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 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)
Bernanke still a speed demon
The folly of Ben Bernanke's over-aggressive monetary policy was highlighted
even before he took over as Federal Reserve chairman. With central banks now
locked in a devaluation war, he appears to have learned little over the years,
despite the devastation around him. - Hossein Askari and Noureddine
Krichene (Jun 30,'09)
THE BEAR'S LAIR
Lessons from the revolution
A new understanding of the Black Death in the 14th century and the subsequent
Industrial Revolution in England holds valuable lessons for present-day
resource exploitation, immigration policies and education. - Martin Hutchinson
(Jun 30,'09)
CHAN
AKYA
The Jackson factor
Global investors can find in the debt and drugs-fueled tragedy that marked
Michael Jackson's final years a parallel to the current goings-on in stock
markets. Stimulus funds sourced from government debt are leaking into the stock
markets while antidepressants may be helping people ignore rising valuation
risks. (Jun 29,'09)
Bernanke keeps his enemies close
United States Federal Reserve chairman Ben Bernanke will need more muscle than
his usual crew of pasty faced economics Phds to face down the Republicans at
the next Congressional hearing. They are sharpening their knives over the
claims that his Fed put pressure on the Bank of America to complete its
calamitous acquisition of Merrill Lynch last year. - Julian Delasantellis
(Jun 25,'09)
False profits and prophecies
AIG Financial Products, whose disastrous credit default swaps brought the
company to its knees, was taking advantage of regulatory arbitrage, a practice
Alan Greenspan, the former US Federal Reserve chairman, called "desirable".
Another ominous cause of the credit crisis was regulatory risks being defined
by credit ratings, which led to the two feeding off each other. - Henry C K Liu
(Jun 23,'09)
THE BEAR'S LAIR
The perils of multipolarity
As the US economy declines in global strength, the BRICs (Brazil, Russia, India
and China) will emerge with policies favoring nationalism over globalization
and government-directed protectionism over free trade. The burgeoning
multipolar world economy is analogous to Europe in the 19th century, when it
led to devastating conflict. - Martin Hutchinson
(Jun 23,'09)
CHAN
AKYA
BRIC plotters stage a farce
The inaugural "BRIC" summit of leaders from Brazil, Russia, India and China
ended in farce, as can only be expected when four disparate economies attempt
to cobble together an alliance based on ephemeral rather than sustainable
competitive advantages. The motley crew, instead of plotting the downfall of
Julius Caesar, merely ended up begging for more, like Oliver Twist.
(Jun 19,'09)
Welcome to the G-8 world of
illusion
The Mediterranean mood, good Italian food and wonderful views overwhelmed Group
of Eight finance ministers last weekend, prompting them to claim breezily that
their economies had stabilized. That was easier than confronting the tally of
record fiscal deficits, highly volatile exchange rates and unprecedented money
expansion. - Hossein Askari and Noureddine Krichene
(Jun 18,'09)
Obama tip-toes on regulatory
reform
Republicans are preparing to fight several of President Barack Obama's
proposals for reform of financial market regulations. There is plenty to
criticize, yet much of it has been inherited from the previous Republican
administration. - Henry C K Liu (Jun 17,'09)
The world is now changed
Even US Treasury Secretary Timothy Geithner conceded the issue in China this
month - global economic power is already being rebalanced, with the strategic
rise of emerging economies and the simultaneous decline of developed nations.
That will only accelerate as the financial crisis fades. - W Joseph Stroupe
(Jun 17,'09)
This concludes a three-part report.
Part 1: Awakening
ahead on bond delusion
Part 2:
BRIC group plans own revolution
Public interest RIP
A generalized public interest no longer exists in United States public policy.
Whether it is the Troubled Asset Relief Program or healthcare reform, the
oligarchy of monied, corporate and financial interests makes sure it gets the
government-baked pie, with the rest of society left to fight over the crumbs. - Julian
Delasantellis (Jun 17,'09)
BRIC group plans its own
revolution
Russia's choice of Yekaterinburg, scene of the execution of Tsar Nicholas II
and his family, for the summit of Brazil, Russia, India and China may be
telling. This week's gathering could prove to be a milestone in developing a
new global economic order as the countries seek to move away from US-dollar
dependence. - W Joseph Stroupe (Jun 16,'09)
This is the second article of a three-part report.
Part 1:
Awakening ahead on bond delusion
THE BEAR'S LAIR
Speculative games stage
comeback
Happy days are here again, with the unimaginably loose US monetary policy
giving Wall Street touts every incentive to renew their endless speculative
games. It is now clear that President Barack Obama's initial "stimulus" was one
of the most counter-productive policy initiatives ever perpetrated. - Martin
Hutchinson(Jun 16,'09)
It's official - cheap oil era is
over
It has long been the energy world's nasty little secret, aired by experts,
decried by officialdom. Now the United States government's Energy Information
Administration is getting on board - the era of cheap and plentiful oil is
drawing to a close, and just as China moves faster than forecast to being the
top energy consumer. A new era of cutthroat energy competition is on us. - Michael
T Klare (Jun 15,'09)
Obama's job claims don't work
The White House would do well to stop the wild claims of having created or
saved 150,000 jobs in the first 100 days and promising four times as many over
the next 100 days. This is not a campaign any more. At some point, the promise
must turn into prosperity. - Peter Morici (Jun
10,'09)
It all comes down to Keynes
Concerns over the inflation that is threatened by the amazing budget deficit
increases in the US and how it should be mastered are misplaced. It is a simple
matter of pressing the correct button - "C", "I" or "G" - and a strong dose
of political courage. - Julian Delasantellis
(Jun 9,'09)
THE BEAR'S LAIR
Unproductive misery
Productivity growth in the United States is likely to be far lower in the next
few years than in the recent past, yet another reason to expect the next decade
to be economically a miserable period. - Martin Hutchinson
(Jun 9,'09)
US moves into back seat
If the United States and its consumers aren't likely to return as the global
economic driver anytime soon, and they most certainly aren't, why should China
and other emerging economies still think and act as if the US will return to
such a key role? There is now no going back to the old order with its outdated
thinking and ways. - W Joseph Stroupe (Jun
8,'09)
This article concludes a two-part report.
