Thursday, June 18, 2015

Some news and punk rock lyrics

Seems like silver might paint an outside day after overnight's strength. I guess Chinese trading is still ignored by Wall Street Whitey. Oh well, we'll see what happens.

And here's the news:

Bespoke - jobless claims lower than expected. Is that why the markets are up over 1% today? Or is it just that all the panty-piddlers went home early?

WSJ RTE - Janet Yellen suspects pickup in US wage growth. But:

Carola Binder - wage increases do not signal impending inflation. Quote:
Hopefully the FOMC members are aware of new research by two of the Fed's own economists, Ekaterina Peneva and Jeremy Rudd, on the passthrough (or lack thereof) of labor costs to price inflation. The research, which fails to find an important role for labor costs in driving inflation movements, casts doubts on wage-based explanations of inflation dynamics in recent years. They conclude that "price inflation now responds less persistently to changes in real activity or costs; at the same time, the joint dynamics of inflation and compensation no longer manifest the type of wage–price spiral that was evident in earlier decades."
Yeah, I do think the Fed committee reads their own employees' research, especially Yellen. And since she's married to George Akerlof I doubt she's going to go out of her way to fuck over the working class just to look like a good little central banker.

As the great American poet Eric Boucher once wrote:
soup is good food
you make a good meal
how does it feel to be shit out our ass
and thrown out in the cold like a piece of trash?

WSJ RTE - IMF backs steps to reduce inequality. Hey, Christine? Know what really reduces inequality? Moderate inflation. Like, letting if go over 2% FFS so that the rich pay an inflation tax on their interest income and capital gains income. The only people who want inflation under 2% are the kleptocratic ruling classes, Christine, and if you want to remain in the pope's good books you had better quit worshipping at the temple of Mammon and actually start following the teachings of Christ. Speaking of which....

Salon - Fox News calls Pope "most dangerous person on the planet". It's about time they had a pope who wasn't a vicious right-wing thug. The next 10 popes will probably suck, though. As the great British poet Peter Dennis Blandford Townshend once wrote, etc....

Simon Wren-Lewis - the EZ's Greece coverup. Quote:
Suppose that Eurozone policy makers had instead stood back, and let things take their course when the markets became seriously concerned about Greece at the beginning of 2010. That would have triggered immediate default, and a request from the Greek government for IMF assistance. (In reality at the end of 2009 the Euro area authorities indicated that financial assistance from the Fund was not “appropriate or welcome”: IMF 2013 para 8) In these circumstances, given the IMF’s limited resources, there would have been a total default on all Greek government debt.

If that had happened, the IMF’s admittedly large assistance programme (initially some E30 billion, but increased by another E12 billion in later years), would have gone to cover the primary deficits incurred as Greece tried to achieve primary balance. That E42 billion is very close to the sum of actual primary deficits in Greece from 2010 (which includes the cost of recapitalising Greek banks).

What that means is that the involvement of European governments has not helped Greece at all. With only IMF support, Greece would have suffered the same degree of austerity that has actually occurred. The additional money provided by the European authorities has been used to pay off Greece’s creditors, first through delaying default in 2010 and 2011, and then by only allowing partial default in 2012.
And then he points us to:

Al Jazeera - Germany is bluffing on Greece. Where this salient point is provided to us:
[T]he strategy of Greece’s European partners is pretty clear: It’s all about regime change. One senior Greek official involved in the negotiations referred to it as a “slow-motion coup d’├ętat.” And those who were paying attention could see this from the beginning. Just 10 days after Syriza was elected, as I noted previously, the European Central Bank cut off its main line of credit to Greece and then capped the amount that Greek banks could lend to the government. All the hype and brinkmanship destabilize the economy, and some of this is an intentional effect of European authorities’ statements and threats. But the direct sabotage of the Greek economy is most important, and it is remarkable that it has gotten so little attention.

The unannounced objective is to undermine political support for the Syriza government until it falls and get a new regime that is preferable to the European partners and the U.S. This is the only strategy that makes sense, from their point of view. They will try to give Greece enough oxygen to avoid default and exit, which they really don’t want, but not enough for an economic recovery, which they also don’t want.
Simon seems to think this is a bit of conspiracy theory nonsense. But given the neocon plutocrats in charge of the EU and IMF, and given how shaky the neocon position is nowadays with economists like Stiglitz & Krugman criticizing them and left political parties rising in power, why should I take seriously the idea that the plutocrats wouldn't want to intentionally sabotage a government that resists them?

FTE - this is nuts, what could possibly go wrong? For the China Dooooom newsbit of the day, the FT points out that nearly all corporate profits in China this year come from stock market gambling. Which is nice. Still, on a fundamental basis China still deserves a high valuation for its stock market, considering the CPC has demonstrated they're the best macroeconomic managers in the world, and China still has a long way to go before they become a Western-level developed nation. In any case, I'm with Billy Bishop, who says he still doesn't expect any sort of market collapse this year.

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