Europe's Game of Political Chairs Doesn't Impress Markets - WSJ.com
Interestingly said - but, as Selzer alludes, if doesn't point out, the raft of politicians and union leaders believes there is a free lunch.
All the talk of the ECB coming to the rescue is like a family running up a limit on its credit cards. In other words, do they cut back their spending, live within their income, try to get a better job - or, as with the heavily indebted EU states (and the US), do they want the printing presses to roll out more credit?
Clearly, the objective is more credit.
After all, people have been told they are entitled. The unions haven't a clue how to start a business and socialist and union-centric governments don't want to encourage non-union, free-market businesses to compete with feather-bedded, regulatory-heavy businesses - as Selzer points out.
The US is in the same position.
The quagmire is like that of the housing market. In the US housing bubble, it was unsustainable housing price increases moving out-of-tandem with incomes.
In the world of sovereign debt, it's low interest rates moving out-of-tandem with the incentive of the private economy to save and transfer the savings to government borrowing for the socialist state.
To say the housing bubble was the first big bubble of the millenia is fairly easy; to say the sovereign debt bubble is the next - well, that would seem fairly easy too.
But, as with housing, how many really want to admit what is starring them in the face?
Sunday, November 20, 2011
THE ONGOING MISMATCH: High-Grade Corporates Benefit from Europe's Woes - Barrons.com
High-Grade Corporates Benefit from Europe's Woes - Barrons.com
As with the during-bubble run-up in housing prices in excess of income changes; so now, it would seem there is a developed world run-up in demand for new debt (even Greece in supposed austerity has a projected 10% of GDP deficit for the upcoming year) that is totally out-of-sync with the real returns offered to savers to provide the funding for the debt.
And, as governments' need low rates to be able to afford the interest due on their debt; and, as growth isn't happening under the regulatory and fiscal frameworks these governments feel necessary politically; and, as the governments (US and EU) appear to want money to be printed...
draw your own conclusions.
As with the during-bubble run-up in housing prices in excess of income changes; so now, it would seem there is a developed world run-up in demand for new debt (even Greece in supposed austerity has a projected 10% of GDP deficit for the upcoming year) that is totally out-of-sync with the real returns offered to savers to provide the funding for the debt.
And, as governments' need low rates to be able to afford the interest due on their debt; and, as growth isn't happening under the regulatory and fiscal frameworks these governments feel necessary politically; and, as the governments (US and EU) appear to want money to be printed...
draw your own conclusions.
Friday, November 18, 2011
FISCAL POLICY ICE AND SNOWDRIFTS: History Repeats In Policy Blunders - Barrons.com
History Repeats In Policy Blunders - Barrons.com
There is also the old-saying about "garbage-in-garbage-out".
In this case, it would appear the garbage is to ignore Art Laffer's many comments.
As said a few days back, why not approve this new pipeline and give a bunch of people jobs? (In this case, it's the environment lobby that needs appeasement) Same with more oil drilling off the coast of the US. - all totally outside of austerity policies.
The regulatory burden (Obama's and others such as Sarbanes Oxley) - all designed with seeming good intentions have nothing to do with austerity - they just hold back business.
The austerity debate is really more of a red herring of the socialist-union alliance that wants high levels of government spending - and, this alliance believes it is a free lunch.
The policies that are holding back the economic 'car' need to change. Flooding the engine and a heavy foot on the spending and borrowing accelerator do nothing to overcome the fiscal policy ice and snowdrifts.
There is also the old-saying about "garbage-in-garbage-out".
In this case, it would appear the garbage is to ignore Art Laffer's many comments.
As said a few days back, why not approve this new pipeline and give a bunch of people jobs? (In this case, it's the environment lobby that needs appeasement) Same with more oil drilling off the coast of the US. - all totally outside of austerity policies.
The regulatory burden (Obama's and others such as Sarbanes Oxley) - all designed with seeming good intentions have nothing to do with austerity - they just hold back business.
The austerity debate is really more of a red herring of the socialist-union alliance that wants high levels of government spending - and, this alliance believes it is a free lunch.
The policies that are holding back the economic 'car' need to change. Flooding the engine and a heavy foot on the spending and borrowing accelerator do nothing to overcome the fiscal policy ice and snowdrifts.
Thursday, November 17, 2011
THE RELATIONSHIP OF BORROWERS TO SAVERS (OR MONEY PRINTERS): Bond Market Calls the Shots in Europe - Barrons.com
Bond Market Calls the Shots in Europe - Barrons.com
The same is true in the United States - much to the less-than-realistic imagination of the socialist types like Obama and the public employee unions - all of whom somehow believe that if you 'wish for an outcome', then eventually, that's what will happen.
Even if history shows that not to be the case - witness union-centric socialist economic policies collapsing the economies of Greece, etc. And, as with GM, once the equity is gone, someone has to step in to revive what has been depleted.
When everyone keeps wanting to borrow (crowding-out by sovereigns noted) and no one wants to save (i.e. a negative real return), then something has to give.
Either savers need to be paid more or borrowers have to borrow less or start paying back.
Which way will the winds blow?
The same is true in the United States - much to the less-than-realistic imagination of the socialist types like Obama and the public employee unions - all of whom somehow believe that if you 'wish for an outcome', then eventually, that's what will happen.
Even if history shows that not to be the case - witness union-centric socialist economic policies collapsing the economies of Greece, etc. And, as with GM, once the equity is gone, someone has to step in to revive what has been depleted.