Part 1:
Dollar's wounds reopen
GM rescue dumps crash victims
General Motors, beneficiary of US$50 billion in government aid, says it should
not be required to compensate people harmed by known defects in its vehicles.
Rival Chrysler has won a similar deal. (Jun 8,'09)
CHAN AKYA
Principal over principle
The very moral fiber of Anglo-Saxon countries appears to have come under threat
in response to the ongoing financial crisis. Be it the nationalization of vast
swathes of US industry, the expenses scandal in Britain or the attacks on
Indian students in Australia, the very ugly side of these societies has been
pushed into plain view. (Jun 5,'09)
Bankers perpetuate crisis
US Federal Reserve chairman Ben Bernanke, after rejecting classical economic
theory and price and market adjustment mechanisms, has already announced that
economic recovery is underway. Perhaps he and his fellow central bankers should
back their forecasts with their own cash. - Hossein Askari and Noureddine
Krichene (Jun 4,'09)
Dollar's wounds reopen
The US Federal Reserve believed it could breathe new life into
America's asset bubble-based economy by getting credit flowing again and by
replacing investor fear with investor confidence. It succeeded to an extent,
but the US dollar isn't getting the benefit. Instead, its wounds are only being
reopened.- W Joseph Stroupe (Jun 4,'09)
This is the first article of a two-part report.
Dollar's fate written in history
Investors have plenty of recent examples, from Russia to Argentina, Thailand to
Brazil, if they want to chart how the United States will likely emerge from
this crisis. The result is far from comforting if you harbor US dollars. - John
Lee (Jun 3,'09)
China needs no sales pitch
Chinese leaders know very well the state of the Chinese, the US and the world
economy; they don't need a sales pitch on buying US debt. So what's the purpose
of US Treasury Secretary Timothy Geithner's trip to Beijing?- Axel Merk
(Jun 3,'09)
IMF gains illusory strength
As the financial crisis reached global and historic proportions last year, many
commentators identified the International Monetary Fund as the debacle's great
winner. Yet in reality there is little to suggest a sense of renewed faith in
the institution by its main shareholders, let alone by the borrowers.
(Jun 3,'09)
Better than war
The debt-for-equity deal that marked General Motors' bankruptcy solution at
least keeps the failed company ticking over. Therein lies the answer to the
woes of the US at large. Let China and the sovereign wealth funds that own so
much US debt come in and sweep up the bargains. That, at least, would be better
than war. - Julian Delasantellis (Jun 2,'09)
THE BEAR'S LAIR
Regulatory roulette
Demands for improved bank regulation, while understandable, risk overlooking
the disastrous consequences of an inappropriate regulatory structure - the
Federal Reserve being the least suitable entity on earth to regulate the US
banking system. - Martin Hutchinson (Jun
2,'09)
CHAN AKYA
Till debt do us part
Getting out from under the weight of debt is a hard business, not the stuff of
magic wands some in the financial media seem to want it to be. With some
governments adding to the confusion amid both creditors and debtors, today's
recession is likely to become a global depression before individuals and
capitalists, not least those in China and Brazil, once more take charge of
their destiny. (May 29,'09)
False confidence
Ignore the vagaries of US consumer confidence polling and stick to the enduring
laws of economics. Production leads to stocked shelves, but looting leaves them
bare. - John Browne (May 28,'09)
Monetary folly oils oil gains
It is little surprise that oil prices are again jumping, given the fuel's
sensitivity to monetary policy and the vast returns offered by oil futures
contracts compared with Treasuries. Nor do exporters have incentive to boost
output, even where they have such a capacity. Those price gains are just the
start. - Hossein Askari and Noureddine Krichene
(May 27,'09)
World Bank generous to a fault
India and Vietnam head the countries mentioned in a deeply buried report into
corruption involving World Bank aid. More than a decade after bank president
James Wolfensohn started his "Cancer of Corruption" campaign, talk and no
action remain the institution's leitmotif, even as the bank is granted billions
of dollars more to hand out where it sees fit - with few questions asked. - Bea
Edwards (May 27,'09)
The greatest swindle ever sold
Former US Treasury secretary Henry Paulson's initial US$700 billion financial
rescue plan has morphed into a $12 trillion-plus government and Federal Reserve
commitment to bail out swathes of the economy. The impact seven months on
remains unclear. What cannot be disputed is the identity of the biggest loser
of this largesse: the American taxpayer. - Andy Kroll
(May 27,'09)
THE BEAR'S LAIR
The government bond glut
Even the doziest Middle Eastern central banker will realize by the end of the
year that inflationary forces have already taken a grip on the global economy.
