tag:blogger.com,1999:blog-2546602206734889307.post1904619685233765123..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: The Eurozone: out of the ashes?Mainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-2546602206734889307.post-8475464001018784562014-05-10T15:31:08.749+00:002014-05-10T15:31:08.749+00:00A New Eurozone is coming.
Bible prophecy foretel...A New Eurozone is coming.<br /><br /><br />Bible prophecy foretells in Revelation 13:1-4, it is out of the European Debt Crisis, that is out of tossing waves of sovereign, banking, and corporate insolvency of the Club Med Nations, specifically Portugal, Italy, Greece, and Spain, that a New Monster is rising to replace the Creature from Jekyll Island. It is completely different from the Interventionist of creditism, corporatism and globalism. The Regional Animal, has the form of a leopard, feet like those of a bear and a mouth like that of a lion; and thus operates by stealth, roots outs it enemies, and devours its prey by crushing, ripping and tearing them apart. <br /><br /><br />And as seen in Revelation 13:5-10, there is a Regional Leader waiting in the wings of Europe’s stage, who will soon step into the limelight, and through cunning and shrewdness, will rise to power through regional framework agreements, to rule the Eurozone, with the help of a Regional Monetary High Priest, seen in Revelation 13:11-18. The word, will and way of the Sovereign will replace all traditional constitution, national and historic law. And that of the Seignior will establish seigniorage, that is moneyness, for all residents of the EU. The mandates of fascist leaders will coin diktat money which will establish economic value and grease the wheels of economic activity. <br /><br /><br />In the age of credit the economy, there were two economic goods, consumable output and leisure, demanded by households. Now in the new economy, that is the age of debt servitude, there is increasingly one economic good, consumable output demanded by regional fascist leaders. <br />theyenguyhttps://www.blogger.com/profile/08515095308836729043noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-23672274649125971542014-05-04T17:35:23.963+00:002014-05-04T17:35:23.963+00:00This is another nice example how a model that norm...This is another nice example how a model that normally works well under somewhat peculiar circumstances shows a lot of flaws.<br />Problem with all the current Hans Brinker policies there are a lot of those.<br /><br />Markets look considerably overvalued/-priced. Basically most market participants know this (the large ones do at least that it is very likely), but they are riding the QEwave.<br />This creates however a pretty unstable situation. Basically all are gambling on the greater fool. Which is totally unrealistic.<br />Reason QE wave plus ZLB or close returns on nearly anything.<br />At one point however markets are so far stretched that the upside potential is simply not worth the risk taken. Probably we are there already 3% for 10Y Spain is madness for instance.<br />Just extrapolate trends now and markets would go to all time highs within a very short period of time, which is with still a lousy economy completely ridiculous. Even with a great economy it would be.<br /><br />Back to my point. As I see it we are close to at best a major correction, worst a crash.<br />Further from there cycle might be looking not too bad, but when the market crashes a completely new story will start.<br /><br />In other words normal rules are likely to be iverruled by the particularities of the moment.<br /><br />Similar with your RE story. Available income vs costs is a pretty good to determine house prices. But if you put your interest artificially low (not Macro low but normnal market low) you get first an impuls. Which as said will likely create a bubble here. And a subsequent down goes usually much faster than up (with some delaying factor).Riknoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-57744969324986727602014-05-03T20:33:31.038+00:002014-05-03T20:33:31.038+00:00The EZ countries are basically in worse financial ...The EZ countries are basically in worse financial shape than before the crisis. Debtlevels have gone up considerably. Deficits are still as crap.<br /> Same with the banksector, most banks in the South are bust were it not for funny bookkeeping and that kind of stuff. Very little of the mess have been cleaned up.<br /> Governance structure has somewhat improved (but nowhere near what you would need to make a union function), but on the other hand it there goes something wrong now it is likely simply by public pressure game over at least for the EZ in its current form.<br /><br />It is hoping that the market for some reason not get nervous again either for the banks or the countries itself. If it gets nervous there is a huge problem. All the safety shields are simply not big enough. My guess for a year or so now has been this month as most likely candidate for a crash or something similar and I hate to be wrong.<br />Anyway hard to see the stockmarket not to far from now tanking at best crashing likely. Which will be the end of the giant 0.8% growth.<br />Anyway the figures in some countries like Spain look utter rubbish GDP musy have taken a much bigger hit. Which simply mean that 0.X growth could very well be around 0.0 in reality. <br /><br />The problem with the stability thing is. Enforcing is still a huge problem.<br />But more important countries go over it not for economic reasons but for political reasons. It might work economically they do it, it might be a disaster and they still would go over it. Simply not an economical thing.<br />And the Commission is basically a combination of not having a clue when it is dangerous or not (and it might be helpful for the whole zone) and moronic politics. All have to comply to show that the ones that actually have to comply, comply.