The daily headlines of the Euro crisis are a sight to be seen, it's hard to keep up with all of them. One gets the feeling that the barrage of headlines is intended to confuse the markets rather than appease them. Here is the latest via Financial Times:
They couldn't reach a consensus? Big shocker there. Next we have Merkel issuing a blatant lie to German Parliament much to the dismay of France and Sarkozy via Reuters:European leaders will be forced to hold a second summit, perhaps as early as Wednesday, because of the inability of Germany and France to reach a deal on how to increase the firepower of the eurozone’s €440bn rescue fund.European leaders confirmed that a high-stakes summit on Sunday aimed at finalising a plan to shore up the eurozone would proceed. But one senior German official said that no substantive decisions would be taken on giving additional resources to the fund, called the European Financial Stability Facility, so it could tackle the growing threat to large eurozone banks and the Italian bond market.
"The path is closed for using the ECB to ease liquidity problems," German Chancellor Angela Merkel told conservative lawmakers in Berlin, participants at the private meeting said. (emphasis added)I call b/s and this is why:
European governments may unleash as much as 940 billion euros ($1.3 trillion) to fight the debt crisis by combining the temporary and planned permanent rescue funds, two people familiar with the discussions said.This is in regard to the $450 billion European Financial Stability Facility being combined with the $500 billion European Stability Mechanism . But as Mish points out:
Negotiations over pairing the two funds as of mid-2012 accelerated this week after efforts to leverage the temporary fund ran into European Central Bank opposition and provoked a clash between Germany and France, said the people, who declined to be identified because a decision rests with political leaders. (emphasis added)
If there is anything politicians excel more in than spending money that isn't theirs, its accounting tricks to make their coffers look larger than in actuality. That way, addressing financial issues can just be passed along till the next year or next election. What will ultimately happen of course is that the ECB will step in to guarantee the banks once the dominoes starting falling in faster succession. Dexia was just the beginning and was lucky to get out early. No Germany Supreme Court ruling or voter referendum will stop this. State sovereignty and the little people don't pay the government's bills like the banks do. And yet none of the decision makers are addressing the next fiscal train wreck coming down the tracks:Bear in mind this raises the permanent fund above the agreed upon amount. The German Supreme court has stated this cannot be done without a voter referendum.
- The total overall cap is 500 billion Euros
- 160 billion Euros has been spent
- 340 billion Euros remains
- 340 billion Euros + zero Euros = 940 billion Euros
For a more detailed summary of Euro zone shenanigans, see Pater Tenebrarum's take here and here.Portugal's economy is next year expected to shrink further than was previously forecast, the government said Monday as it submitted its tough 2012 budget, while unions responded with a strike call.Finance Minister Vitor Gaspar told a press conference that Portugal was "at the heart of the crisis" affecting the eurozone and that the floundering world economy "will lead to a contraction of gross domestic product of 2.8 percent, following 1.9 percent this year," in Portugal.
So what can possible be worse than a central banking system with a monopoly on the issuance of currency run with only the interest of the big banks in mind? When a socialist lawmaker and team of uber-Keynesians and modern monetary theorists get together to reform it of course! See Vermont Senator Bernie Sanders' newest effort to reform the Federal Reserve:
WASHINGTON, Oct. 20 – Nobel Prize-winning economist Joseph Stiglitz and other nationally-renowned economists agreed today to serve on a panel of experts to help Sen. Bernie Sanders (I-Vt.) draft legislation to reform the Federal Reserve.So who makes up this all star panel? Check it out:
Sanders announced formation of his expert advisory panel in the wake of a damning report that faulted apparent conflicts of interest by bank-picked board members at the 12 regional Fed banks.
Joseph Stiglitz, the 2001 winner of the Nobel Prize. The economics professor at Columbia University is a former chief economist for the World Bank.Stiglitz is of course a tax and spend Keynesian who even a $5 trillion stimulus wouldn't satisfy. According to Warren Mosler (ht by the way), Galbraith, Kelton, and Black are all MMT. Judging by the titles of the rest of the bunch, they are interventionists. So instead of abolishing the criminal syndicate known as central banking and allowing competing currencies, these guys will most likely recommend that the Fed adopt an outlet to get newly printed money into the economy quicker rather than through bank lending and credit expansion alone. This will be highly inflationary of course but, hey, government deficits are the only way to achieve private savings right? And those dastardly Wall Street capitalist pigs are being too stubborn to lend money (they are lending, just not at a fast enough rate though that is about to change) so we gotta go around them. Be ready for a barrel of laughs when their final proposal comes out, it will no doubt be a doozy.
Jeffrey Sachs, director of The Earth Institute and an economics professor at Columbia University. He also is special advisor to United Nations Secretary-General Ban Ki-moon.
Lawrence Mishel, president of the Economic Policy Institute, the premier research organization focused on U.S. living standards and labor markets.
William Black, associate professor of economics and law at the University of Missouri, Kansas City. He worked with the Federal Home Loan Bank Board, the Federal Savings and Loan Insurance Corporation and the Office of Thrift Supervision.
Nomi Prins, a senior fellow at Demos, was a managing director at Goldman Sachs, a senior manager at Bear Stearns in London, a senior strategist at Lehman Brothers, and an analyst at the Chase Manhattan Bank (now JPM Chase)
Jane D’Arista, an Economic Policy Institute research associate, has written on the history of U.S. monetary policy and financial regulation, The former Boston University School of Law professor previously served as a staff economist for Congress.
