What happened to all of the doom and gloom economic threads?

[4est_4est_Gump]

There must be somebody besides us ex-bankers-in-remission rolling around the floor laughing about the succession of headlines on Saturday afternoon. First came this:

WASHINGTON (AP) — The International Monetary Fund is estimating that Spanish banks need at least a euro40 billion ($49.87 billion) capital injection following a stress test it performed on the country’s financial sector.

and an hour or two later, this:

Spain will seek financial help from its Eurozone partners but exactly how much won’t be known until private audits are undertaken, the country’s economy minister announced Saturday. Earlier, European finance ministers discussed plans to offer Spain up to $125 billion (100 billion euros) in a bid to stabilize its banks — and ease concerns over the even bigger European debt crisis. That amount was described as an upper limit, not an indication of what Spain would ask for. After Spain’s announcement, the Eurozone ministers issued a statement that they expected a formal request “shortly” and are “willing to respond favorably.” Spain earlier said it wanted to wait for two independent audits — due by June 21 — before deciding on whether to seek aid, and it was not clear if those audits were being stepped up.

It’s $49 billion–no–its$125 billion! Either this is a particularly aggressive effort to soften up European sentiment for an even larger bailout, or it is the product of a general panic in the Spanish government and the European elite. In fact, the butcher’s bill probably will be a multiple of the promised $125 billion. As I wrote in an open letter to German Chancellor Angela Merkel last week, the 184 billion euros in bad loans to which Spanish banks admit is probably less than half the total. The Spanish elite bet the whole economy on a construction bubble which, relatively speaking, has three times the weight that America’s housing bubble did back in 2008. Even worse, Spanish banks have more than doubled their loans since 2008, apparently capitalizing interest (lending more to zombie borrowers in order to book interest payments and avoid a write-off).

Because the Spanish government and banks have engaged in a vast coverup of the financial crisis, it is of course impossible to say how deeply the banks are in the hole. My best guess (based on the lending volume of Spanish financial institutions) is that the real number will be in the $300 billion range. This is a scam, a ripoff, a Ponzi scheme, not a national economy. As I wrote to Chancellor Merkel, to save the credit of Germany and other solvent European countries, the best thing to do is to sacrifice Spain, and draw the line at helping the French banks (who own a lot of Spanish debt). My letter, published first in the Asia Times, was translated into a number of European languages and published in major Dutch, Belgian and Polish newspapers. Chancellor Merkel seems committed to the path of least resistance.

Political cowardice in the face of financial scams on an epic scale is not exactly news these days, but the utter incompetence of the European finance ministers and lack of coordination among the international organizations involved in the deliberations are deliciously new. Never before in the course of human events have so few wiped out so much credibility for so many.

http://pjmedia.com/spengler/2012/06...t-125-billion-and-counting-for-spanish-banks/

 

[RobDownSouth]

That's right, AJ, you can't badmouth the American economy any more because even the conservatives here will roll their eyes and laugh at you now...so hey, let's bash Spain instead.

 

[4est_4est_Gump]

...

Governments indeed have the dubious distinction of being a source of wealth destruction. As we have witnessed in Europe, their “take from the rich, give to the poor” notion of a business is problematic and unsustainable at best, and fraudulent and even criminal at worst. It often starts with the government promise to receive something for nothing. In Greece, the promise was an all expense paid early retirement. Live long and prosper free of charge. In Spain, Portugal, and Italy it was the promise to work at unsustainable wage rates without the possibility of cost concession in times of economic distress. Even here in the U.S. we have not been immune to the making of such unsustainable promises. With the cleaver use of a little known or understood legislative device called “reconciliation,” our government has now promised everyone the finest healthcare in the world without increased costs. Again, live long and prosper free of charge.

...

Federal Reserve Chairman Ben Bernanke told Congress this past week that he expected the economy to expand moderately this year. Yet in the same breath he noted “the recovery faces major risks from both the worsening European crisis and a confluence of expected tax increases and spending cuts at year’s end.” Was anybody listening? He acknowledged the possibility of using more monetary tools to help the economy, but in a final plea to Congress he noted, “I’d be much more comfortable if Congress would take some of this burden from us.”

...

But was anybody listening?

