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Economist first, attorney second. I enjoy critiquing the current groupthink spewing from the academics, central bankers, journalists and banksters regarding the world’s fiscal, financial and economic condition. The groupthinkers seem to think that we are muddling through a post-Great Financial... More
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  • Around The Globe 04.25.2013 0 comments
    Apr 25, 2013 1:11 PM

    Italy Led by Letta Brings Berlusconi Back to Governing as Winner - Bloomberg.

    Italy's New Leader Throws Down Gauntlet on Austerity.


    Letta and Berlusconi will work together after Bunga receives some favors in exchange for his support. The question is how long does this grand coalition last? Bunga is currently leading the polls, and he may just be biding his time until he can organize his coalition for another run.

    The mainstream media gives credit for the recent bond rally to the resolution of this political stalemate, but as we have shown several times on these pages the rally began in earnest when the BoJ recommitted to money printing. Traders are frontrunning the liquidity pushing yields down in both Spain and Italy.

    Italy 10yr Bond 04.22.2013

    South Korea's Economy Grows at the Fastest Pace in 2 Years - Bloomberg.

    South Korea GDP Performance

    South Korea GDP performance is being lauded, but as you can see in the chart above growth is on a downward trend. South Korea's growth will not accelerate to former lofty levels until Japan and China begin expanding rapidly, and that does not look like it's in the cards. As long as South Korea's growth remains anemic, there will be pressure for the central bank to weaken the Won further.

    By the way, guess which country's currency has weakened the most since the U.S. closed the gold window in the early 70′s.

    South Korea Currency Weakening

    Spain Unemployment Rate Hits Record 27.16% in First Quarter.

    Spanish Unemployment

    I could write the headline when Spain releases its unemployment rate every quarter: Spanish Unemployment Hits Record X%. Spain's unemployment rate has been rising at a fantastic pace and even accelerated last quarter. The 1.2 point rise represents almost a 5% increase in the number of unemployed in just one quarter. Since late 2007, only two quarters of 24 had decreases in the rate as the chart above makes clear. In coming months, the rate will exceed 30%, as the euro continues to slowly strangle Spain to death.

    Pound Rallies on U.K. Growth as S&P 500, Gold Advance - Bloomberg.

    Britain avoids recession with faster than expected growth | Reuters.

    UK GDP Performance 04.2013

    The U.K. did avoid the technical definition of a recession, but its economy is still not doing well. It has shrunk in four of the last six quarters, and this quarter's growth of a mere 0.3% is anemic at best. Since the word "recession" is out of play, exuberance has pushed up the pound and the FTSE. With the slump in the Eurozone deepening, growth in the U.K. will remain low despite today's not bad news.

    Chrystia Freeland | Analysis & Opinion | Reuters.com.

    Ms. Freeland points out the trend of lionizing central bankers and then piles on wholeheartedly. Money printing is inflating asset prices, which is preserving the status quos for the rich, the TBTF banks and bankrupt governments at the expense of the worker. Note that in every country practicing extreme forms of money printing, unemployment remains stubbornly high depressing wages. On the other hand, lofty stock markets fuel record prices for high end real estate, art and collectibles. This will end badly, but in the meantime mainstream media journalists will deliver breathless odes to their heroes. The rest of us know the truth:
    Central Bankers are not Supermen | DARECONOMICS.

    Central Banks Load Up on Equities - Bloomberg.

    Central banks have been intervening more and more as the Great Financial Crisis drags on. Will these banks require more taxpayer money to recapitalize after the next bear market?

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