While he is right that much our economy is run on debt, his solution of public workers threatening to strike in order for banks to essentially lose billions is pure idiocy. It's like he thinks that cities and states didn't run themselves into a fiscal hole to begin with by making bloated monetary promises for the sake of votes (union ones at that) and that rising interest rates are not the result of increasing riskiness associated with institutions increasing in insolvency.
Though I am not a fan of Wall Street's cozy relationship with Washington and soaring rhetoric about people rising up against centralized power is entertaining, Lerner just doesn't understand economics and how the Federal Reserve provides the impetus to accumulate massive amounts of debt. It will be interesting to see if Lerner's plan actually happens, but it probably won't amount to much of anything.
Announcements like this from JP Morgan are the kind that probably irk Lerner:
The likelihood that the Portuguese government will fall this week looks high. This suggests that the sovereign will likely access the EFSF in the near term, despite the current government's efforts to avoid this outcome.We can only hope so. In Lerner's mind, banks should continue to waste capital and investment funds on fiscally insolvent governments. He seriously doesn't get it. I never thought I would say it, but Glenn Beck seems to be starting to get it. From EPJ:
Just in case you didn't catch it, I watched yesterdays episode of Beck online just now, and apparently he is doing a show on the Fed this Friday (he even called it "The Monster from Jekyll Island").I might actually try to tune in. Larry Kudlow, despite his constant Reagan worshiping, is starting to get it too. From his column today:
The last leg of this gas-price jump can be attributed to the $10 or $12 oil-price spike, resulting from supply worries in the Arab world. But it's worth noting that gasoline moved from $2.70 to $3.15 just as soon as Ben Bernanke announced his money-pumping QE2 strategy in late August last year.Now add Libyan President Gaddafi to the list of those who get it:
The Libyan central bank – which is under Colonel Gaddafi’s control – holds 143.8 tons of gold, according to the latest data from the International Monetary Fund, and FT says some suspect the true amount could be several tons higher.You would think indications like this would turn more people around:
Our debt sustainability analysis across the eurozone periphery shows that Greece is clearly insolvent; the Irish government is unable to support its banks and remain solvent; Portugal’s public debt is not sustainable at current interest rates; it is still quite possible that Spain will lose market access in 2011; and Italian public debt is comparatively stable.For now, the dollar is holding steady compared to gold and silver, but is losing ground to other currencies:
And yet, even as it become clearer by the day that what Whitney said was both irresponsible and wrong (do the math; just $12 million of munis have defaulted since December and we're already ¼ of the way through her timetable) she continues to mesmerize certain members of the press with her nonsensical meanderings about a market she obviously knows nothing about.See the video of Gasparino on Fox Business saying the same stuff here. While Whitney may have overstated the crisis to begin with, only time will tell if Gasparino is correct.
Update- The Daily Show did an awesome and equally hilarious job on outlining why we are in Libya last night:
Also famed investor Jim Rogers on the possibility of a rally in the dollar:
“We’re at a moment of truth for the dollar,” Rogers continued. “If the dollar breaks and keeps going down now . . . there’s a lot of good news for the dollar: the Middle East is erupting–supposed good news for the dollar. All of these people are supposed to be fleeing to the U.S. dollar as a currency for safety. But it’s not happening. When you start seeing good news for something and it goes down, it’s usually a good sign that you better get out fast.”
The dollar’s next move is critical, he said, as a break down to near the all-time lows for the currency at approximately 71 on the USDX achieved just prior to the Bear Stearns meltdown of March 2008 will turn him into a seller of the dollar.
I don't doubt him. If the so-called "safe haven" of currencies doesn't get a bump from the turbulent world events occurring right now, what will? Gold? The Yuan?“If it [dollar] keeps going down, I’m going to have to dump the rest of my dollars, and then it’s all over for the dollar.”
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