The Automatic Earth

Nicole Foss - New Zealand And The End Of Economic Growth

SUNDAY, JUNE 09, 2013 2:58 PM

From yet another "gruelling" tour comes this once again highly recommended 1 hour podcast from New Zealand's GreenplanetFM radio, in which Nicole, as usual, covers a wide range of topics, with indepth analysis of issues specific to an economy [More...]

Five Stonking Crashes

FRIDAY, JUNE 14, 2013 11:46 AM

Photo top: Dorothea Lange Broke, Baby Sick February 1937
"Tracy (vicinity), California. U.S. Highway 99. Missouri family of five, seven months from the drought area. Broke, baby sick, car trouble."

Little by little the realization is seeping through that, provided we can agree a recovery cannot be purchased outright, there is no such thing as a recovery anywhere in the western world. Mind you, I said seeping, and I could even have said trickling; it's a slow process. And that is a direct consequence of various vested interests in producing the illusion of recovery and growth which exist in the realms of politics, finance and media.

A few days ago, in the shadows of its revelations concerning Edward Snowden, The Guardian - in its Sunday sister The Observer - ran another piece that warrants scrutiny. The core line in it is this:

Trying to solve a debt problem with more debt has created a bigger bubble, (and it's hard to see what the central banks can do).

(The core term in it of course is "stonking crashes", I love that.) And then Wed [More...]

What If Stimulus Is Self-Defeating?

SUNDAY, JUNE 02, 2013 2:13 PM

It's sort of funny to see a wider - though still faint - recognition developing in the financial world that perhaps it's true that the more stimulus is applied in today's global economies, the faster it will hit a wall. Some may finally even [More...]

Is The EU A Tide That Lifts All Boats?

THURSDAY, MAY 23, 2013 8:11 PM

Last weekend, a group of influential British business people published a letter in the Independent which attempts to "make the economic case" for having the UK stay in the EU. The letter of course is a reaction to unrest within PM David Camer [More...]

If The Rest Are Only Half As Bad As Ireland ...

SUNDAY, MAY 12, 2013 4:05 PM

Ireland was one of the first European countries to get hit by the financial crisis. It decided to bail out its banks at the direct cost of the taxpayer. In 2012, those banks were still overleveraged (and still are today) to the same level as [More...]

What Do We Want To Grow Into?

MONDAY, APRIL 22, 2013 7:45 PM

"The world’s leading economies acknowledged on Friday that 'further actions are required' to put the global economy on track for strong, stable and balanced growth.", writes the FT. The torture never stops. Not that we had expected it to just [More...]

Dutch Delusion: Europe's Core, She Rots Some More

FRIDAY, APRIL 12, 2013 1:23 PM

A report published Thursday by the real estate industry in the Netherlands states that the average home price is now 18% lower than it was at the peak in 2008, while detached homes lost 20%-25% (March 2013 YoY prices fell 6.8%, says Eurostat) [More...]

The Only Way Forward For Europe Is Splittsville

WEDNESDAY, APRIL 03, 2013 8:10 PM

Seeing Spanish and Italian bond yields drop over the past few days, it's impossible not to wonder what it is the markets, whoever they're comprised of, can't seem to figure out. Like that the Italian cloud will hang over Europe well into summ [More...]

The Lesson From Cyprus: Europe Is Politically Bankrupt

TUESDAY, MARCH 26, 2013 9:18 PM

Over the past week, Europe, or rather the present EU leadership, has done damage to itself it will never be able to repair.

It seems to escape everbody, but that doesn't make it any less true: people from Portugal to Spain to Italy to Gre [More...]

Bank Run in Cyprus; Who's Next?

SATURDAY, MARCH 16, 2013 1:51 PM

Overnight last night, the Eurogroup (Eurozone executive committee) negotiated a deal for a bailout of the banking system in Cyprus. As part of the deal, a one-time, one-off levy on depositors was agreed: deposits below €100,000 are subject to [More...]

Spain Has A Long Way To Go Down

MONDAY, MARCH 04, 2013 12:59 PM

Ilargi: I received another entry from Dave Fairtex, who delves into Spanish housing data this time around. We had a nice discussion about it, since I question some of the assumptions on which he bases his interpretation of the data. In parti [More...]

Compound Interest : Friend Or Foe?

FRIDAY, JUNE 07, 2013 3:45 PM

Amid all the superficial up and down rumblings of stocks and bonds, and hyped up analysis thereof, none of which makes you any wiser (hey, I told you Abenomics can't work..), it's a good idea to look at some of the more profound workings of the fi [More...]

Japan : It's Not A Bet If You Can't Win

MONDAY, MAY 27, 2013 4:15 PM

The reactions to the $314 billion, 7.3% plunge in the Nikkei last week were, let's say, for the best part amusing. The army of experts and analysts stood at the ready to name the external factors that made it happen (by the way, that army seems to [More...]

Widely Visible Symbols Of Human Folly

SUNDAY, MAY 19, 2013 11:59 AM

Why do we do it? Sure, we discount the future, and consensus is that's genetic, but it's not just our own future we discount. In fact it's not even the one we discount most: that would be our children's future. We don't just take what we need, [More...]

The Untouchables of the 21st Century

MONDAY, MAY 06, 2013 7:55 PM

Throughout history and throughout the world, there have been classes of untouchables. Best known perhaps (other than Elliott Ness and Wall Street bankers) are the caste that goes by the name in South Asia, a.k.a. the Dalits, but there are/were als [More...]

Daily Links
- Forget Prism: NSA Tapped Straight into Internet Pipeline
  Interviews with more than a dozen current and former government and technology officials and outside experts show that, while Prism has attracted the recent attention, the program actually is a relatively small part of a much more expansive and intrusive eavesdropping effort.
- Simple theory may explain mysterious dark matter
  Theoretical physicists at Vanderbilt University contend that a simply theory may explain mysterious dark matter. They propose that most of the matter in the universe may be constructed of particles that have an abnormal, donut-shaped electromagnetic field known as an anapole. According to a news release from Vanderbilt University, Professor Robert Scherrer and post-doctoral fellow Chiu Man Ho carried out an in-depth analysis to determine the validity of this theory. Scherrer points out that he likes this theory because of “its simplicity, uniqueness and the fact that it can be tested.”
- GM crops: UK environment secretary to push for relaxation of EU rules
  Believe it or not: the National Farmers' Union director of policy even claims that GMO crops are a solution for the effects of climate change.
- Neoliberalism has spawned a financial elite who hold governments to ransom
  That's what the financial crisis was all about. The ransom was paid, and as a result, governments have been obliged to limit their activities yet further – some setting about the task with greater relish than others. Now the task, supposedly, is to get the free market up and running again. But the basic problem is this: it costs a lot of money to cultivate a market – a group of consumers – and the more sophisticated the market is, the more expensive it is to cultivate them. A developed market needs to be populated with educated, healthy, cultured, law-abiding and financially secure people – people who expect to be well paid themselves, having been brought up believing in material aspiration, as consumers need to be. So why, exactly, given the huge amount of investment needed to create such a market, should access to it then be "free"?
- When the bond bubble finally bursts, a lot of investors will get hurt
  If and when the euro crisis flares up again – and I am pretty sure that it will – you will see a flurry of funds pouring into gilts “for safety”. Yet, looked at over the medium term, gilts are just about the most unsafe asset around. They may well be OK for a while yet, but when the bond bubble bursts, a lot of people are going to get hurt.