<br /><br />Doubt btw if the 3% is still ok. It is based on 2% inflation and 2% structural growth. The EZ is running straught in a Japan scenario with low inflation and low growth as half the countries donot have the sound industrial base Japan has while the rest is equal at best. Basically on alot of points much worse, all the Southern PIIGS have ended up in the EM group competition wise (which is completely overcrowded).<br />From that pov it should be further reduced.<br />Inflation will likely be Japanese like only when worldwide commodity prices get under upward pressure more demand there it will hit in (same again as Japan).Riknoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-25321165217033716512014-05-03T13:44:31.125+00:002014-05-03T13:44:31.125+00:00No doubt my wrongness stems from giving too much c...No doubt my wrongness stems from giving too much credence to all the rhetoric emanating from EU officials emphasising the necessity for stability, no asymmetric shocks etc. Oh and the chronic lack of stability, the recessions that were engineered to protect the peg (in the case of the ERM) & which were only reversed after exit and devaluation. <br /><br />As for paragraph 2: A fiscal council with policy making power is just a local gang of unelected technocrats as opposed to an international gang of unelected technocrats. The unelected bit stays the same. If, however, they are just intended to provide an independent forecast then the (ahem) asymmetry problem arising from differing fiscal policies which the stability pact was intended to address remains.<br /><br />A single currency which is not backed by a single treasury and a single fiscal policy is a necessarily fragile construct..... Tony Maherhttps://www.blogger.com/profile/04684372328862363343noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-50146752669075164472014-05-03T13:08:55.186+00:002014-05-03T13:08:55.186+00:00Ignoring sticky wages and prices is not neoliberal...Ignoring sticky wages and prices is not neoliberal - its just wrong!Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-33822633744748718552014-05-03T13:07:24.660+00:002014-05-03T13:07:24.660+00:00I'm afraid your first paragraph is just wrong....I'm afraid your first paragraph is just wrong. I disagree with the second. In the UK, would you be just as happy for the Commission to do the fiscal forecasting as the OBR?Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-34428376415186304052014-05-03T09:44:11.457+00:002014-05-03T09:44:11.457+00:00It is not about sticky wages/prices, but it is mon...It is not about sticky wages/prices, but it is monetarist/new classical in arguing about the importance of rules and policy credibility and breaking inflationary expectations and classical in arguing about the importance of hard currency.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-86653528636268000152014-05-03T09:28:56.221+00:002014-05-03T09:28:56.221+00:00Good commentary bringing up some issues that I had...Good commentary bringing up some issues that I had not considered.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-32284709751754948242014-05-03T09:01:32.733+00:002014-05-03T09:01:32.733+00:00The Euro currency, by ignoring sticky prices and w...The Euro currency, by ignoring sticky prices and wages, is a neoliberal project; it's straight-up classical economics. <br /><br />I expect that would surprise some Tories and UKIPers (and New Labour and Orange Book Liberals), given that they claim allegiance to Thatcher-Reaganism against the apocalypse of the 1970s. But there it is. <br /><br />And if the last six years won't shift them then only falling into deflation looks likely - or some political pressure through the election of some unpleasant parties in the upcoming European elections.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-5828489334240633712014-05-03T07:58:14.546+00:002014-05-03T07:58:14.546+00:00Surely the single currency (like the ERM before it...Surely the single currency (like the ERM before it) requires stability i.e. no asymmetric shocks. One interest and exchange rate and 18 (then) untethered fiscal policies has not worked. In practise these national fiscal Councils would be unable to initiate countercyclical policy because they would be injecting inflation into the eurosystem and the response of the ECB autopilot would be hoist rates (& thereby increase the cost of borrowing and raise the exchange rate) and squeeze out the counter cyclical recovery. In the ERM/ euro world one countries growth is also an asymmetric shock and is unacceptable. If you can't devalue you can't run an effective counter cyclical policy.<br /><br />Your fiscal Councils sound just as undemocratic as the centralised policy. <br /><br />If it is politically impossible to get the Germans to give ground under the stability pact regime (to the contrary they forced through the uber austerian fiscal pact) then, to my mind, it is beyond the realms of political reality that they would agree to fiscal competition within the single currency area. It is inconceivable that the Commission would agree to be sidelined.<br /><br />Any hope of even a moderate counter cyclical policy set depends on a country's prior departure from the euro...<br /><br /> Tony Maherhttps://www.blogger.com/profile/04684372328862363343noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-22370709244539600982014-05-03T07:52:28.121+00:002014-05-03T07:52:28.121+00:00"To say that this interjection was regarded a..."To say that this interjection was regarded as unwelcome was an understatement."<br /><br />I find that disturbing. (Unless it was just "We are here to talk about economics, not politics".)Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com