Admittedly, Europe is dealing with an economic mess. Bailing out Greece, if they could fully do it, creates the moral hazard that other countries will follow. The money train will have to make stops in Italy, Spain, Portugal, and the list will grow as “free money” is doled out. Social unrest calling for less austerity and more indulgence can only increase as the payouts fan the flames of “something for nothing.” If history is any indicator, economic sovereignty will begin to be questioned as countries ask for more money with no strings attached. European states will each claim to be “too big to fail” and Germany will be demonized for requiring too much for the money they loan. Individual countries will have to determine whether it is in their self-interest to stay with the Euro and part of the community or go it alone.

In the alternative, perhaps Germany and other self-sustaining European countries should cut their losses and get out now before the money train leaves the station and European wealth evaporates. While the economic impact of such a move would be similar to a bank closing before it loses any money, it could have the effect of causing a run on all other banks. European countries would financially isolate themselves to wait out the storm and weigh their options. Countries like the Netherlands, France, and Germany could find safety in their financial bunkers. The more fragile economies of Greece, Spain, Italy, and Portugal would be forced to weather the storm above ground, subject to the full force and fury of the anarchists and social revolutionaries who often use such events as a rallying cry for their cause. Again, if history is any indicator, shortages would lead to more natural austerity and more social unrest. And as we have seen, the rest is history!

What is likely to occur? Germany will spend more than it should and less than it could. Greece and other similarly situated countries will fight austerity, take what they can get, and demonize their lenders. They will push to the line but back off when they are on the brink. The European crisis will linger and languish for years, and history will repeat itself time and again. Large centralized governments will continue to promise something for nothing and kick the can down the road to another generation.

And lest you think we are only speaking of Europe here. Think again!

David L. Buckner is an economist, professor, and author of “Permission to Think.”

 

[4est_4est_Gump]

If you’re tracking the economy, start tracking women’s lips. If they’re red, plump and glossy, then you know that the economy is heading into a recession.

With the possible exception of Kim Kardashian, who has millions to blow on 72-day marriages, American women are putting off big-ticket investments like weddings, childbirth or homeownership because of the economy. Instead, they’re buying lipstick. Lots and lots of lipstick.

During the 2001 recession, Estée Lauder chairman emeritus Leonard Lauder conceived the “lipstick index” to describe the spike in cosmetic sales he witnessed during hard economic times. Today, Lipstick and nail polish sales are soaring through the roof even as women struggle to keep roofs over their heads. As of October of 2011, lipstick sales were up 14 percent annually and nail polish sales were up 54 percent.

The reason women are opting for lipstick over houses is not because women don’t know how to budget. It’s because socialist and unconstitutional public policies have ravaged our free market economy to the point where the only self-help item many American women can immediately afford is a tube of lipstick or a jar of nail polish.

http://townhall.com/columnists/katiekieffer/2012/06/11/read_my_red_lips_recession

(((LIPSTICK)))

Barry Says: I'm puttin' some lipstick on that pig!
http://pajamasmedia.com/tatler/files/2011/04/obama-wide-grin80.jpg

 

[4est_4est_Gump]

Europe’s monetary union has entered a doom loop. Recessions in peripheral Europe are driving down tax revenues and increasing welfare spending. Despite German-imposed austerity programs, deficits keep overshooting the targets. But these governments can no longer borrow at affordable rates. Meanwhile, their banks are hemorrhaging deposits. Up until now, broke banks could prop up broke governments by borrowing from the European Central Bank and using the cash to buy their governments’ bonds. But that game is over. For there is nothing the ECB can do to stop panicky Spaniards swapping “Spanish euros” for “German euros”—in other words, putting their savings into German banks for fear that Spanish accounts will one day be converted back into pesetas.

This is a potentially explosive process. Already the centrifugal forces at work have generated a vast imbalance within the TARGET2 system, which processes payments between the euro-zone member states’ central banks. In effect, the peripheral central banks owe the German Bundesbank €650 billion. This is a figure that grows larger with every passing week.

What makes all of this so terrifying is that it vividly recalls the events of the summer of 1931. It’s often forgotten that the Great Depression, like a soccer match, was a game of two halves. If the first half was dominated by the U.S. stock-market crash, the second was kicked off by a European banking crisis. It began in May 1931, when the biggest bank in Austria, the Creditanstalt, was revealed to be insolvent. The lethal blow was the collapse two months later of the Danat Bank, one of the biggest in Germany.

As economic confidence slumped, unemployment soared to unprecedented heights. At the peak in July 1932, 49 percent of German trade-union members were out of work. We all know what the political consequences were. All over Europe, the extremists of the right and the left—fascists and communists—surged in popularity. Hitler came to power in 1933. Six years later Europe was at war.

