Posts Tagged ‘Paul Krugman’

 

Gingrich Tries To Grab Some Votes

It has turned out that Ron Paul's critique of the Federal Reserve has caught on. Polls have revealed that voters (especially Republican voters) are actually partial to the idea of going back to a gold standard. This was revealed in a Rasmussen poll in early January, which characterized the gold standard debate as a 'sleeper issue' that 'could tip the scales of the race'.

 

„Phone interviews with 501 likely caucus-goers were conducted in Iowa in mid-November. The potential respondent was screened to ensure a. registration to vote in Iowa b. registration as a Republican and c. self-described as “definitely” or “probably” going to participate in the caucuses to select the Republican nominee for president. The survey has an overall margin of error of 4.4 points at the 95 percent confidence interval.

“A majority (57 percent) of those surveyed are favorable to the United States returning to a gold standard and over one-quarter is ‘very’ favorable to the idea,” reports pollster Erin Norman. “Only 17 percent are unfavorable to this idea, which equates to a better than three-to-one favorability ratio among likely Iowa Republican Caucus goers. These are remarkably high numbers given that the question contained no information about the gold standard specifically.”

Translated out of pollsterese? The gold standard drives votes both in the caucuses and primaries and in the general election.“

 

Read the rest of this entry »

 

Interpreting the Activity of Banks and the ECB Correctly

It appears that market observers are only very slowly coming around to grasping the fact that what the ECB has done in December does indeed amount to a major dose of monetary pumping. The misunderstandings center mainly on the use of the ECB's deposit facility by banks, which overshadows the far more legitimate debate over whether the commercial banks are going to use ECB funding to play the sovereign debt carry trade or rather 'play it safe' in view of the large amount of bank bonds maturing in the first quarter.

Read the rest of this entry »

 

Paul Krugman on Keynes

As a friend of ours remarked when sending us the link to Paul Krugman's December 29 editorial, 'he's trying to get in the last word for the year'. The editorial is entitled 'Keynes Was Right' and it is at least somewhat reassuring that it appeared on the NYT's 'opinion pages', because that is all it amounts to – an opinion.

Read the rest of this entry »


An Intractable Problem

Something that keeps exercising our mind is the seeming contradiction between two stances uttered as firm principles by the German political leadership. The first is that often repeated assertion that it is determined to ensure the euro's survival. The second is the equally often repeated assertion that using the ECB's printing press to stem the run on euro area sovereign bonds is completely out of the question.

 

Read the rest of this entry »

 

A Paucity of Imagination

We want to return to a theme we have recently discussed in these pages, namely the allegedly exhaustive hypotheses regarding the possible solutions to the euro area's problems that are regularly presented to us in the media.

Leading intellectuals and economists usually list a set of choices based on the views of the current economic orthodoxy, which choices they insist are all that is possible or even imaginable.

We have briefly mentioned the topic last week and so has Mish in a recent post that similar to our article looked critically at Martin Wolf's recent 'Thinking the Unthinkable' editorial at the FT.

The main problem from our point of view is of course that no-one in the mainstream has as of yet really given voice to the so-called 'unthinkable', which in a way demonstrates what it really consists of (if it weren't 'unthinkable', they would have thought of it).

Read the rest of this entry »

 

A Historical Mistake

There once was a time when the science of economics – based on sound reasoning –  concluded that economic liberalism was the best way to achieve lasting and growing prosperity. Classical economists may have been stumped by the theory of value, a problem satisfactorily solved by Carl Menger in the 1870's,  but on the whole, their teachings were conducive to the adoption of free market capitalism. This ushered in an age of unprecedented capital accumulation and prosperity.

Read the rest of this entry »


Euro Area PMI – Ireland Must Be Doing Something Right

Manufacturing in the euro area continues to contract noticeably – the crisis is taking its toll not only on financial markets, but also the real economy. Note here that what the present economic situation reveals are the results of the policy errors of 2008-2009, namely massive monetary pumping and various wealth-misdirecting and wealth-destroying  government intervention schemes designed to 'avert recession'. Why are these mistakes revealed now? This is due to the lag time of monetary policy. On account of the ECB's approach (the ECB – so far – accommodates booms, but is reluctant to actively pump during busts except in order to rescue insolvent banks) monetary policy has become much tighter in the course of the past year than the still very low administered interest rate would suggest. Money supply growth in the euro area as a whole has only been 1.3% year-on-year (in terms of money TMS), with several peripheral nations experiencing outright monetary deflation. Read the rest of this entry »

 

Antipodes Speak Out – Lacker and Evans

Over the past two weeks we have heard several regional Fed presidents speak their mind, some of whom oppose the central bank's current easy money policies and some of whom think it should ease even more. Members of the Fed's board of governors in Washington and chairman Bernanke were also heard from – this group seems to be united in wanting to pursue an extremely easy monetary policy. We will look at some of the speeches that were delivered, with special emphasis on Charles Evans, as his viewpoint seems to be gaining ground lately. Read the rest of this entry »