Government bond rates of 3% or 4% will become unsustainable and rational
investors will go on a "buyers' strike". Prices will collapse, and further
long-term funding will become impossible. - Martin Hutchinson
(May 27,'09)
Liquidity drowns meaning of
'inflation'
The standard terms of "inflation" and "deflation" no longer hold sense as US
government intervention perpetuates a broken financial system where financial
profits rise as demand and prices fall. Only reform toward full employment with
rising wages will save this economy. - Henry C K Liu
(May 26,'09)
California's sweet dream sours
In 1965, the Mamas and the Papas wrote of California dreaming, which can be
seen now as meaning everything all the time one wants it. As the increasingly
jobless state sinks under the weight of ballot-mandated programs, perhaps it
would be better now if it finally woke up and faced the morning. - Julian
Delasantellis(May 26,'09)
CHAN AKYA
Easy bets with other folks' cash
Recognizing the role financial engineers are playing in the current global
stock-market rally will help investors identify just how they are being
hoodwinked. Irresponsible comments from central bankers and government
officials aside, it is the people who talk up their own books who merit the
most ire. (May 22,'09)
Banks bounce back, homeowners
slump
As executives at Goldman Sachs, JPMorgan and other US banks boast of their
institutions displaying remarkably rude health, people at the other end of the
financial crisis - US homeowners - face record foreclosures, the highest
jobless rate for 25 years, and the threat of even higher payments to the banks
for credit-card use. (May 21,'09)
Recession 'shape' points down
Economists who see a "V" shape to the recovery from recession, or less
hopefully an "L" shape, share a misguided optimism. The shape of this crisis,
at least for the United States and the United Kingdom, is a series of downward
steps into the gloom. This provides a tremendous opportunity for the rest of
the world, especially for the increasingly wealthy East. - W Joseph Stroupe
(May 21,'09)
Uncle Sam's 'F'-rated bonds
Washington's monopoly on printing dollars makes it difficult to assign a
conventional rating on its bonds. They can't default, but investors' capital is
still at risk. Perhaps a special grade is required: "F" for "flee them now". - Peter
Morici (May 20,'09)
All-round welcome for emissions
plan
Everybody, it seems, from General Motors to environmentalists, is welcoming US
President Barack Obama's new nationwide rules for car exhaust emissions and
mileage standards, even if it drives up the cost of buying a new car. What is
needed now, say the automakers, is support for new technologies, investment in
infrastructure, and smart regulation. (May 20,'09)
Depravity at the GM wheel
Wall Street has few equals when it comes to rewarding moral depravity, witness
the role played by holders of credit default swaps in the bankruptcy of General
Motors. The "hold" put on Gary Gensler's nomination as chairman of the US
Commodity Futures Trading Commission - at least while it lasted - was
remarkably contrary to form. - Julian Delasantellis
(May 19,'09)
THE BEAR'S LAIR
The wreck of modern finance
Wall Street's economists and hired "mathematicians" caused global havoc through
creating risk-management models claiming mastery of an assumed "randomness" -
where only chaos existed. Where Enron's Jeff Skilling got a 24-year jail term
for inventing an unsound trading platform, what sentence is due the Nobel prize
winners who created these fictions? - Martin Hutchinson
(May 19,'09)
GM plays the China card
GM's announcement that it may make automobiles in China for sale in the US may
merely be a ploy to wring more concessions from the unions in Detroit. If more
than that, it is just plain stupid, not least because such sales cannot be
reciprocated. China's safety and counterfeit record alone should make the plan
a non-starter. - Peter Navarro (May 18,'09)
IMF using crisis for own ends
The International Monetary Fund is taking advantage of the global financial
crisis to force expensive contractionary policies on countries in need in order
to rejuvenate its own existence, claims a Washington-based researcher.
(May 18,'09)
G-2 too simple for reality
Advocates of a "G-2" partnership between the United States and China to shape
the post-financial crisis world overlook its more complex reality. The
inclusion of Europe, for one, would help to achieve a more appropriate
equilibrium. - David Gosset (May 15,'09)
Fed plays proxy for China
Both the US Federal Reserve and the bond markets have a vested interest in
seeing Treasury yields, especially longer-dated debt, remain very low. The
question is, which side will pay to see that they remain that way. One clue -
it is not the Chinese. - W Joseph Stroupe (May
15,'09)
Kirk talks nice at WTO
United States Trade Representative Ron Kirk used his first official appearance
at the World Trade Organization headquarters to proclaim "greater openness" and
that "the substance of our talks will drive the process" of the struggling Doha
Round of negotiations. Delegates were then left wondering just what that
substance would be. (May 14,'09)
Border crossing resolved
The Internet has vastly increased employers' ability to use far-off workers to
perform up-to-the minute but tedious tasks at cheap rates. But why stop at
software tinkering and answering phone calls. An Alex Rivera movie has
Mexico-based "laborers" guiding robots through tasks such as housebuilding. As
one character says: "We give the US what it's always wanted. All the work
without the workers." - Mark Engler (May
14,'09)
Oh, impotent Washington
The saddest part of the ultimately degrading spectacle of the now totally
discredited US bank stress tests is how they indicate the impotence of the US
government when it comes to addressing national problems which necessitate a
sacrifice by well-heeled interest groups. - Julian Delasantellis
(May 13,'09)
MONETARISM ENTERS BANKRUPTCY
Credulity
caught in stress test
Regulators are beginning to grasp that "too-big-to-fail" in the debt-driven
financial democracy that is the US now encompasses individual mortgage or
credit-card holders. The government has already got the picture, evident in its
negotiation of the "must pass" stress test for banks. - Henry C K Liu
(May 12,'09)
This report is the third in a series.
Part 1:
Monetarism enters bankruptcy
Part 2:
The burden of elitism
Inflationary musketeers
Central bankers, led by Ben Bernanke in the United States, Mervyn King of the
United Kingdom and Europe's Jean-Claude Trichet, are injecting trillions of
dollars of fake money into the global economy, yet they have no ability to
inject even one barrel of oil or a pound of rice. Their money printing is pure
taxation, pure wealth redistribution, with the inevitable inflationary result.
- Hossein Askari and Noureddine Krichene
(May 12,'09)
THE BEAR'S LAIR
Which green shoots will wilt
first?
Indications of economic recovery are sprouting in the most unexpected places,
yet conditions will worsen as the cold gale of rising interest rates vies with
the frost of inflation to kill off those early "green shoots". As buyers of US
Treasury bonds realize they have been suckered, expect to hear more from
China's central banker, Zhou Xiaochuan. - Martin Hutchinson
(May 12,'09)
CHAN AKYA
Truth is too hard to handle
Greed and fear have re-established themselves as the drivers behind bond and
stock performances. All hint of logic is absent as the markets adopt the "green
shoots" anthem. Yet in reality, we can forget about the stability of financial
institutions and stop imagining any chances of corporate earnings recoveries.
Higher interest rates and lower stock values beckon.
