Courtesy of The Automatic Earth.
Howard Hollem for OWI D-Day in Times Sqaure June 6 1944
The drivel that lies like a blanket over our societies still directs traffic, markets, news and the weather. If we have to believe CNN and BBC, “we” have forced Putin into some sort of moral submission (or whatever you’d call it), making him feel obliged to sit his ass down at the high diplomacy effort tables we want him seated at.
The US, looking as powerful as a brainless haircut can, considers severe sanctions, say the “reporters”, and when Russia replies by simply issuing a new law that would allow it tit for tat with any such sanction and confiscate US and EU assets, on top of its threat of dumping US bonds, that is just about completely ignored. All looks, no substance, other than what they think they can fabricate out of thin hot air. If and when the EU offers Ukraine $15 billion in aid, maybe it would be useful to add that if it had done that a few months ago, this whole crisis might never have come about.
Believe it or not, but after digging up up Munster Albright yesterday to offend Putin, CNN did itself one better and pulled Sarah Palin out of hibernation (the only nation she’s fit to rule) on its screens this morning. For some reason there’s a lot of women that want a piece of Putin: Albright, Merkel, Hillary Clinton, Sarah Palin – who’s left?, they must be running out of stock -. For some reason, too, they’re all extremely impolite and insulting, which looks weird, since it’s entirely unprovoked. He’s delusional, lives in another world, he’s like Hitler, there’s no limit. Let ‘er rip. CNN viewers believe anything.
Americans – and Western Europeans – no longer seem comfortable with any branch of truth or reality, and live to see another day only on a diet of supersized helpings of corn syrup, anti-depressants, implanted Kardashian boobs and Honey Boos. Which provides psychopath kingmakers and neocons with the space to play their rule-the-planet games with impunity.
But for now, the recovery growth-is-here mantra is so deeply imbedded in society’s drivel blanket that people actually will go out and get more debt and more homes and more gadgets and chirp gaily about Oscar selfies while their deluded leaders take turns calling Putin delusional, secretly hoping they can provoke either a war or the Great American Reich.
This weirdness, for lack of a better term, even more than in matters of state shines through in economics. From today’s ADP US job numbers, as described by Tyler Durden:
More snow. That is the assessment of Mark Zandi and the ADP Private Payrolls, which just printed at 139K on expectations of a 155K print. But don’t worry: the number was pre-spun for idiot consumption, as the 139K was actually an increase from the January 127K. What was not said is that the January number was a massive revision lower from the previously announced 175K. What will also not be said is that the December ADP print was revised lower from 227K to 191K and the November 289K was chopped off and revised to only 245K.
Of course, both of those numbers were massive beats at the time, and have now become misses, but who cares: they have served their algo kneejerk reaction purposes. And while the data is complete garbage, and is obviously manipulated and goalseeked (as we have shown before), it should be welcome to the US to know that in February it generated a whopping 1,000 manufacturing jobs.
To Alhambra Investors’ take on Abenomics and the huge jump in Japan’s January trade deficit :
One cannot adequately describe the trade deficit from January. It is clear, or should be but likely isn’t, that monetary practitioners have got “something” very wrong in their theories or the applications of them. It is an axiom of economic “science” that devaluing a currency increases exports and decreases imports (one becomes cheaper, the latter more expensive). What we see here is precisely the opposite, thus rendering that “axiom” more suitable as uneducated or unsophisticated conjecture – and the whole of such monetary science more like faith-based ideology.
And Steve Keen’s comments on BOE head Mark Carney.
In a speech marking the 125th anniversary of The Financial Times, Carney noted that when the paper was founded, “the assets of UK banks amounted to around 40% of GDP. By the end of last year, that ratio had risen tenfold.” He then noted that if the UK maintains its share of global finance, and “financial deepening in foreign economies increases in line with historical norms”, then “by 2050, UK banks’ assets could exceed nine times GDP, and that is to say nothing of the potentially rapid growth of foreign banking and shadow banking based in London.” [..] “The Bank of England’s task is to ensure that the UK can host a large and expanding financial sector in a way that promotes financial stability…” Carney said.
Herein lies the rub, and the non-sequitur: bigger cannot mean more stable, for the simple reason that the assets of the financial sector are, in large measure, the debts of the real economy to the banks. The bigger the assets of the financial sector, the higher the debts of the real economy have to be. Ultimately, even with near-zero interest rates, servicing this debt is likely to prove impossible to large segments of the economy, leading to a financial crisis.
Neither in Japan, China nor in Britain does there seem to be any idea that there is such a thing as a risk of damage from increasing debt levels. And of course the US and Eurozone lost it long ago as well. In less than a month, Japan’s sales tax hike will start ravaging its economy.
China can withstand one default, but it can also easily be overwhelmed if there are more at the same time. The British economy relies on shady oligarchs to keep its housing sector afloat. For a while. But all of them are in deep debt, and since they can only get out by selling each other what they manufacture, but none have any money to import stuff with other than the funny kind, the downfall is certain and the only thing that is not is the date.
And when you look at the smog in Beijing, or the leaks in Fukushima, and you add the overall Anglo-Saxon attitude towards the land they live on, you must conclude that a lot of damage could still be in the offing before economic misery sets in for real. What the governments in Britain, Australia and Canada do, and wish to do, to their pieces of the earth is not one inch short of stunning. All on the name of trying to keep the delusion going that they can grow and prosper, something their debt levels completely forbid.
Maybe a piece of reality that stares us in the face is what we need. Maybe it’s time a for a little down time in America. Maybe a nice chunk of real hardship wouldn’t be all that bad.
