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Category Archives: Depression

Tragi-Comic Greece Illuminates “Austerity”


Tragi-Comic Masks--a Greek Invention [courtesy Google Images]

Tragi-Comic Masks–a Greek Invention
[courtesy Google Images]

Reuters wrote in May (“Euro zone: more time needed for Greek reforms”):

Euro zone finance ministers will not meet on Thursday and need more time to discuss Greek reforms that would unlock new loans, signaling significant differences remain between Athens and its lenders on bailout targets.”

Signaling”?!

Signaling significant differences?!“

Bunk.

What they’re signaling in this “never-ending story” is that Greece will never be both willing and able to repay its existing national debts—and neither side wants to admit that truth.

What they’re “signaling” is that the EU creditors refuse to face reality: Greece is bankrupt. Therefore, Greece should be allowed to file for bankruptcy because it can’t possibly repay its existing debt. Greece should be allowed to rebuild its economy without repaying existing EU debt obligations—and also without going deeper into debt.

What they’re “signaling” is the creditors’ refusal to admit that “what can’t be paid, won’t be paid”.

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“Interesting Times” in the Oil Patch


[courtesy Google Images]

[courtesy Google Images]

Ancient Chinese curse:  “May you live in ‘interesting’ times.”

 

In the first week of A.D. 2016, Salon magazine published an article entitled “A year of war: 10 destructive armed conflicts the U.S. fueled in 2015”.   According to Salon,

 

“2015 was marked by violence and war. The most prevalent story in the U.S. media throughout the year was ISIS. The Paris attacks, mass shootings, police brutality, terrorism, the Charleston massacre and the refugee crisis were also among the top 10 stories of the year.”

That article illustrated an important point:  As A.D. 2015 ended, the mainstream media and the American people were focused on questions of war.  Would Syria erupt in full-scale war?  Would Russia declare war on Turkey?  Saudi Arabia with Iran?  Shiites with Sunnis?  ISIS sneaking backpack nukes into the US?  Israel with . . . well, Israel could be fighting with anyone.  What about the US goading China or Russia into WWIII?

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Economic Depression: Curse or Cure?


Curse or Cure? [courtesy Google Images]

Curse or Cure?
[courtesy Google Images]

Early last November, Financial Times published an article entitled “The Bank of Japan Considers More Easing”.  That “Easing” was more Quantitative Easing (QE)—the printing and then injection of more, unearned fiat yen into the Japanese economy.

The object of QE is to create sufficient inflation to “stimulate” a slow, stagnant, recessed, or depressed economy back to economic vigor, productivity and prosperity.

According to that article,

 

“Last Friday the Bank of Japan [BoJ] decided to leave monetary policy unchanged. But it also revised down its inflation and growth forecasts, and pushed back its expectation of hitting the 2 per cent inflation target to the end of next year. . . . Disappointing outcomes do not mean that the BoJ’s combination of an inflation target and using QE has failed, but that it needs to be more enthusiastically pursued.

“The BoJ can and should contemplate going further.”

 

In other worlds, even though a Japanese version of QE (Quantitative Easing) has failed to stimulate the Japanese economy for most of 20 years . . . even though QE has failed to stimulate the US economy for the past seven years and, currently, seems to be failing to stimulate the EU and Chinese economies . . . Japan has nevertheless concluded that there’s no reason to think that QE just doesn’t work.

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Posted by on January 12, 2016 in Depression, Economic collapse

 

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Economics: Mostly Math or Mostly Moral?


Institutionalized Injustice:  Fighting Over Unearned Wealth [courtesy Google Images]

Institutionalized Injustice: Fighting Over Unearned Wealth
[courtesy Google Images]

Financial Times:

 

“On Friday [Nov. 6, A.D. 2015] the Bank of Japan [BoJ] revised down its inflation and growth forecasts, and pushed back its expectation of hitting the 2 per cent inflation target to the end of next year. It seems likely, and indeed desirable, that the BoJ will be forced to expand its programme of quantitative easing [QE] before too long.”

QE is intended to cause more borrowing, more spending and more inflation in whichever country/economy that promotes it.  In the case of Japan, continued reliance on QE is strange since they’ve tried to use some version of QE for most of 25 years without much success.

Why does Japan continue to beat that dead horse?  Could it be because that’s the only horse they have?  Financial Times:

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Odd Indicators


Which Economic Indicators Indicate the Truth? [courtesy Google Images]

Which Economic Indicators Indicate the Truth?
[courtesy Google Images]

How odd.

I’ve reported the weekly changes in the same nine economic indicators (gold, silver, platinum, palladium, Dow, NASDAQ, NYSE, USDX, and Crude Oil) since April of A.D. 2008.  Usually, at least one or two of those indicators run contrary to the remainder. I.e., if seven or eight are up, one or two are down—or vice versa.

The week of November 6th through 13th is the first time I can recall when all nine of those indicators were down in the same week.  Is that coincidence a “harbinger of doom”—or merely a curious anomaly?

The three pure commodities (platinum, palladium and crude oil) in my list of indicators were down an average of 10% each between November 6th to 13th.  Ten per cent?!!  In one week?!!  Damn.

Historically, falling commodity prices signal an economic depression.

In the same week, the three equity market indicators (DJIA, NASDAQ, and the NYSE) fell by an average of 3.8% each.  In just one week.  That decline isn’t unprecedented, but it’s nevertheless noteworthy.

Falling stock prices are another indication of economic recession or depression.

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Internet Deflation


One Small Plug for Man . . .  One Huge Deflationary Force for Mankind [courtesy Google Images]

One Small Plug for Man . . .
One Huge Deflationary Force for Mankind
[courtesy Google Images]

The New York Times published “Insurance via Internet Is Squeezing Agents”:

 

 

“Walmart and Google have recently established websites that allow consumers to compare the premiums of various companies for auto, home and other types of insurance, and buy policies.  Both companies have entered partnerships with insurers.

“To the list of jobs threatened by the Internet, add one more: insurance agent.

“Technology start-ups, and companies from the insurance industry, are introducing websites that sell or promote a range of insurance including auto, homeowners and small commercial policies. These portals, which promise savings by showing consumers many price quotes so they do not have to shop site by site, are putting pressure on insurance agents, who collect 10 percent or more of their policyholders’ payments.”

 

The story of ruinous internet competition among insurance agents is a common theme for internet businesses.

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Currency War’s Prize: Privilege to Print “World Reserve Currency”?


Dali: a surrealist artist for a surreal currency [courtesy Google Images]

Salvador Dali: a surrealist artist for a surreal currency
[courtesy Google Images]

Salvador Dali (1904-1989) was one of the world’s premier surrealist artists.  During his peak popularity he enjoyed a peculiar privilege: Whenever he wrote a check, he embellished the check with so many distinctive flourishes and artwork, that many people refused to cash his checks. 

Why?  Because they believed his check (an intrinsically worthless piece of paper) was—as a work of art signed by the Dali—worth more than the face value of the check. 

Result?  Dali frequently didn’t have to actually pay for many of the goods and services he purchased by check with a deduction from his bank account.  Dali could buy dinner or a new pair of tools and discharge his debt with nothing more than a few doodles.

Dali was essentially printing his own fiat currency (an intrinsically worthless piece of paper just like a US fiat dollar).  His celebrity allowed him to use that “currency” to discharge his debts without redeeming that currency at Dali’s bank.

In that regard, Dali was able to emulate the US government’s ability to issue fiat dollars (the World Reserve Currency) and never have to actually redeem the fiat dollar. 

I.e, whoever prints the world reserve currency doesn’t have to actually pay his bills.  At least not for a couple of generations.

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