(May 11,'09)
Market can do the stress testing
The market, rather than the government, should decide on capitalization of
financial institutions and thus the ability of those institutions to lend. That
could be done through an obligation to issue and regularly refinance
subordinated debt, representing, say, 10% of all loans extended - Axel Merk
(May 7,'09)
A break from the bankrupt norm
Hedge funds that gambled against the president of the United States over
whether Chrysler should be put into bankruptcy may now be wishing they'd left
the table one hand earlier. Even so, the world soon returned to normal. - Julian
Delasantellis (May 6,'09)
US debt on default path
The assumptions behind US government claims that it can reverse policies in
time to fend off hyperinflation, and that default on its debts is out of the
question, look far too rosy to be given any credence. - W Joseph Stroupe
(May 6,'09)
MONETARISM ENTERS BANKRUPTCY
The burden of elitism
Banks are indispensable for a working economy; badly-run banks ignoring sound
banking principles are not. What is needed in a depression is not more central
bank money for distressed banks but government deficit money to sustain full
employment with living wages. - Henry C K Liu
(May 5,'09)
This report is the second in a series.
Part 1: Monetarism
enters bankruptcy
THE BEAR'S LAIR
The correct recovery paradigm
History is replete with examples of how to fix an economy when it is struck by
a range of disasters, and awash with failed efforts at staging a recovery the
wrong way. The policies advocated in the past by John Maynard Keynes and being
pursued today in numerous countries belong to the group of dismal failures. - Martin
Hutchinson (May 5,'09)
The mirage of recovery
The Barack Obama administration is trumpeting the recovery of the US economy.
Yet, thanks to Federal Reserve chairman Ben Bernanke and the manner in which he
has expanded his mandate far beyond what is permitted central banks, what we
see is merely the illusion of a recovery, to be shattered when the bills fall
due. - Hossein Askari and Noureddine Krichene
(May 4,'09)
Stress tests flunk stress test
United States central bankers may actually believe the assumptions behind
their "stress tests" of commercial lenders. More likely, neither the Federal
Reserve nor the Treasury has any will to paint a clear picture of the country's
financial turmoil. China's purchase of gold, meanwhile, tells its own story. - John
Browne (Apr 30,'09)
Black-hole balance sheets
A half century after Chicago economist Melchior Palyi condemned the
falsification of bank balance sheets through how they accounted for government
bonds, the practice of building fortunes on bogus capital has returned to haunt
the world. - Antal E Fekete (Apr 30,'09)
The hard and simple maths of
crisis
Xiang Lin Li emerged from the chaos of China's Cultural Revolution to stamp his
genius on the Western financial system with a mind-numbing equation that led to
the present global financial crisis. Or was the crisis really just caused by
the demand of the white middle class in the US for good schools? - Julian
Delasantellis (Apr 29,'09)
The global politics of swine flu
The United States and the European Union are already at odds
over the outbreak of swine flu. And if this is merely the first phase of the
deadly attack, subsequent waves will cause greater disruptions in world trade,
transport and trans-border human movement, making a whole new logic of
de-globalization inevitable. - Kaveh L Afrasiabi
(Apr 29,'09)
CHAN AKYA
Swine flu over cuckoo markets
The outbreak of swine flu and the continuing global financial crisis have more
in common than their potential to disrupt the lives of numerous people across
the globe. Both highlight the danger of maintaining unsustainable modus
operandi at the core of modern humanity's lifestyle.
(Apr 28,'09)
THE BEAR'S LAIR
UK shows bankers the exit
The British budget for the coming year will encourage the decline facing the
City of London as native and overseas bankers and financiers vacate the
monuments of modern finance for more welcoming and attractive shores. - Martin
Hutchinson (Apr 28,'09)
IMF lost on the high seas
Central bank governors and finance ministers at the weekend
again underlined their failure to recognize the catalyst common to two
centuries of financial panics - excessive credit creation. Their willingness to
put more money into the hands of the International Monetary Fund will just
create a bigger crisis in the future. - Hossein Askari
(Apr 27,'09)
CHAN AKYA
G-8's first bankruptcy
The United Kingdom is the leading candidate for the first sovereign bankruptcy
among Group of Eight countries. Rather than learn from the downward spiral of
its financial system, the government is crawling back towards populist
socialism in a move that is destined to destroy the economy.
(Apr 24,'09)
The Treasury's squalid vacuum
How big does a cause have to be before you kill your friends, or in the case of
the US Treasury under Henry Paulson, how big does the money have to be before
one's principles are abandoned? Former Treasury official Philip Swagel has come
in from the cold, with few kind words for his former comrades in arms. - Julian
Delasantellis (Apr 23,'09)
Profits mask coming storm
The recent stock market rally and glowing bank profits mask a gathering storm
that will yet again throw the US financial sector into turmoil. The bottom
hasn't been reached - worse, it is still nowhere in sight. - W Joseph Stroupe
(Apr 23,'09)
Growth fit for the future
People globally are realizing the world cannot survive under the present
economic growth model, yet human demands and the desire to meet these will not
go away. Nor need they. An alternative exists that will enable unparallelled
consumption and unprecedented business opportunities - and help to create a
world fit for humanity. (Apr 22,'09)
Gigantism stamped with failure
As Western governments pour money into struggling giants of
the financial world, they would do well to pay attention to how nature grows,
adapts and survives. "Too big to fail" is a mantra that leads only one way - to
failure. - Chip Ward (Apr 22,'09)
BP's boss gauges the climate
Peter Sutherland, who once coveted the European Commission presidency, is now
signed up - in a personal capacity - as official adviser to the present
incumbent, Jose Manuel Barroso, on energy and climate change. His company,
British Petroleum, meanwhile, spends millions of dollars on lobbying US
politicians - but only a few euros on their European counterparts.