Nobody expects all of that history to repeat itself. Europe’s population is older today and much less militaristic. Nevertheless there are disquieting signs of a populist backlash in many countries—and not just in Latin Europe. In the Netherlands and Finland, right-wing parties win votes by denouncing both Europe and immigration. In the upcoming French and Greek parliamentary elections, the far right will also do well, as will the hard left. And maverick politicians and movements are springing up in the most unlikely places: the comedian Beppe Grillo in Italy, the Pirate Party in Germany.

Today’s populism won’t lead to war. But it is making the task of governing Europe progressively harder every time an election is held. In Europe there is now no such thing as a two-term leader. In the age of austerity, the incumbent always loses.

So, after more than two years of procrastination—known universally as “kicking the can down the road”—Europe has reached the moment of truth.

http://www.thedailybeast.com/newswe...how-europe-could-cost-obama-the-election.html

 

[RobDownSouth]

Two more cut-n-pastes for the morning spewnami!

Drown out the opposition, AJ!

Let no voice other than yours be heard!

It's the Glibertarian Way!

 

[unregistered]

 

[4est_4est_Gump]

Good catch Gump, you're getting to be a first class hog caller.

I'm in a real good mood knowing that the Private Sector is doing fine!

Barry Says: I'm puttin' some lipstick on that pig!
http://pajamasmedia.com/tatler/files/2011/04/obama-wide-grin80.jpg

 

[unregistered]

 

[4est_4est_Gump]

Sweet Barry Croons:

The Private Sector is doing just fine (We got it right where we want it)
[remix]
http://pajamasmedia.com/tatler/files/2011/04/obama-wide-grin80.jpg

 

[mercury14]

They're quoting the CBO and S&P.



It's hard to "lie" about that...

Whenever a liberal quotes the CBO it's a joke source to you. Then you turn around and quote it yourself.

Classic AJ hypocrisy.

 

[unregistered]

 

[richard_daily]

CBO credibility has to do with the data input they are allowed to work with, Clown.

And of course, the only data input that they use that you believe reliable, is the stuff that comes to the conclusions that you agree with.

You're a partisan coward, a hack, and a useless drain on society.

 

[pete]

And of course, the only data input that they use that you believe reliable, is the stuff that comes to the conclusions that you agree with.

this article does a good job pointing out why the CBO shouldn't be praised as some divine measure of economic prediction.

or your could just google "cbo credibility" and see what entertaining hits you get

 

[richard_daily]

this article does a good job pointing out why the CBO shouldn't be praised as some divine measure of economic prediction.

or your could just google "cbo credibility" and see what entertaining hits you get

So if the CBO isn't reliable, then you can't use it as a source, correct?

The issue here, isn't necessarily the CBO, it's the hypocrisy shown by posters like AJ and veteman in which they criticize the CBO in one breath, and then use it to try to support their agenda in the next.

 

[mercury14]

this article does a good job pointing out why the CBO shouldn't be praised as some divine measure of economic prediction.

or your could just google "cbo credibility" and see what entertaining hits you get

212,000 hits on Yahoo, almost entirely conservative opinion pieces. What do you think we should take from that?

And nobody ever suggested taking it as divine truth. You're making another straw man argument.

 

[pete]

So if the CBO isn't reliable, then you can't use it as a source, correct?

The issue here, isn't necessarily the CBO, it's the hypocrisy shown by posters like AJ and veteman in which they criticize the CBO in one breath, and then use it to try to support their agenda in the next.

they used to be more reliable as a non-partisan source, despite the limitations posed on their projections cited in that article. but then they changed staff around and their directors started having meetings with the president and congressional leaders, which had been sorta verbotten in the past. so now their motives are seen as questionable, picking and choosing what to scrutinize and what to ignore.

although that doesn't necessarily mean everything they examine is bullshit, per se. no single piece of data should be taken as sole evidence, no matter where it comes from. so i guess using cbo data is fine when used to support other sources with similar conclusions

 

[pete]

212,000 hits on Yahoo, almost entirely conservative opinion pieces. What do you think we should take from that?

And nobody ever suggested taking it as divine truth. You're making another straw man argument.

gee i don't know that we 'should' take anything from that, it could mean several things now couldn't it?

what should we take from the fact that you infer we should disregard information coming from a conservative opinion?

"another" straw man argument suggests i made more than 1. what others did i assert?

but yes, many people on these boards love to quote and link to cbo stats as absolute truth or the final word. it's not a stretch to characterize that as divine truth.

