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So put together, the total is €750B ($966B) of shock and awe to save the eurozone -...
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Sunday, May 9, 2010, 10:15 PM ETSo put together, the total is €750B ($966B) of shock and awe to save the eurozone - €440B in loans from the nations, €60B from EU emergency funds, and €250B from the IMF - but it better be enough, as signals from the U.K. and from German elections suggest no future help is forthcoming. Euro +1.3% against the dollar; S&P 500 futures +2.6%.
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No one wants to take their medicine, work on fixing the problems, and lay a foundation for a stronger fundamental based futures. Nope. Only borrow heavily from the future to stay the course now. Very very short-sighted.
You mean the the over 230,000 jobs the private sector just added?
And with the earning season we've just had, how is all this a BAD thing? Just trying to understand your rationale....
The problem is that "things" then become dependent upon that ultra low level.
What happened the last time a liquidity driven bubble(s) faced increasing interest rates (remember 2008?)?
The only thing left since they can't pay a negative interest rate is to pay interest on reserves - that only helps banks - not business.
The simply fact is that the average joe is hurting, continues to hurt, and will be hurt further by the actions taken by our govt (and now the EU, China, etc.).
If you look at money supply growth, it is now flat. M2 has been flat since late last fall.
It's the fiscal stimulus together with the earlier declines in the dollar that is spurring aggregate demand and output.
You caught in this mindset that refuses to distinguish structural deficits and macroeconomic deficits. Obviously the US has a lot of both, but the big difference between 2006 and 2009 is macroeconomic.
There's a lot more to play from that "orchestra" until they cue the Fat Lady, I suspect. We get rid of one and what do we have left, PIIS?
Right.
And yes, there will be fiscal consolidation at the end of the road.
75% of the human population (roughly, those in the developed/developing nations) are MUCH BETTER OFF now that the markets can react out of current information, and not out of fear....
Yes, there are nations in Europe that are not in good shape right now. Neither are we - but these individual nations don't have the benefit of having the most widely held currency on the planet.
Getting rid of the fear will allow these nations to get their finances in order (call it an intervention, if you will...). If they fail to respond to it in a timely manner, kill them off (economically speaking, of course).
But since they still have workers, and jobs, and resources, why not let them crank out whatever output they can, and let the rest of the world get on with the business of, you know, free markets?
Wealth is relative to another & the more this printing business goes on the more the government controls more of the wealth. Its more government control over the economy plain & simple.
Markets fearful? The big boys have TONS of money & can hit up the printing presses at any time... the market going up is fear... fear of holding paper currency my friend....
Last I checked printing money in the US was to extend unemployment & continue to give incentives to those who don't work & punish middle class savers who won't be able to get ahead with wages not outpacing inflation.
You're short sighted man, governments are controlling a higher percentage of wealth until its near 100%... I'm surprised you really applaud these actions.
Quit quoting widely panned BLS numbers and go look out your front door. Everyone employed? Housing stabilized ( ohwait for the the housing stimulus effect to end in about 2 weeks ) .
For deflation to still be increasing with as much money being printed and dumping from the skies is scary.
We should have some inflation by now, but nope.
M2 growth is flat now.
The Fed did not print money. They injected funds into the banking system, which the banks to a very large extent sat on.
Thus the bleak credit picture for small business in fly over country. As in the 30's, the Fed has drained credit from the system for the very people who could bring the country out of the recession, if history is a relevant indicator.
Interesting strategy.
you're exactly right - playtime is over.
It's time for Greece, the rest of the PIGGS, soon enough the UK, Japan and the U.S. - TO STOP ADDING DEBT ON TOP OF DEBT and have the fantasy that is a solution to the problem. Actually I think they know it's not a solution - just a stop-gap to get re-elected.
Losing my patience with the attitude of letting our kids deal with our debt build-up. Also that 'governments' must win. The market WILL WIN one way or another. The EU has just perpetuated the problem.
I guess if there's enough zorrow's out there, they'll continue their hoodwink program(s) - per Obama - "to instill confidence in the markets"....Over leverage got us into this - and you praise actions that keep adding to it.
...or speculators using leverage without any insurable interest to bring down currency, the problem will be corrected.
Currency traders perform a intregal price discover mechanism based on perceived mood and risk. Beats the hell out of relying on the ratings agencies or TBTF banks and central bankers for market reads.
Right now, governments are the agents of disorder.
thankfully, we'll have elections to determine the next bunch that will try and manipulate the markets.
The last thing you worry about during a severe recession is government debt, which is often your only salvation (particularly when the banks are not lending and there is a liquidity trap).
The time to worry about deficits is when the economy is at full employment and growing briskly. It is the structural deficits, ironically associated with Republican administrations (Reagan/Bush) that are the greatest cause for concern.
Go to a sex shop if you can't overcome your fetish ...
PS: I have no debt whatsoever.
Buffet is correct: Credit default swaps are weapons of mass destruction. A form of insurance where the insuring party has no obligation to set aside reserves ....
It's naive as well as historically inaccurate to claim that governments cause most of the economic problems.
Any hard nosed look at history shows private market instability is the norm.
www.cnbc.com/id/37054713
excerpt
U.S. President Barack Obama and German Chancellor Angela Merkel spoke by phone about the importance of EU members acting to build confidence in markets.
Nothing to do with facing the problem - let's just hoodwink the pheasants and it should work out ok.
