I know, I know ... The popular mantra is that we just have to be "confident" in the economy, and things will magically get better!
Besides, it's "un-American" to prepare for, predict, or expect a major economic catastrophe (and crazy too). It's all about Animal Spirits, dontcha know?
The term "animal spirits," popularized by John Maynard Keynes in his 1936 book "The General Theory of Employment, Interest and Money," is related to consumer or business confidence, but it means more than that. It refers also to the sense of trust we have in each other, our sense of fairness in economic dealings, and our sense of the extent of corruption and bad faith. When animal spirits are on ebb, consumers do not want to spend and businesses do not want to make capital expenditures or hire people. - Robert J. Shiller.
Well then, why didn't Congress spend the "stimulus" money by sending every American a Tony Robbins program? That way, we could all be confident!
Anybody who starts talking about "confidence" in the markets, doesn't know squat about economics. Sorry. I prefer to live in the real world. "Confidence" is nothing but political pundit bumper sticker nonsense.
Bolshi Theater
I'm sniffing more than a hint of conspiracy, to wit: how does some dude from Chicago go from unknown to the U.S. presidency in less than 10 years? Yes, many of you are deliriously stupid and voted for "change", but there does seem to be a fair amount of consciously designed con job to this whole matter. People such as myself expect a breakdown of the U.S. economy to be used for some major power play by persons and interests who by and large are unknown to us. Real Bolshies? Probably not. More likely your garden-variety asshole, with some very dangerous malice, and a lot of leverage to force your slavery.
Credit Markets Flash Hottest Warning Signal Since Crisis
European credit markets are flashing the most serious warnings signs in a year as the yields on risker bonds rise sharply and a string of companies cancel share flotations, raising fears that the recovery may falter in coming months.
Jitters over Chinese credit tightening and default risks in Greece and Dubai are causing bond vigilantes to batten down the hatches across the world, bringing the most dramatic credit rally for a century to a shuddering halt.
"The index is a leading indicator so it is a warning signal. This is being driven by volatility in sovereign debt, with Greece being the biggest issue at the moment but tightening in China could be a bigger negative catalyst in the long-term," he said.
The rating agency Moody's said market ructions have led to a "material" rise in borrowing costs over the last month, prompting the cancellation of debt issues by the Dutch energy group New World Resources, Italy's Snai betting group, and the UK's Travelport. Sixteen companies wordwide have pulled debt issues worth a $7.3bn (£4.66bn) since mid-January, including Canada's Bombardier.
Dr Suki Mann, a credit specialist at Societe Generale, said stronger companies should weather any squall but concerns are mounting. "The world has woken up to the real possibility of a double dip. These are nervous times," he said.
BusinessEurope, the EU-wide lobby, warned this week of a "very worrying situation" as it become harder to raise money at a viable cost, if at all. The group called on the European Central Bank to send a "clear signal" about its collateral policy. Fears of tougher ECB rules are a key factor causing market flight from Greek debt.
Someone Wants the U.S. Economy to Fail
If Obama is not incompetent, then surely somebody is trying to ruin the economy while Obama is unaware, as former Virginia Governor Wilder laments. However, somebody needs to explain plausible deniability to Obama. It means having underlings doing things while you were unaware. Sometimes it is true, sometimes a lie. But no, Obama does the lying by himself. And then there is his signature on all the bills.
Maybe there is something wrong with the economic models professed by most Democrats. This much is true. Keynesianism as a faulty economic system somehow lives on. For instance, Keynes asserted government is flexible and business is not. Evidence in the last fifty years shows that government is a living and breathing entity that seemingly must either grow larger or die. It should be no wonder that the best years of the post-WWII era were the Reagan years, as he openly declared war on big government. Keynes also said that full employment is gained through fiscal policy served up by -- you guessed it -- big government.
Beware July
The financial sector is very unstable and all hell could break loose at anytime, but July has special problems.
If we somehow make it past the money needs of Greece in April and May and that is a big if, the next significant money raise will need to be done by Italy
In addition to a sizable money raise in March, Italy needs to raise significant amounts of money in June. It won't necessarily be the easiest thing to get done, but FT tells us:
Italy, apparently, has a “robust domestic banking system,” meaning there should be no problem absorbing the due supply of Italian government paper
Don't bet your house on this, even if it is underwater, but maybe the Italians can pull it off. Remember the head of Italy's central bank, Mario Draghi, is a former Goldman man.
Following the heavy Italian money needs comes Spain.
Back on the domestic front, Los Angeles faces a budget shortfall of nearly a billion dollars. The first hurdle is a $200 million deficit that some how has to be funded. The month of this deficit? July.
I repeat, the entire global government connected financial sector is teetering and could collapse at any time. But July seems to have more intense problems.
Wait a minute. Hold the phone!
Did he just say "the head of Italy's central bank, Mario Draghi, is a former Goldman man?"
As in Goldman Sachs?
Oh c'mon now, that's just some kind of miraculous coincidence. After all ... None Dare Call It Conspiracy.