(Apr 21,'09)
THE BEAR'S LAIR
Drowning in the soup of recovery
Thanks to government bungling in most countries, "L" might be the best shape of
economic recovery most people can hope for. Certainly over the next five years,
it might be better to be Polish, Brazilian or Korean than Japanese, Indian or
Anglo-American. - Martin Hutchinson (Apr
21,'09)
Not all economists agree
President Barack Obama has moments of clear-eyed insight in regard to the
financial crisis. Yet he backs away from the tough choices and is badly misled
in claiming agreement among economists that government spending should be
maintained in a recession. - Peter Schiff (Apr
20,'09)
Make it personal
News of financial bailouts and stimulus packages has battered
the public on a daily basis, with numbers beyond any sense yet of vital
importance to their lives and those of later generations. Working that out at a
personal level is a start, but these averages also mask cause for deep anger. - Max
Fraad Wolff (Apr 16,'09)
The gods, too,are taxed
Those who contend a real recovery is upon us, declining, for example, to look
too closely at the latest earnings of Citibank and the like, do not see that
they are taunting the gods of irony to unleash their wrath. Small mercies are
enough as the world economy seeks to rebuild amid the ruins of a shadow banking
system. - Julian Delasantellis (Apr 16,'09)
Decouple the world from the
dollar
While monetary easing and fiscal stimulus may limit the current slump, the
broken machinery of the global economic system must be fixed. For a start, a
wedge should be driven between the dollars held in foreign reserves and those
the US will be creating at a much faster clip. (Apr
15,'09)
Taxing grandma to pay Goldman
Sachs
Pure gravy in the form of cheap funds courtesy of the US Federal Reserve is
helping Goldman Sachs and the like declare stronger-than-expected profits.
Banking skill has nothing to do with it. And the ultimate losers are
non-banking retirees. - Peter Morici (Apr
15,'09)
World leaders miss the target
The world leaders who met in London this month proved adept at posturing for
the TV cameras while missing the important opportunity to redefine the
predatory terms of international trade created by dollar hegemony. - Henry C K
Liu (Apr 14,'09)
THE BEAR'S LAIR
The world's most important election
The elections in India that start this week could help the emergence of a
magnificent political and economic ally for the United States and Europe. Yet,
with the country's economy an accident waiting to happen, the poll outcome is
likely to contribute to the downside of a dismal global decade. - Martin
Hutchinson (Apr 14,'09)
Appeasement and decline
With US imports from China remaining strong, Beijing is exporting unemployment
while threatening to stop buying US Treasuries if the Washington acts to offset
China's currency and other subsidies. The Barack Obama administration is
foolishly buying the threat. - Peter Morici (Apr
9,'09)
Bankers get a model rush
The past several months have been one big downer for US bankers, as they
watched the value of their assets shrink. Now, thanks to a tweak to accounting
rules, they can start feeling high again. - Julian Delasantellis
(Apr 8,'09)
G-20 makes it worse
The global economy has merely worsened between the past two Group of Twenty
crisis summits. The arrival of US President Barack Obama has now swung the
group firmly to the left, guaranteeing even further deterioration. - Hossein
Askari and Noureddine Krichene (Apr
7,'09)
THE BEAR'S LAIR
Prolonged global winter
Having David Ricardo as an economic advisor helped, but the
United Kingdom once upon a time knew how to get out of a recession. And
quickly. Now practically the entire world is ensuring that the pain will be
ground out over years. - Martin Hutchinson (Apr
7,'09)
CHAN AKYA
The G-20 piles folly on folly
Broken window panes apart, the only tangible result of the Group of 20 meeting
in London - the tripling of International Monetary Fund resources to US$750
billion - is astounding. The people whose incompetence has made the fund a
byword for poverty and who had no clue about the present crisis until it burst
on us are now supposed to show the foresight to end it.
(Apr 3,'09)
Geithner's dirty little secret
US Treasury Secretary Timothy Geithner claims he is not seeking "to sustain
weak banks at the expense of strong". Yet the biggest five lenders in the US,
led by JPMorgan Chase and Bank of America, are the weakest, holding 96% of US
bank derivatives positions and almost all the net credit-risk exposure. And
they are dictating federal government policy. - F William Engdahl
(Apr 2,'09)
Zoellick seeks new trade fund
World Bank president Robert Zoellick, anticipating a fall in global economic
output this year, wants the world leaders meeting in London to back a
"vulnerability fund" to cushion developing countries against the impact of the
financial crisis and create a US$50 billion program to ease trade credit. - Jim
Lobe (Apr 1,'09)
Born again - and again
Few outside Washington and Wall Street's inner circles know her name. But when
that economic and political "elite" claims innocence for the present financial
chaos across the world, they are forgetting, as we should not, the person they
trussed up and violated in their own practiced fashion - Brooksley Born. - Julian
Delasantellis (Apr 1,'09)
The G-20's summit of fear
The problem with the Group of 20 crisis summit in London this week is that it's
all show, masking fear among the global elite that it really doesn't know how
to stabilize the world economy. - Walden Bello
(Apr 1,'09)
SPEAKING FREELY
China's White House hostage
It remains in China's interests to finance US budget and trade deficits as the
White House throws ever-more dollars into the economy. But ultimately neither
country will prosper under this status quo. - Peter Navarro
(Mar 31,'09)
THE BEAR'S LAIR
Beyond the dollar
China's proposal that the International Monetary Fund's Special Drawing Rights
replace the US dollar as the world's main currency is a non-starter. But China
could break an IMF prohibition by putting the yuan on the gold standard. That
would be of long-term benefit to the world economy and its own citizens. - Martin
Hutchinson (Mar 31,'09)
G-20 maps road for chaos
The failure of this week's Group of 20 summit in London to map out an escape
route from the global financial crisis appears unavoidable if the earlier
gathering of the group's finance ministers and central bankers is a guide. The
pain and cost of continued financial anarchy will be borne in the years ahead.
- Hossein Askari and Noureddine Krichene
(Mar 30,'09)
CHAN AKYA
Goldplay
Another merry week for the markets underscores the utter moral bankruptcy of
the Group of Seven countries that will soon translate to financial bankruptcy.
Inflation will become more common, but contrary to the apparent thinking of the
People's Bank of China, there is no room for a "global" currency. All you need
is gold. (Mar 27,'09)
Time to stop the rip-off
The US government is indulging in the biggest rip-off in the
history of man - even as the wealth divide in the US has never been greater.
