When we think we understand what's going on, we fool ourselves.
Salvation Isn't What It Used To Be: First the 'zone was saved, for the ECB was going to accept toxic crap as collateral (sounds vaguely familiar). But wait, the Bundesbank and Frau Merkel say doing so would violate certain treaties (like those that the EU is based on). And worse, she'd like some (total) control over how the funds would be spent.
On A Scale Of Ten... Oil, which started the year at $103 a barrel and peaked at $110, has dropped to $78. What in the world is going on? Despite appearances (and statements) to the contrary, the Fed, ECB, BOJ, BOE and so on are not being “accomodative” enough. The fall in energy prices is a huge canary, flopping around at the bottom of a mineshaft. If they cannot reflate some bubble, any bubble, pretty soon, things are going to get ugly – the fall in the price of energy is deflationary, not something to celebrate.
Time's A'Wastin': Italy's ECB/IMF/EU appointed Prime Minister says that he, Hollande, Rajoy and Merkel have just a week left to save the euro, or Europe will splinter, abandoning all hopes of a grander integration, both financial, fiscal, and political – which seems to have been the goal of at least some of the players for some time now.
In The Wilderness: What's wrong with this picture: Corporate profits are at their all-time highs while wages, as a percent of the economy, are at their all-time lows. How much greater will the gap become before the serfs pour into the streets with pitchforks?
Hell & Environs: The absolute and inevitable doom that awaits us if we do not do something about the federal deficit and federal debt has never actually been proved to be real. Those who preach this particular doom are trying to validate a personal belief or, more likely, trying to achieve a hidden and unstated political goal. We've been running a real-life experiment on deficits and the debt for quite some time now and none of the promised plagues have descended on us: no rampant inflation, no interest rate punishment, no diversion of resources from the private sector (which is awash with cash it dares not deploy). Maybe someday, maybe. But so far, doom remains just over the ever receding horizon. Maybe it's gone to hell.
Where's Pogo? The text of the draft agreement to be signed at the Rio+20 summit is so weak it doesn't even set out any aspirational goals, much less setting forth serious commitments to specific steps to be taken within specific time frames in hopes of preventing catastrophic climate change and the probably collapse of civilization.
The Path: Over the last 30 years, the US economy has generated only $1 for every $3 of debt it has assumed. If the 'growth' is subtracted from the borrowing, the gap is a negative $38 trillion.
How Far Down Is Down? When will the market reflect the fundamental weakness of the global economy? And when will the market finally hit bottom? Granted the connection between the stock markets and reality is tenuous, eventually Wall Street is going to notice that the real economy is weak. Failing. Slip-sliding away. Then what? More easing, more kicking the can, and ever greater divergence between them and us.
Dollar Dethronement Development: The 'dollar exclusion zone', once confined to Asia, has slipped a tentacle into the New World, as China and Brazil agree to a currency swap. When the US Dollar is ultimately dethroned, no-one will have seen it coming. Well, except for folks in China, Japan, Russia, Iran, India, Iraq and now Brazil. And you, of course.
Tab A, Slot B: The EPA says food waste in the US has risen 50% in the last quarter century and has replaced paper as the largest single component of US landfills. At the same time, the UN Children's Fund reports that 1.5 million West African children are in “imminent danger” of starvation.
Teaching Aid: You can join the effort to inform TSA personnel of your rights by wearing a T-shirt with the 4th Amendment printed in metallic ink on it – ink that they can read while gazing at your torso in the x-ray scanner.
Porn O'Graph: Through a glass, darkly.
The Parting Shot:
Dividends.
3 comments:
«the fall in the price of energy is deflationary, not something to celebrate.»
That's confused thinking: it is the sign that deflation caused by recession is happening. But its consequences can be inflationary: it allows for inflation of other prices, for example wages or profits.
In general the use of "inflationary" or "deflationary" without saying of what is a symptom of being fooled by neoliberal propaganda.
Because changes in prices are almost always redistributive and using terms like "inflationary" or "deflationary" is misleading, without saying for whom.
A decrease in the global price of oil is bad for oil producers and good for oil consumers, as it redistributes income from producers to consumers, and that's what matters.
The most notable example of the use of "inflationary" in neoliberal propaganda is that in practice "inflation" in first-world countries means "rising wages" while rising capital gains somehow are non-inflationary, and the just rewards for the sagacity of property owners.
Blissex is right, in a technical sense. I only meant to suggest that the joy of lower gasoline prices was being brought to us by a slowing economy that is slipping back into deeper recession.
Which is what I should have said.
ckm
We are not wasting food in our landfills, we are planting fossil fuels for our "future" Americans to enjoy in domestic tranquility.
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