Daily Digest - July 21
- BIS, The Central Bank of all Central Bankers: The Central Bank WAS Warned in 2003 (Repost)
- FSN News Hour Part 3A
- Ambrose Evans-Pritchard Says End of the Financial World is Nigh
- Ending the week on a positive note...
- Persistent Ignorance
- Denninger on CNBC Follow Up
- White House putting off budget update
- Bailouts could cost U.S. $23 trillion
- Fed member Lockhart calling a mea culpa on Fed policy
- CRE: I Think The Other Shoe Just Dropped (Chart on Page)
- USPS May Be Unable to Make Payroll in October and Retiree Health Plan Costs, Unions' Letter to White House Says
I respectfully suggest reading the entire piece.
25% Unemployment & Underemployed
Bank or Hedge Fund
Beware of the Allure of Debt
One of the good things about those of the Austrian persuastion is that they serve to protect the flanks of the merely skeptical like me.
I am not exactly keen Ambrose Evan-Pritchard's prescription, which is greater monetary easing with more fiscal restraint. I put banking industry reform (of the root and branch sort) very high on the list, but the sort needed will never happen in the absence of another breakdown. So we patch the system with duct tape and see how long it holds together. Failing that, I have doubts of the efficacy of monetary measures.
But that aside, I do agree with his more general points, that the current policy mix is not a good one, and that too many people are making the dangerous and often self serving assumption that we are out of the woods.
Below is an email I just received from NFTRH subscriber Steve Dore, a man who I consider a friend even though we have not met - yet. I first came upon his work at Financial Sense and thought 'who is this musician - way ahead of his time - singing about gold, silver, inflation and the Fed?'. This was long before the Ron Paul phenomenon kicked in. Steve, in his way was a kindred spirit of mine in that we were using different media to put out a similar message.
Yeh, he is crazy. Just like me. Just like all the crazies out there that nobody wanted to listen to when things appeared okay, conventional or dare I say, normal. We have come a long way indeed. One of the real crazies, Peter Schiff, is exploring a run against Chris Dodd for a Connecticut US Senate seat. A disciple of Austrian economics in the US Senate? Another (Dr. Paul) in Congress? What's this country coming to?! :-) I talked to Schiff on the phone once and I will tell you I got an ear full in just 2 minutes. That guy can TALK... and argue. The time is now for a new debate.
It's funny -- or sad, depending on your perspective -- how those who supposedly know best -- the highly paid "experts" on Wall Street -- keep misreading what is happening in the real economy.
For example, all signs point to the fact that what we have been going through these past few years is not just a garden-variety recession, but a full-fledged meltdown spawned by the bursting of the biggest credit/housing bubble in history.
Yet the "Wrong Way' Corrigans" who never saw the unraveling coming, who insisted that the crisis would remain "contained" or otherwise end quickly, who kept seeing rebounds and bottoms that never quite materialized, and who are now proclaiming an end to the "recession" -- their word -- persist in trying to mislead or confuse the masses with their profoundly ignorant assurances.
The latest delusion is the notion that allegedly "good" earnings from corporate America herald the beginnings of an economic recovery. In "The Thesis Continues To Validate: GE," The Market Ticker's Karl Denninger puts paid to this silly theory.
WASHINGTON (AP) - The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today's bleak landscape.
The administration's annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama's budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress.
A series of bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as $23 trillion, the U.S. government’s watchdog over the effort says – a staggering amount that is nearly double the nation’s entire economic output for a year.
I believe for the very first time, a Fed member is admitting that it was an artificially low fed funds rate that ‘helped create the housing bubble’ (I’m quoting Bloomberg). Voting member Lockhart just made the comment in a Q&A after a speech on the US economy. He took office as head of the Atlanta Fed in 2007 so he of course was not party to the Greenspan/Bernanke Fed that cut rates to 1% and left it there for one year. While I’d love to say ‘the first step to recovery is to acknowledge the problem,’ Lockhart went on to say a low rate policy will likely hold ‘for some time,’ today’s low rate is not repeating history and the low rate will not lead to a bad outcome. This time is different is always scary to hear, specifically so with Fed policy.
The letter, which the FederalTimes.com blog provided a scanned copy late last week, says:
"[USPS] top executives are now saying that the USPS will default on a $5.4 billion payment to prefund future retiree health benefits on September 30, 2009. And its government affairs representative are now telling Congressional staff that the Postal Service may not be able to make payroll in October and will be forced to issue IOUs instead."