And there is no end in sight. President Barack Obama has to learn the toughest
decision there is in business - when to stop throwing good money after bad
money.- Hossein Askari and Noureddine Krichene
(Mar 26,'09)
Building on a weak foundation
The Barack Obama administration is, with extravagant policies aimed at holding
back an even worse financial crisis, building a dike higher by taking soil from
its base. When the overwhelming waters of depression break the dam, it will
collapse all the faster because of this lack of foresight. - John Browne
(Mar 26,'09)
DISPATCHES FROM AMERICA
Economic dirty bomb goes off in
New York
The streets and people of New York are devastated for the second time in a
decade. This time, the culprits behind the wrecked lives and ruined livelihoods
are not foreign extremists, but homegrown. And rather than receive appropriate
retribution, the perpetrators receive billions of government dollars for their
demolition job. - Tom Engelhardt (Mar 25,'09)
An imbalanced summit
When seven highly indebted and crisis-hit rich countries assemble with some of
their creditors in London next month, those not present include most of the
countries to which the "rich" are indebted. This imbalanced summit marks the
crumbling of an era. - Oscar Ugarteche (Mar
24,'09)
Down the dark path
The warm market welcome accorded to US Treasury Secretary Timothy Geithner's
toxic assets plan does not signal its success, while President Barack Obama's
choice of favoring banks over taxpayers seems to indicate he is heading down
the sad, dark path of "third way" socialism. - Julian Delasantellis
(Mar 24,'09)
THE BEAR'S LAIR
Assigning the blame
Separation between the US Fed and the governmental apparatus must be increased.
Such a position will be attainable only when one overriding truth is grasped:
the crisis is more the fault of the Fed than of Wall Street, which simply
responded to the incentives provided by monetary mismanagement. - Martin
Hutchinson (Mar 24,'09)
Fed sends wrong message
The US Federal Reserve's decision to buy US$300 billion in long-term Treasury
bonds over the next six months is a risk-free gift to bond bulls and another
disincentive to businessmen to make new investments. Why invest today if rates
will be lower tomorrow? - Antal E Fekete (Mar
23,'09)
Tax to the rescue
The incentives for speculators to roil the currency markets can be reduced
through imposition of a low-level tax that could also feed into a currency
under attack. This is an issue Group of 20 leaders should evade no longer.
(Mar 23,'09)
US Fed's move is the bigger
problem
The public in the United States is not only following the wrong story with its
cries of anguish over AIG bonuses, rather than being concerned with how AIG got
into the mess in the first place. The far bigger story being ignored is the US
Federal Reserve effectively telling foreigners, such as the Chinese, that the
US does not need their money; it will print its own. - Julian Delasantellis
(Mar 20,'09)
CHAN AKYA
Bonus-free knuckleheads
The way out of the financial logjam is to provide the private sector with
incentives to get its act together rather than by driving through retrospective
moves designed to placate popular anger. Governments don't have any experts to
deal with this problem, and it is time they acknowledged that fact.
(Mar 20,'09)
SPEAKING FREELY
Free markets are not rational
Man, smoker or otherwise, is no longer rational, nor can he be trusted with
free markets. Everything we know about economic behavior, right back to Adam
Smith, must be rethought. Back before nationalism, socialism, capitalism. Two
hundred years is long enough to live a theory that was clearly wrong. - Aetius
Romulous (Mar 19,'09)
The second shockwave
The developing world is yet to feel the full impact of the
global financial crisis. That is coming, as remittances from richer countries
fall, exports decline and survival without an adequate social security net
becomes increasingly hard. "Regime-threatening instability" is next on this
path. - Michael Klare (Mar 19,'09)
G-20 fritters as crisis deepens
Preparations for the Group of 20 economic summit next month
have so far failed to recognize the cause of the financial crisis it is
supposed to resolve, even as governments continue the reckless, easy-cash
policies that brought it about. This summit is risking failure, and that too
will carry a cost. - Hossein Askari and Noureddine Krichene
(Mar 18,'09)
DOLLAR CRISIS IN THE MAKING
China inoculates itself
against dollar collapse
Any publicly recognized effort by the Chinese government to reduce its heavy
exposure to US dollars could bring about the very collapse in dollar value that
it fears. Beijing is fully aware of the risks - and is acting accordingly. - W
Joseph Stroupe (Mar 17,'09)
This article concludes a three-part report.
PART 1:
Before the stampede
PART 2:
The not-so-safe haven
CRAMER TAKES THE FALL
Comedian Jon Stewart's face-to-face condemnation of
business commentator Jim Cramer struck a righteous chord with an impoverished
American public blinded by the hysteria of a TV ratings war. Yet a media
bully's self-promotion in this most-modern form of community trial may further
stifle the financial discussion he claims to wish broadened.
Justice on Comedy Central
- Julian Delasantellis (Mar 17,'09)
Danger of the bully pulpit
- Peter Morici (Mar 17,'09)
THE BEAR'S LAIR
The baleful Bretton Woods legacy
The US call for a trebling of the International Monetary Fund's lending power
ignores the dismal history and recent actions of the Bretton Woods institution.
A better international financial architecture would appear if the IMF merely
disappeared. - Martin Hutchinson (Mar 17,'09)
DOLLAR CRISIS IN THE MAKING
The not-so-safe haven
The US is caught between multiple contradictory interests concerning its
issuance of ever-more Treasury debt. Weighing heavily is much recent evidence,
even before Chinese Premier Wen Jiabao's public expression of concern over
China's US assets, that Beijing is already eyeing an exit route from dollars. - W
Joseph Stroupe (Mar 16,'09)
This is the second article in a three-part report. PART 1:
Before the
stampede
CHAN AKYA
Buyer beware
Endemic fear of deflation has pushed Western governments to issue mountains of
cash to their citizens. Asia is feeling the pinch, and not just in terms of
currency values. Savers are seeing a decline in both current income and future
purchasing power. (Mar 13,'09)
A swallow before summer
Embattled Citigroup's surprise claim to be profitable in this
quarter was enough excuse for US stock prices to start flashing green. Yet the
stench of toxic assets remains. And cause for deep concern. - John Browne
(Mar 12,'09)
The great escape
The financial crisis requires more-effective stimulus packages, an aggregator
bank, and fixing, with "protectionist" China, the dollar-yuan exchange rate. Peter
Morici also tells US legislators that the worst legacy of the Wall
Street morass may be a broken confidence in capitalism and a ruined public's
sense of betrayal on seeing bank executives escape with their fortunes.