When everyone keeps wanting to borrow (crowding-out by sovereigns noted) and no one wants to save (i.e. a negative real return), then something has to give.
Either savers need to be paid more or borrowers have to borrow less or start paying back.
Which way will the winds blow?
THE ILLUSION OF A FREE LUNCH: Simon Moore: Britain's Gas-Price Gamble - WSJ.com
Simon Moore: Britain's Gas-Price Gamble - WSJ.com
Needless to say, any government intervention has consequences. The old law of physics about actions and reactions.
If costs are raised everywhere through higher taxes, there are implications in terms of fewer jobs being created.
People also live less well because everything costs more, salaries don't increase and people have to make do with less.
As people make do with less, the opportunity to create better, newer cities diminishes along with the jobs to build these cities.
As this article says, the less government interference in what people want (electric power) and the way in which the market supplies it (i.e. no subsidies), the better!
In terms of unknowns, it seems as though everyday is bringing more frightening news about the banking and sovereign debt crises - all of which should be laid directly at the feet of governments and their voting blocks that think there is a free government lunch. Clearly there is no such free lunch!
Needless to say, any government intervention has consequences. The old law of physics about actions and reactions.
If costs are raised everywhere through higher taxes, there are implications in terms of fewer jobs being created.
People also live less well because everything costs more, salaries don't increase and people have to make do with less.
As people make do with less, the opportunity to create better, newer cities diminishes along with the jobs to build these cities.
As this article says, the less government interference in what people want (electric power) and the way in which the market supplies it (i.e. no subsidies), the better!
In terms of unknowns, it seems as though everyday is bringing more frightening news about the banking and sovereign debt crises - all of which should be laid directly at the feet of governments and their voting blocks that think there is a free government lunch. Clearly there is no such free lunch!
Thursday, November 10, 2011
WHY NOT PUNISH UNION THUGGERY COSTING TAXPAYERS - THE LIRR SCANDAL: Review & Outlook: Europe's Entitlement Reckoning - WSJ.com
Review & Outlook: Europe's Entitlement Reckoning - WSJ.com
Fair is fair, but the unions are being given a free ride - particularly the public employee unions.
Sadly, the US unions and the Democrats haven't even a clue as to what they are doing to the economy. It's all free lunches to the deserving.
Yesterday, there was a report on the scandal of union members (the LIRR in this case) gaming the disability system.
Was there any indication that any public official saw this as an outrage and that the perpetrators (90% of retirees from the LIRR) be obligated to repay their ill gotten gains? I didn't and haven't seen it.
Fair is fair, but the unions are being given a free ride - particularly the public employee unions.
Sadly, the US unions and the Democrats haven't even a clue as to what they are doing to the economy. It's all free lunches to the deserving.
Yesterday, there was a report on the scandal of union members (the LIRR in this case) gaming the disability system.
Was there any indication that any public official saw this as an outrage and that the perpetrators (90% of retirees from the LIRR) be obligated to repay their ill gotten gains? I didn't and haven't seen it.
Saturday, November 5, 2011
THE TIMES DON'T REALLY SEEM TO BE CHANGING: Greek Referendum and Swaps Option Raise Huge Risks - Barrons.com
Greek Referendum and Swaps Option Raise Huge Risks - Barrons.com
In the same way the housing bubble, as it was building, seemed to be a house built on the sand of rising prices but not rising incomes; so too, the current environment,where interest rates are effectively zero or negative (thus no encouragement to save and defer gratification) yet governments are spending far more than their economies can give them with ever rising taxes, seems to be economic environment built on sand.
What the storm will be that wracks these economies and whether a particular storm will have the same destructive impact on all of them is clearly unknown.
However, this article starts to touch on them.
(As a simple example, we see low rates paid on savings here in Portugal; yet, Friday's news was that the Portuguese banks don't have the funds to lend to Portugal's largest companies that need to roll over EUR ($?) 3 billion in debt.)
Clearly, the economic balancing act between borrowers and savers is askew; and,looking for the Fed or ECB to keep printing money can't end well.
We know fiscal and regulatory policies are inhibiting growth in the US and here in many parts of Europe.
The housing bubble went on far longer than a number of people thought (the rest being blissfully ignorant). So too, people demanding and wanting things from government that are ultimately unaffordable seems to be going on far longer than one would hope.
Then again, politicians are afraid to talk about it.
In the same way the housing bubble, as it was building, seemed to be a house built on the sand of rising prices but not rising incomes; so too, the current environment,where interest rates are effectively zero or negative (thus no encouragement to save and defer gratification) yet governments are spending far more than their economies can give them with ever rising taxes, seems to be economic environment built on sand.
What the storm will be that wracks these economies and whether a particular storm will have the same destructive impact on all of them is clearly unknown.
However, this article starts to touch on them.
(As a simple example, we see low rates paid on savings here in Portugal; yet, Friday's news was that the Portuguese banks don't have the funds to lend to Portugal's largest companies that need to roll over EUR ($?) 3 billion in debt.)
Clearly, the economic balancing act between borrowers and savers is askew; and,looking for the Fed or ECB to keep printing money can't end well.
We know fiscal and regulatory policies are inhibiting growth in the US and here in many parts of Europe.
The housing bubble went on far longer than a number of people thought (the rest being blissfully ignorant). So too, people demanding and wanting things from government that are ultimately unaffordable seems to be going on far longer than one would hope.
Then again, politicians are afraid to talk about it.
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