Wonder who's orchastrating our premarkets?
the more they screw around with borrowed $, the harder the fall -- and there's enough sense out there to realize it. In the next day or so - great time to lighten up on long positions...
Interbank lending rates are heading back. The last time that happened was the fall of 2008 and it caused a liquidity crisis that was largely responsible for the recession's severity.
Certainly there are rogues in this story. But you will never understand the crisis if you treat it as a morality play.
How much of that $1trillion is coming from American taxpayers?
When was the last time Europe bailed out America?
France's help was more to support a proxy war against their #1 enemy than to help America.
If the Euro falls against the dollar, then US recovery, which is being driven by exports, will weaken.
If the crisis continues, interbank lending rates will rise and we will repeat the fall of 2008.
Your comments show little analytical sight. Save them for your morning coffee at the local cafe.
Our help for France during WWI and WWII was driven not by our love of France but by our desire to defeat the Germans.
You're trying to split hairs, but you don't have a good command of the facts.
French aid to the US was crucial in winning the American Revolutionary War and it was motivated by idealism to a large extend.
Key aspects of the US Constitution including separation of powers were pulled out of the writings of French political authors.
I can criticize French in many respects, but fair men are fair.
ASX 200 went up 2%+ in early trading, amazing given the goings on in your neck of the woods and the carniage on EU markets on Friday.
We got the "good" news 5 minutes before Japan opened ... up until then our SPI futures were 60+ points down. Nice 160+ and 3%+ turnaround in a couple of minutes.
I've got a hunch that smart money will be selling into this not buying, we'll see.
Quantitative easing has not resulted in inflation. Neither in Japan nor the US.
Quantitative easing is typically in situations where there has been massive asset deflation after a speculative bubble. You are not going to get an inflation mentality after people has seen 20% to 50% of their net worth eliminated ...
To those who blindly put faith in governments and feel they can do no wrong, I seriously hope you take the time to wake up to reality. It isn't about political biases, but instead the fact that people make up governments and they make some good decisions and very bad mistakes.
Papering over a liquidity crisis that has arisen from solvency risks at the sovereign level is no real solution to an inevitable reckoning of various sorts. The very fact that government officials took the short-term solution to masking a long-term problem shows that this time these people have made a very grave mistake.
Greece showed us last Thursday how imposing austerity measures that really don't solve a deficit/debt problem can create something far worse than market selloffs-- social unrest. The bigger fear/risk now is just how ugly things will get when the 'markets' realize bailouts are no longer solutions to structural issues in the global economy. By the way, contagion has spread the moment central banks decided to work together on a fiat monetary system. It isn't about toxic debt or assets that create liquidity crises inasmuch as t is anything derived from fiat currencies have that potential so it's the solvency of that country representing that currency that should remain the focus and solution. The full faith and credit i.e. confidence is only as good to those who believe it. This belief does not come from printing near a trillion dollar package, but the actual lomg-term viability that nations can show they can grow without further debt-- this unfortunately seems near impossible with the engrained rhetoric amongst government officials and their crony economic advisers.
the Eurozone is going to grow more slowly, the Euro will devalue progressively over the next 6 to 12 months. if they handle it right and it seems like they have finally twigged to what they need to do - they should get out of the mess - just as the US is getting out of its mess.
also social unrest in Greece is not unusual. have you been there? they are in the streets at the drop of a hat but it is a sideshow. social unrest in Germany now that would be a problem. you see that and you take action. a bunch of communist trade unionists and two bit anarchists running through the streets of Athens is business as usual. it is like French farmers blocking freeways with milk tankers - it would be odd if it didn't happen. get a grip.
E
The mess is our insolvency. We are getting out of insolvency how? By lowering interest rates and taking on more debt?
Think again.
The blip up in the economy was from government spending (more debt). We're living in denial. The denial ends because investors won't buy country bonds without higher rates since all government debt is becoming junk bonds, risky as hell.
More debt never resolves a debt problem. (Oh, maybe I can just refinance. I've been doing it for years...!)
Show us some figures.
if you had run a business or just understood basic finances you would get it that borrowing to work your way out of trouble is not an unusual tactic if the underlying business and cash flow is strong.
as the US grows - and it is growing - and tax receipts rise - which they are - as we speak - then you have a shot at getting out of it.
the people who complain about the actions of the Fed and Treasury are the ones who also were crying about unemployment and lack of growth.
we did what we needed to do to deal with the panic and now things are improving. we had to start the patients heart we used a lot of juice to do it but the patient is worth the trouble. ok so there are scorch marks on the chest. so what. the patient is alive and looks he will make it.
you should be grateful - you ingrate. quit complaining or do something about it. Start a movement to demand higher taxes and less expenditures. call it the dinner party.
E
Are you really that ignorant? Have you not studied what happened to the US economy in 1937 when FDR listened to his conservative economic advisors
He raised taxes and cut spending while the US economy was still at 14% unemployment (down from 25% in 1932) and what happened?
A recession inside the Great Depression ...
Everything is just great 'American in Paris'.
I suggest buying your conviction in the markets, go "all in" on Bank of America, Citibank, and bonds in Greece, Portugal, Italy, and Spain.
Does anyone else fully into the market at this time appear to have any interest other than the money? Right. Know the playing field.
'American in Paris' isn't always wrong, he just has his idols in line. Principles extraneous to money are not relevant to the market.