of the worst financial crisis in 60 years, United
States policy before and since can be considered a failure, possibly
unparalleled in history. President Barack Obama's one-eyed welcome of recent
data notwithstanding, there will be a day of reckoning. - Hossein Askari
and Noureddine Krichene (Aug 12, '09)
Experts never learn
The stock rally has caused many people to conclude that the recession is
nearing an end in the United States. That is a forlorn hope. The best we can
hope for is that Congress and President Barack Obama will start doing the exact
opposite of what they have already tried. - Peter Schiff
(Aug 12, '09)
Credit still at the wheel
After the credit boom and bust, a foreclosure auction encapsulates capitalism's
power of creative destruction and a return to its first principles - you buy
something, you pay for it, in cash. Yet lurking not far away is the brute pain
of eviction - and the driving need, still, for dodgy credit. - Julian
Delasantellis (Aug 11, '09)
THE BEAR'S LAIR
Biological tweak to Adam
Smith
The ventromedial prefrontal cortex has been around a lot longer than credit
default swaps, subprime mortgages and even Alan Greenspan - and may have played
as big a role as these in the present financial crisis. If we were more aware
of our biological demands and responses, we could make our actions more
economically rational. - Martin Hutchinson (Aug
11, '09)
CHAN AKYA
Clunkers for cash
The parallels between the bailouts of General Motors and the general US
consumer are striking. Leaving the main problem unaddressed and granting
special competitive privileges to a select few, the bailouts will end up
distorting the automotive industry as well as the general economy.
(Aug 7, '09)
Hurricane season not over
Investors continue to drive up US stock valuations and President Barack Obama's
economic team is telling the world the recession is over in the United States.
Yet as a US$3.4 trillion commercial mortgage crisis fast approaches, the
country is in the eye of an economic hurricane. - John Browne
(Aug 6, '09)
THE BEAR'S LAIR
Even China faces meltdown
China could be different - it always has been. But from the excesses now seen
in the Chinese economy, a meltdown appears to be impending. The result will not
be pretty for any of us. - Martin Hutchinson (Aug
5, '09)
Goldman Sachs, the lords of time
Forget about the beauty of space. The goal of "rocket
scientists" in the United States in the 21st century is to develop market-data
machines tuned to the microsecond, help Goldman Sachs dominate the world of
finance - and to avoid, if possible, the long arm of the Federal Bureau of
Investigation. Has investment that benefits only the few ever been so esoteric
and glorious? - Julian Delasantellis (Aug 4,
'09)
CHAN AKYA
Faith-based investing
Continued gains in the world's stock markets have attracted numerous
explanations in harness with poor analytical skills, self-contradicting
indicators and a lack of basic math. There is only one answer for rising market
values for risk assets - and therein lies the path, once more, to economic
ruin. (Aug 4, '09)
Dead banks walking
The latest earnings from Goldman Sachs and other big banks are reminiscent of
the era that crashed to an end last September. Yet, if the US Federal Reserve
ever has the nerve to raise interest rates, as it acknowledges it will have to
do, it could bankrupt every financial firm that survived the initial crisis. - John
Browne
(Jul 30, '09)
Monsanto, Dow stack up the genes
The prairies of North America will be planted next year with genetically
engineered corn from Monsanto and Dow AgroSciences that will carry an
unprecedented eight novel genes. Yet critics say the potential health and
environmental risks have not been independently investigated, while US
regulations do not require any such assessments. (Jul
30, '09)
No escape for Fed
United States Federal Reserve chairman Ben Bernanke's
ambivalent testimony regarding a "safe exit strategy" can only exacerbate
instabilities. Not least, when such a strategy would knock what are
already unprecedented deficits out of the ballpark. - Hossein Askari and Noureddine
Krichene (Jul 29, '09)
Middle-class suicide
Many in the US middle class oppose President Barack Obama's attempts at
healthcare reform - yet these are the people whose wealth is now being consumed
so the rich can get the doctors and care they want. - Julian Delasantellis
(Jul 28, '09)
THE BEAR'S LAIR
The return of Thomas Mun
China's recent announcement that it will use its vast foreign reserves to boost
its companies' overseas acquisitions tells us that its economic beliefs are
neither those of Adam Smith, nor of Karl Marx, but of the 17th-century
mercantilist Thomas Mun. It portends a world significantly poorer than our own.