(Mar 12,'09)
OBAMA, CHANGE AND CHINA, Part 2
A dangerous balance
Trade and currency values have long been a contentious issue between China and
the West. Yet the appreciation required to close China's balance of payment
surplus would cause instability for the whole global economy - including
collapse of the US retail trade. - Henry C K Liu
(Mar 12,'09)
This report is the second in a series
Part 1:
The song stays the same
Work makes a comeback
A "lifetime" of work has until recently usually meant just that, with no notion
that it be followed by retirement and ease. The West's baby boomers, their
pensions disintegrating just as they were coming into reach, are very painfully
about to rediscover history. - Julian Delasantellis
(Mar 10,'09)
THE BEAR'S LAIR
Subsidizing failure
The near US$4 trillion so far in US government "stimulus" is pushing funds to
the most unproductive assets and burdening sensible taxpayers and sound
business. The consequence will be GDP almost 10% lower than it would have been
without these subsidies for failure.- Martin Hutchinson
(Mar 10,'09)
Geithner's folly
As US unemployment rises inexorably, Treasury Secretary Timothy Geithner is
playing his part in ensuring that the trend will continue, while his
explanation of "why we are here" overlooks his own role in that descent into
economic madness. - Hossein Askari and Noureddine Krichene
(Mar 9,'09)
OBAMA, CHANGE AND CHINA, Part 1
The song stays the same
President Barack Obama's promise of a new approach to politics is yet to be
reflected in the US position regarding China, while financial bailouts led by
the US are following the tired formula of cutting jobs and driving down wages.
China appears to be the only exception of this trend. A redefinition of US
national interests is critical if Obama is to succeed with his agenda of
change. - Henry C K Liu (Mar 5,'09)
This report is the first in a series.
Time for prayer
US Federal Reserve chairman Ben Bernanke's inability to read
correctly economic signals that are accurately interpreted by others and his
strategy to resolve the financial crisis should prompt us to pray for a miracle
amid his chaos. - Hossein Askari and Noureddine Krichene
(Mar 5,'09)
The unspeakable solution
Losses at US financial institutions may soon deepen to US$3.6 trillion,
worsening amid the failure of various government approaches to stem the
financial crisis. Nationalization, in spite of deep hostility to the term, may
be the most market-friendly solution to getting banks back into business. - Nouriel
Roubini (Mar 3,'09)
Outhouse politics
Baffling to non-Americans, millions of people in the
United States, their homes without running water, fear a socialist government
would make their lives even rougher. Hence, in part, Treasury Secretary Tim
Geithner's contortions to save the banking system without overt
"nationalization". - Julian Delasantellis (Mar 3,'09)
THE BEAR'S LAIR
One casino too many
Of all the Wall Street casinos created over the past generation, the credit
default swaps market has been among the most lucrative. The damage it has
caused to the global economy justifies at the very least sharply restricting
use of this sandbox. - Martin Hutchinson (Mar
3,'09)
CHAN AKYA
Beggar, I thy neighbor
The economic crisis, unsurprisingly if painfully, is forcing political
realignments around the globe. The pace at which pseudo-autonomous states, from
within Europe to the Gulf to the western United States, are being pushed into
the embrace of richer neighbors presents rare opportunities for a new
generation of Bismarckian politicians. (Feb 27,'09)
Crunched into modernity
As the credit crunch reshapes perceptions of old models of finance, the
Internet and the changes it has wrought on how people and organizations relate
offer new ways of linking investors and borrowers, with a much-reduced role for
banks. - Chris Cook (Feb 26,'09)
Hey Washington - it's a global
crisis
United States President Barack Obama seemed at best to underplay, at worst to
forget, in his address to the joint Houses of Congress the global dimensions of
the economic crisis. The need for US leadership and responsibility extends
beyond US borders. - Sam Gardiner (Feb
26,'09)
A scam at the heart of the US
A commodity trader's rant against aid for foreclosure-threatened US homeowners
was fun but misplaced - unless he plans to stay in his present home for the
next 30 years. America's moneyed elite have established a crooked mug's game at
the nexus of law and finance - and US judges should close it down.- Julian
Delasantellis (Feb 25,'09)
A planet at the brink?
Angry protesters are taking to the streets in cities across the world - a
perilous consequence of the crash of 2008 is increased civil unrest and ethnic
strife. Governments are talking of "swollen rivers of anger" and "summers of
rage", and it could get a lot worse. - Michael Klare
(Feb 25,'09)
Gold lights up Obama errors
The combination of the Barack Obama administration's unrestrained fiscal
deficits and Federal Reserve financial engineering will, rather than create
millions of jobs, drive up prices and extend the financial, housing and
unemployment crises. Gold prices have rarely been mistaken in forecasting
deteriorating economic conditions. - Hossein Askari and Noureddine
Krichene (Feb 24,'09)
THE BEAR'S LAIR
Government digs a deeper hole
Every new stimulus and rescue plan is being met with stock market declines and
more gloomy economic data for good reason. The markets recognize that the
deepest hole the global economy will need to climb out of is the one
governments have dug. - Martin Hutchinson (Feb
24,'09)
BOOK REVIEW
Show me the exit!
When Markets Collide - Investment Strategies for the Age of Global Economic
Change by Mohammed El-Erian
Ideally, an investment book should answer the eternal conundrum - when to sell.
The respected El-Erian may put recent events in "their proper context" and give
readers "the tools" to interpret the markets. But this reviewer is still
waiting for the answer to the key investment riddle. Tell me when to get out! - Julian
Delasantellis (Feb 20,'09)
G-7 points to more instability
The declaration by the Group of Seven countries that stabilization of the
global economy and the financial markets was their highest priority
unfortunately came with a resolution to continue with policies that created the
present crisis. Their meeting was not a step towards stability but fuel for
instability. - Hossein Askari and Noureddine Krichene
(Feb 19,'09)
Economic catastrophe looms
Gold's remarkable rally in the face of depressants such as sales by the
International Monetary Fund highlights investor nervousness even after the
latest, doomed, US stimulus plan. When governments send the next wave of
liquidity downriver, the value of nearly everything, except for gold, will
diminish. - John Browne (Feb 19,'09)
THE BEAR'S LAIR
The liquidationist alternative
One person, Andrew Mellon, would have shunned the Keynesian stimulus approach
being followed by his successor, US Treasury Secretary Tim Geithner. Before the
crash of 2008, Mellon's purgative approach would have minimized the damage.