 

[mercury14]

they used to be more reliable as a non-partisan source, despite the limitations posed on their projections cited in that article. but then they changed staff around and their directors started having meetings with the president and congressional leaders, which had been sorta verbotten in the past. so now their motives are seen as questionable, picking and choosing what to scrutinize and what to ignore.

although that doesn't necessarily mean everything they examine is bullshit, per se. no single piece of data should be taken as sole evidence, no matter where it comes from. so i guess using cbo data is fine when used to support other sources with similar conclusions

Yeah.

So when I posted stimulus impact analysis from the CBO, the Fed, Moody's, Macroanalytic Advisors, IHS/Global Insight, and JP Morgan Chase, all of which agreed that it saved 2-4 million jobs at a critical time, the righties here discredited the CBO's conclusion anyway. Even though it was at the low end of that 2-4 million figure.

I did exactly what you said in posting data and analysis from a range of sources, public and private. And I challenged AJ and others to find professional analysis (not blogs) that differed from the half-dozen sources I provided. Conservatives here reacted by becoming even more entrenched in their opinion that the stimulus did nothing (or made the recession even worse).

AJ especially trashed the use of the CBO as a source and when I asked why it agreed with a number of private sector sources he refused to even acknowledge the question. Then he posted a link to the Fed's analysis of the stimulus which used the 4 million number... And then said he didn't mean to post it (he didn't read it lol).

So while I applaud you for your wise statement about using a range of sources, do not think for even a second that (the majority of) the conservatives here put any stock in that method. After all, this is the thread where AJ claimed to cancel out these six sources with a link to a Canadian college kid's class assignment.

 

[richard_daily]

they used to be more reliable as a non-partisan source, despite the limitations posed on their projections cited in that article. but then they changed staff around and their directors started having meetings with the president and congressional leaders, which had been sorta verbotten in the past. so now their motives are seen as questionable, picking and choosing what to scrutinize and what to ignore.

although that doesn't necessarily mean everything they examine is bullshit, per se. no single piece of data should be taken as sole evidence, no matter where it comes from. so i guess using cbo data is fine when used to support other sources with similar conclusions

You're missing the point. If it's not a reliable source, then you can't use the data that they provide to make your point when it suits your interests.

Either it's reliable, or it's not. It can't be reliable when it suits your agenda, and not reliable when it doesn't.

The topic here isn't the CBO, it's hypocrisy.

 

[mercury14]

gee i don't know that we 'should' take anything from that, it could mean several things now couldn't it?

what should we take from the fact that you infer we should disregard information coming from a conservative opinion?

I don't think it should be disregarded. It should be regarded. As opinion. Take political opinion pieces for what you will. But I believe they're poor sources for facts don't you think?

but yes, many people on these boards love to quote and link to cbo stats as absolute truth or the final word. it's not a stretch to characterize that as divine truth.

Who? Name names.

 

[pete]

You're missing the point. If it's not a reliable source, then you can't use the data that they provide to make your point when it suits your interests.

Either it's reliable, or it's not. It can't be reliable when it suits your agenda, and not reliable when it doesn't.

The topic here isn't the CBO, it's hypocrisy.

no, i get that. and overall i'd personally say they're not very reliable, although *any* source predicting economic activity in the future is going to be subjective and not entirely waterproof.

there's nothing i hate more than stupidity, and i'd group hypocrisy as a subcategory of that.

 

[richard_daily]

no, i get that. and overall i'd personally say they're not very reliable, although *any* source predicting economic activity in the future is going to be subjective and not entirely waterproof.

there's nothing i hate more than stupidity, and i'd group hypocrisy as a subcategory of that.

Be consistent with that opinion, and you'll have my respect, regardless of your political position/s.

 

[pete]

I don't think it should be disregarded. It should be regarded. As opinion. Take political opinion pieces for what you will. But I believe they're poor sources for facts don't you think?

opinion pieces that are only prose don't hold much weight, but many offer links and cite references that support their argument, so i'll definitely prefer to read those.

Who? Name names.

ugh, you're not gonna make me rifle through threads, are you? i'm actually trying to write a story here.
but you've been around these boards long enough to acknowledge that you've seen cbo linked and quoted a helluvalot, yeah? let's agree to that and leave it there.

 

[pete]

Be consistent with that opinion, and you'll have my respect, regardless of your political position/s.

hey i'm not perfect, brother. truth be told i haven't even showered yet.
but yeah i don't have much of an ego, if i contradict myself i'll own it.