- Martin Hutchinson (Jul 28, '09)
No exit for Ben
US Federal Reserve chairman Ben Bernanke believes that his new gadgetry will
allow him to perform a feat of monetary magic no other central banker has
managed to pull off. He can talk about it all he likes, but when it comes time
to actually pulling the trigger, his nerves will buckle. - Peter Schiff
(Jul 27, '09)
It's time to revamp the Federal
Reserve
The US Federal Reserve's pursuit of low interest rates has
compromised the entire US financial system, while its present strategy of
inflating the economy is inequitable and has many associated risks. A national
debate of Fed policies and its possible reorganization has become a pressing
matter for the United States. - Hossein Askari and Noureddine Krichene
(Jul 24, '09)
Dancing on thin ice
The strong rise in US stocks still leaves the Dow Jones
Industrial Average about 40% below the 2007 peak. With Asia looking
increasingly attractive, the domestic economic picture far from promising, and
significant increases in US consumer spending unlikely, any sense of euphoria
is misplaced. - John Browne (Jul 23, '09)
WTO highlights protectionist
concern
The World Trade Organization, in an annual report that untypically does not
make trade projections for the following year, focuses on protectionist
concerns - a topic chosen, it says, when the trade body had little idea of what
it would be confronting now. (Jul 23, '09)
Credit crunch, part two
Given the typical lag time of US Fed intervention, the much-acclaimed if
optimistically termed "green shoots" may soon die absent fresh liquidity, just
as massive financing calls hit the markets. Call it credit crunch, part two. - Axel
Merk (Jul 22, '09)
'New normal' will be a painful
place
Economists and pundits are now referring to "the new normal", where the economy
will settle after it finishes reacting to the financial crisis. But the "new
normal" is not here yet. It's somewhere else, and it will be a much more
painful place than the present. - Julian Delasantellis
(Jul 21, '09)
THE BEAR'S LAIR
Was Enron right?
The huge profits reported by Goldman Sachs and the investment banking end of JP
Morgan Chase demonstrate again the power of trading operations to earn
spectacular returns for their protagonists. The case was already made by Enron
and Jeff Skilling - now a convict, but also a pioneer of 21st-century business.
- Martin Hutchinson (Jul 21, '09)
CHAN AKYA
Goldman's Atlas shrug
No sooner does a Wall Street firm announce bumper earnings than all the
communists squirm out of the woodwork to criticize it for "profiteering",
whatever that means. It is very much the job of capitalists to make money off
the idiocy of communists and socialists, and given the rich pickings across the
world, more are likely to follow Goldman Sachs principles than those of
communists in government. (Jul 20, '09)
Historic moment for Asian
finance
The financial panic of 2007-08 and the ensuing great recession have changed the
balance of wealth in the global financial arena. The big question is whether
Asian institutions can take advantage of the change and step up into a
leadership role - or hold back and further delay parity between East and West.
- Scott B MacDonald (Jul 17,'09)
Toxic skills keep their appeal
Finding jobless folk from almost any field is an easy matter in the United
States following the hollowing out of the economy with the subprime meltdown.