Tim Canova, professor of economics and law and co-director of the Center for Global Law & Development at the Chapman University School of Law in Orange, Calif. He was an early critic of financial deregulation and warned of the dangers of the bubble economy.
Robert Johnson, senior fellow and director of the Project on Global Finance at the Roosevelt Institute. He was chief economist of the Senate Banking Committee and a senior economist for the Senate Budget Committee.
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. He was a senior economist at the Economic Policy Institute, a consultant for the World Bank and the Joint Economic Committee of the U.S. Congress.
Gerald Epstein, chair of the economics department at the University of Massachusetts at Amherst. Epstein also is the co-director of the Political Economy Research Institute.
Robert Pollin, co-director of the Political Economy Research Institute and economics professor at the University of Massachusetts-Amherst. He has worked with the Joint Economic Committee and the U.S. Competitiveness Policy Council.
Stephanie Kelton, assistant professor at the University of Missouri, Kansas City and a research scholar at the Center for Full Employment and Price Stability.
James K. Galbraith, professor of government at the Lyndon B. Johnson School of Public Affairs. He served in several positions on the staff of the U.S. Congress, including Executive Director of the Joint Economic Committee.
I just wanted to mention quick that while I thought my article on Occupy Wall Street was good, George Reisman takes it to another level in Mises Daily today. The article is very highly recommended and these excerpts show why:
Contrary to such beliefs, in the modern world in which we actually live, the wealth of the capitalists is simply not in the form of consumers' goods to any great extent. Not only is it overwhelmingly in the form of means of production, but those means of production are employed in the production of goods and services that are sold in the market. Totally unlike the conditions of self-sufficient farm families, the physical beneficiaries of the capitalists' means of production are all the members of the general consuming public who buy the capitalists' products.
For example, without owning so much as a single share of stock in General Motors or Exxon Mobil, everyone in a capitalist economy who buys the products of these firms benefits from their means of production: the buyer of a GM automobile benefits from the GM factory that produced that automobile; the buyer of Exxon's gasoline benefits from its oil wells, pipelines, and tanker trucks. Furthermore, everyone benefits from their means of production who buys the products of the customers of GM or Exxon, insofar as their means of production indirectly contribute to the products of their customers. For example, the patrons of grocery stores whose goods are delivered in trucks made by GM or fueled by diesel oil produced in Exxon's refineries are beneficiaries of the existence of GM's truck factories and Exxon's refineries. Even everyone who buys the products of the competitors of GM and Exxon, or of the customers of those competitors, benefits from the existence of GM's and Exxon's means of production. This is because GM's and Exxon's means of production result in a more abundant and thus lower-priced supply of the kind of goods the competitors sell.
"The physical beneficiaries of the capitalists' means of production are all the members of the general consuming public who buy the capitalists' products."
In other words, all of us, 100 percent of us, benefit from the wealth of the hated capitalists. We benefit without ourselves being capitalists, or being capitalists to any great extent. The protesters are literally kept alive on the foundation of the wealth of the capitalists they hate. As just indicated, the oil fields and pipelines of the hated Exxon corporation provide the fuel that powers the tractors and trucks that are essential to the production and delivery of the food the protesters eat. The protesters and all other haters of capitalists hate the foundations of their own existence.
The benefit of the capitalists' means of production to non-owners of means of production extends not only to the buyers of the products of those means of production but also to the sellers of the labor that is employed to work with those means of production. The wealth of the capitalists, in other words, is the source both of the supply of products that non-owners of the means of production buy and of the demand for the labor that non-owners of the means of production sell. It follows that the larger the number and greater the wealth of the capitalists, the greater is both the supply of products and the demand for labor, and thus the lower are prices and the higher are wages, i.e., the higher is the standard of living of everyone. Nothing is more to the self-interest of the average person than to live in a society that is filled with multibillionaire capitalists and their corporations, all busy using their vast wealth to produce the products he buys and to compete for the labor he sells. (my emphasis)Wow, just wow. In brilliant prose, Reisman takes the protestors to school showing precisely how misguided and ignorant their hatred really is. It's quite a read.
I will end by pointing out that Zerohedge has finally caught up with what some of us have been harping on for a while:
$10,000 an ounce for gold may come sooner or later, but one only needs to look at the Fed's stock measures to see how much money printing Bernanke is presiding over. This isn't rocket science though some treat it like so.US Money Supply Surges Surges 33% in 4 Months – Global Money Supply to Lead to Gold $10,000/oz?Gold is trading at USD 1,623.80, EUR 1,177.95, GBP 1,027.01, JPY 124,535.72, AUD 1587.39 and CNY 10,354/oz.Gold’s London AM fix this morning was USD 1,623.00, GBP 1,027.02 and EUR 1178.14 per ounce.Yesterday’s AM fix was USD 1,629.00, GBP 1,033.24 and EUR 1,180.17 per ounce.
Update- Looks like even the more mainstream guys are finally recognizing it, via Barry Ritholtz at The Big Picture:
CPI in Canada 3.2% y/o/y, CPI in Hong Kong 5.8%, CPI in Malaysia 3.4%, CPI in the US 3.9% and last week saw euro zone CPI at 3%. Inflation is a growing problem
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