Amid the crisis, he would have paved the way for a quicker recovery and at much
less cost. - Martin Hutchinson (Feb 18,'09)
Perhaps a cool hand
The opprobrium and despair that met US Treasury Secretary Tim Geithner's
financial rescue plan - late, vague, opaque - was near universal. Yet his
"stress test" for banks may prove a key card in the game of poker being played
with bankers over the pricing of mortgage-backed securities. Julian
Delasantellis (Feb 17,'09)
 SPENGLER
Obama, an economic unilateralist
Claims that the financial crisis will dethrone the United States as the
dominant world superpower are merely silly. The crisis strengthens the relative
position of the US and exposes the far graver weaknesses of all prospective
competitors, China included. It also positions President Barack Obama as a
unilateralist president far beyond Ronald Reagan's dream.
(Feb 17,'09)
Capital wisdom from the East
Gaining the confidence of investors takes decades to build, but is easily
destroyed, a fact understood by Chinese Prime Minister Wen Jiabao, if not by
his counterparts in the West. - Axel Merk
(Feb 12,'09)
The 'best men' fall - again
Bankers justifying huge pay levels to keep "the best men" remain blind to how
we'd all have saved serious money if they had hired the worst. Anger at the
financial sector's hubris is surfacing again after 70 years. The old order is
dying. Let's bury it. - Steve Fraser (Feb
12,'09)
SPEAKING FREELY
Stop worrying and embrace the
debt
America is in debt because it wants to be. And as long as the United States is
committed to defending a way of life measured entirely by gain, the only option
is to flood the planet with absolute rivers of more American debt - or
"stimulus". - Aetius Romulous (Feb 11,'09)
Muscled-up Pelosi casts shadow
on world
US House speaker Nancy Pelosi has displayed the strength of her political
muscle in designing the US$827 billion Economic Stimulus Package. Its deep
failings mean the entire world, including President Barack Obama, will pay the
price. - John Browne (Feb 11,'09)
Bad bank - insanity bank
Plans for a "Bad Bank" to take over the banking sector's toxic assets are
insane, act against recovery and lay the foundations for further economic
deterioration. Over a year into the recession, it is time policymakers returned
to the proven sanity of stable and balanced policies. - Hossein Askari and
Noureddine Krichene (Feb 10,'09)
THE BEAR'S LAIR
The zombification of Wall Street
As a populist gesture, US President Barack Obama's new restrictions on the pay
of US bankers are odious banker-bashing. As a corrective to the "too big to
fail" doctrine they have considerable merits. Obama may have found a way,
without draconian legislation, to remold Wall Street. - Martin Hutchinson
(Feb 10,'09)
CHAN AKYA
False hope of protectionism
It didn't take too long for protectionist impulses to rear up across the Group
of Seven leading industrialized countries as the initial bouts of Keynesian
spending failed to provide any relief. Yet demographic factors dictate that any
salvation for developed countries waits on increased consumption in the Asian
region. (Feb 6,'09)
Wanted - a world central bank
It is time to establish a world central bank, free of political control, to
help get us out of this global financial quagmire that threatens the future of
us all. - Hossein Askari (Feb 5,'09)
COMMENT
The contest for global
domination
The epic match between East and West for domination of the globe did not end
with the collapse of the Soviet Union in the early 1990s. In the second round,
the East, despite the mounting hardships of the global economic crisis,
continues its rise. And an increasingly wobbly-kneed West, because of that very
crisis, continues its rapid decline. - W Joseph Stroupe
(Feb 4,'09)
This is the first article in a two-part report.
The bogus side of bonus culture
The argument that whopping year-end bonuses enhance shareholder value would
probably be poorly received by actual financial sector shareholders,
considering that share prices are down 90% or more - and assuming the shares
still have value as something other than e-Bay memorabilia. But has this
inconvenient truth spoiled the bonus party? Not really. At $18.4 billion, bonus
bonanza has only fallen back to 2004 levels. - Julian Delasantellis
(Feb 4,'09)
THE BEAR'S LAIR
The un-stimulating stimulus
Not all government spending is wasteful, the creation of the US Interstate
Highway System having had significant long-term social and economic benefits. A
check-list of the proposed US economic stimulus package quickly reveals, in
contrast, a net depressant effect on the US economy. - Martin Hutchinson
(Feb 3,'09)
Davos under fire
As the financial crisis has deepened, criticism has grown of the World Economic
Forum held annually at Davos in Switzerland. The event is increasingly seen as
a key arena for fomenting the policies now seen as central to the present
global disarray. (Feb 2,'09)
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David P Goldman
(Jul 2, '09)
[Although mentioning "huge" exchange-rate risks] China clearly is talking about
something else ...
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Fast Firefox comes with bugs
The latest version of Mozilla's Firefox web browser, which attracted 5 million
downloads in its first day of release, will please most users. Others may wish
they had held back until the plethora of bugs are fixed.
(Jul 3,'09)
Martin J Young surveys the week's developments in computing, science,
gaming and gizmos.
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 Riches
in store
With the bullion bank net short position in gold now at staggering and almost
record levels, even as the US government talks of "green shoots", we can look
forward to being able to buy ever-more precious metals at bargain prices.
Whee!!! (Jul 2,'09)
THE MOGAMBO ARCHIVE |
CREDIT
BUBBLE BULLETIN
Only the timing in doubt
One challenge in analyzing bubbles is that powerful forces perpetuate them
longer than one would have initially expected, so predicting the timing of
problems now developing in the Treasury and currency markets is cloaked in
doubt. But all the makings for the next problematic leg of this financial
crisis are there.
Doug Noland looks at the previous week's events each Monday.
(Jun 29,'09)
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