The exception appears to be the financiers who actually developed, handled and
sold those "toxic assets". They are still very much in demand. - Barbara Garson
(Jul 15,'09)
Obama must bet the house
Barely six months after moving into the White House, President Barack Obama
must decide whether to launch a second economic stimulus package - and face a
headwind of claims that the first was a failure, along with his first and
possibly only term in office. - Julian Delasantellis
(Jul 14,'09)
THE BEAR'S LAIR
Too big to take risks
Urgent steps are required to resolve the challenge presented by "too big to
fail" financial institutions. Yet British Chancellor of the Exchequer Alistair
Darling's proposals that they carry more capital than smaller banks could
merely make the problem worse. - Martin Hutchinson
(Jul 14,'09)
CHAN AKYA
Krugman
best taken in reverse
It stands to reason that the cheerleader-in-chief of the Keynesian brigade
should also prove to be the most self-contradicting reverse indicator of true
economic direction or workable economic policies. All that said, Nobel Prize
winner Paul Krugman of the New York Times is the commentator for everyone to
peruse and understand; for it is in doing the opposite of whatever he
recommends that salvation could arise. (Jul 13,'09)
Blame Michael Jackson
His body lies in the grave, but Michael Jackson's adolescent soul goes dancing
on. America's obsession with perpetual youth remains and this Peter Pan
syndrome will continue to afflict US culture. Baby boomers spent money on toys
rather than saving for the retirement that's now rushing at them like an
express train. - Spengler (Jul 13,'09)
No end in sight to US jobless
rise
The continued rise in US unemployment underlines the failure of Federal Reserve
chairman Ben Bernanke's unprecedented aggressive monetary policy to deliver the
economic recovery that he promised at each interest rate cut. - Hossein Askari
and Noureddine Krichene (Jul 9,'09)
Goldman good but not that bad
There is no denying that Goldman Sachs workers are far smarter
than the average George W Bush flunkie, but attributing them the power to
control every major world market is stretching a point too far. Even more
invidious, such claims discourage people from actually feeling that they can
control their own destiny. - Julian Delasantellis
(Jul 8,'09)
Indebted nations fight off
vulture funds
Heavily impoverished countries are struggling to hold at bay predatory
investors known as "vulture funds" that seek to get richer by squeezing payment
from nations on the brink of debt relief. (Jul
7,'09)
THE BEAR'S LAIR
US adds to its cost burden
The US government could soon be setting prices in as much as 40% of the
economy, putting it on a par with the more liberal countries of Eastern Europe
under communism, or like France in the 1980s. The outlook is for huge long-term
costs on US living standards. - Martin Hutchinson
(Jul 7,'09)
CHAN AKYA
Raining on the Blue Fox
The shine has started wearing off the "Green Shoots" story that has propped up
stock markets and helped various countries pretend that further developments
aren't imminent. As various US states approach different stages of bankruptcy,
the time for governments to change policies is dawning.
(Jul 3,'09)
Destabilizing US must change
course
Federal Reserve chairman Ben Bernanke's conflicting views regarding current and
future record US fiscal deficits highlight his insensitivity to the damage his
easy-money policy has brought to the US and global economies. - Hossein Askari
and Noureddine Krichene (Jul 2,'09)
Cheating still beats real work
The pre-subprime crisis mortgage system in the United States was set up to
reward wrong and punish right, fostering an addiction to greed, lies and
cheating that the subsequent devastation should have cured. The latest battle
over home-value appraisals proves otherwise. - Julian Delasantellis
(Jul 1,'09) |
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CREDIT
BUBBLE BULLETIN
First Dubai
Dubai's debt problems, despite simplistic casting of blame on a lack of
transparency and stupid bankers, are a microcosm of global credit and economic
woes. Bubbles survive longer and grow larger than analysts often expect, but
the world has moved up the learning curve, with Dubai contributing to that
trajectory. (Dec 7, '09)
Doug Noland looks at the previous week's events each Monday.
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The Googlenet has you
Google now merges content from social networking websites into traditional
search results pages. Less immediately annoying but more scary is Google
Goggles, which supplies instant information on photos taken by Android-based
mobile phones. (Dec 11, '09)
Martin J Young surveys the week's developments in computing, gaming and
gizmos.
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David P
Goldman
(Dec 9, '09)
Two-thirds of US job creation in recoveries [are] from small businesses -
[which are] in terrible shape.
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