Dissenters Speak Out

Before discussing what the Fed might do next, we would note that it has recently 'wheeled out the hawks'. We have noticed that there seems to be a method behind the Fed's communications tactics. Naturally it is possible that we're just a bit too paranoid, but it appears to us that between FOMC meetings, we always get to hear from the perceived 'hawks' (who really aren't all that hawkish, they're only less dovish than their colleagues) relatively early before the next meeting approaches. Their speeches add to the sense that there is someone responsible lurking at the Fed, someone who cares about manipulating the currency 'just right'. Moreover, by getting their remarks out of the way early, it is possible for the Fed to gauge how the markets react to what they say and ideally, from its point of view, make use of the reaction. It is a good bet that if there is a reaction at all, it will be negative from the 'risk assets' side, as Messrs. Plosser, Kocherlakota, Fisher and Lacker (the current crop of dissenters/doubters) all talk about wanting to pursue less rather than more inflation. Read the rest of this entry »

 

Establishment Quacks Call For More Money Printing

No matter how often and how thoroughly inflationist doctrines have been refuted by economic theory, or how many times their implementation in practice has resulted in large-scale economic misery, they never seem to lack for support. The main supporters these days are the pro-statism establishment intellectuals which seem to populate both mainstream media and academe in staggering abundance. You might say there's an inflation of inflation-loving intellectuals.

Naturally, their doctrines are as faulty today as they have been since the times when Roman emperors debased their coins, but that doesn't keep them from recommending the same hoary nonsense all over again. Worst of all, their opinions coincide with those of modern-day policymakers, in fact they serve as a fig leaf and provide propaganda support for their policies. Read the rest of this entry »

 

 … but it stands on a weak foundation.

The expected rebound in stocks and commodities has continued on Monday, but there are a number of signs that this is not much more than a short covering rally that is unlikely to last. Although yields on euro area government bonds and CDS on them have continued to decline (we will update the euro area charts tomorrow), the fact remains that the economy is under pressure, so bounces in stocks have to be approached with great caution – they are more likely to represent selling opportunities than a reason to buy at this stage. Notably the recent rally has inter alia been triggered by a short selling ban in several European countries. Short selling bans have historically always been medium term bearish events – they can trigger a bounce lasting for a few days, but in the long run they are extremely counterproductive, as they lower liquidity and hinder the price discovery process. By taking away the opportunity to hedge, they ultimately create even more selling pressure than would have appeared otherwise. This latest short selling ban is thus likely destined to fail as well – one wonders why the authorities even bother.

Read the rest of this entry »

 

Paul Krugman Pines For A Command Economy

Sometime in late 2008 we waxed philosophically about what we thought had happened to the US pool of real funding (i.e., the pool of saved real goods that funds all economic activity) in the wake of the 1990's/Nasdaq bubble. We wondered how it was possible, in spite of preliminary evidence that the pool of real savings was in trouble, to create yet another, even bigger bubble from 2003-2007.

Read the rest of this entry »

 

A Weakening Economy

More and more evidence is trickling in that shows that economic activity is softening considerably all over the world. Yesterday, US manufacturing ISM data vastly underwhelmed expectations as the headline number dropped to the lowest level in two years, to 50.9 from 55.3 the previous month and against an expected 54.5 (so much for the forecasting prowess of mainstream economists. We have argued all year long that the 'big surprise will be a weakening of the economy as the year goes on', based solely on deductive reasoning).

Read the rest of this entry »


Gratification Delayed – EU Keeping Up the Pressure?

The notion that the EU was 'keeping up pressure on Athens' was the judgment of the media when it turned out yesterday that the euro-group would delay disbursement of the next loan tranche to Greece 'until the Greek government has voted on implementing new austerity measures'.

The German news magazine Der Spiegel put it this way:

 

“Observers had been expecting that the ministers would at least approve the next tranche of aid, worth €12 billion ($17 billion), from the current €110 billion package that was agreed on by the EU and International Monetary Fund in May 2010. Greece needs the money by mid-July at the latest to avoid a national default.

But the euro-zone partners want to wait until the last minute before giving the green light. In a statement, the euro group said that the Greek parliament would first have to approve the latest round of austerity measures and a €50 billion privatization program before the next tranche was disbursed.

The motive behind the finance ministers' tactic is obvious: They want to keep up the pressure on the Greek government – not to mention the recalcitrant opposition. On Tuesday, Prime Minister George Papandreou will face a confidence vote in parliament, which will also vote on the austerity package next week. The euro-zone ministers explicitly appealed to all political parties in Athens to support the austerity measures. "Given the length, magnitude and nature of required reforms in Greece, national unity is a prerequisite for success," the statement read.”

 

Read the rest of this entry »


Fighting A Rhetorical Rearguard Action

As a result of the ever more evident failure of his money printing exercise to produce anything beside overvalued stock prices and soaring commodity prices, Ben Bernanke is now forced to fight a rhetorical rearguard action. The speech he gave yesterday was basically a slightly extended and embroidered version of the past 20 or so FOMC statements. A summary of the salient points has been provided by Marketwatch.

 

Read the rest of this entry »

Support Acting Man

Archive

Realtime Charts

[Most Recent Quotes from www.kitco.com]

[Most Recent Quotes from www.kitco.com]

[Most Recent Quotes from www.kitco.com]

[Most Recent USD from www.kitco.com]

Own physical gold and silver outside a bank

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Oilprice.com