AndrewP
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Growth can continue for a very long time if we can expand into the galaxy. Then the rate of growth is only limited by transport speed.
If anyone can leave the Eurozone unscathed, the whole system is likely to come crashing down. If Greece leaves, Merkel has to make a fine example of them so that no larger and more significant country gets the idea to get up and leave. A Grexit must be accompanied by the most draconian punishment imaginable for the Greeks, so that no one else dares to try it.
How can a property collapse in China make exports collapse? US demand for cheap goods isn’t going to go down just because Chinese property prices crash. If anything, export volume will go UP, especially if the Renminbi plummets relative to the dollar, and makes Chinese goods cheaper.
Anyone who has significant deposits remaining in a Greek bank is a fool and deserves to lose all his money. If they pull the plug on Greece, the TARGET2 system will be disconnected from The Bank Of Greece, and the ATMs will close down once they are empty. The bank run will last all of 10 minutes.
Isn’t it true that the Fed can legally buy gold in addition to the assets Bernanke mentioned?
“”I assume there is a theoretical limit on QE as the Fed can only buy Treasuries and Agencies”. “
The Bernank is saving his ammo for when he really needs it. Bernanke previously told us what QE is for: “….. I’ve kept asset prices higher than they otherwise would be…” In other words, Bernanke is primarily concerned about maintaining the value of the collateral for loans in order to keep the big banks alive. And that’s it. If we see asset prices collapse and the TBTF banks teeter on the edge of insolvency again, Bernanke will act. But he will want to look the Depression Monster in the whites of its eyes before pulling the trigger. The Fed already owns such a large fraction of Treasuries, that shooting his wad right now would be a nakedly political act.
Perhaps Japan will develop Kr-F laser fusion and make it into a game changer. I don’t know of any other technology that has even a remote chance of having a high enough EROEI besides KrF laser fusion.
btw, the NIF facility in the USA is based on a totally inferior technology that can never be viable for a power plant. It was designed to simulate nuclear explosions, not to make a power plant, and it does not work yet anyway.
Most stimulus to date has been non-inflationary because it merely preserved income streams that already existed. Once the Depression returns with full force, the Congress will likely spend massively on Make Work programs, and this will put a lot of dollars in circulation.
A little reality check. Space in The Burj Khalifa costs as low as 2,650 dirhams per ft^2 which is $720/ft^2. That cost per sq ft would make an ordinary house cost millions of dollars. I know commercial real estate is higher due to concrete and steel, zoning regs, etc… but such a high rate is absurd. That is an awful lot to pay for the prestige of being in the world’s tallest building.
If Germany were out of the Eurozone, the rest of them would just print, print, print Euros to infinity and beyond. The Euro would become a Drachma, but its banks would be saved
The only solution for insolvent worthless banks is to zero them out and guarantee the deposits by direct money printing.
The ECB will have to print their way out. Monetize everything. They have no choice now. An EU fiscal union funded by massive Euro printing.
QE3 will definitely NOT be Treasuries. The Fed already owns a large fraction of long term bonds. Bernanke will probably buy mortgages the way he did in 2008-2009, although he could surprise us by purchasing real estate directly, or even stocks.
The systematic withdrawals of deposits from PIGS banks is a slow leak, not a run. In 2008, the rate of withdrawal from money market funds was $250 billion/hr and accelerating, after Lehman fell and Primary Reserve broke the buck. This is 1000x the current rate of withdrawal from the PIGS banks. In 2008 the Fed stopped the run by issuing a blanket guarantee. If the Eurozone had a real run, Mario Draghi would grab emergency powers and do exactly what the Fed did in 2008. And he is the only one who could do anything because the ECB, as the issuer of the Euro, is the only entity that can guarantee all Euro deposits.
Hmmm. The Germans have passed a law that specifies how Germany could leave the Eurozone and stay in the EU. If Germany left, would France, Spain, etc… force Germany out of the EU as well? Things could get interesting.
What about the possibility of a slow exit? The Greeks can reintroduce the Drachma and allow it to float against the Euro. If Greece requires its citizens to pay their taxes in Drachma, the Drachma will have some value. Greece can pay its State workers in Drachma and guarantee only its external debts in Drachma. Eventually, they exit completely, but they don’t have to do that immediately unless the ECB pulls the plug.
Deterrence can work if the penalty Greece must pay is a brutal military occupation. A new EU Wehrmacht should be drafted to occupy Greece with 500,000 troops. They will go door to door and confiscate all gold and silver in the country to pay Germany back. If they feel any household is holding something back, its males get executed on the spot, and the females get taken away as sex slaves, and shipped to Germany or France. Every street lamp in Greece will have a body hanging from it, and the highways will be lined with millions of crucified Greeks. Any city that resists occupation well enough gets put to the nuclear blast. Since Germany does not have nukes, they will have to use the French ones, and that means only an EU Federation will have the power to impose an imperial occupation. Germany cannot do it alone.
Federation makes sense for the EU, and is probably the only way the EU will be able to successfully fight over the scraps of diminishing fuel resources in coming years. A strong federation will create a power greater than the US, and will allow the EU to wage wars of conquest. While cars will not pay for the fuel that feeds them, wars certainly can. The EU wan wage war more efficiently than the US because there will be no extraneous ideological pretentions – they will simply grab the oil.
I disagree that Hollande will accelerate the demise of the Eurozone. More likely, he will save it, but in any case he will force hard decisions to be made. Only 2 States matter in the EU – France and Germany. If Mr. Hollande insists on the ECB monetizing State debt in perpetuity, Germany’s only choices are to accept it, or leave the Euro. And I doubt that Frau Merkel is bold enough to go back to the Mark at a time when Germany is entering recession and her voting coalition is crumbling. She will blink.
The ECB is the sole Sovereign, as it has unlimited money printing power. The ECB will have to buy up all these overvalued real estate assets, and put them into embalming fluid on the ECB’s balance sheet forever.
This article is nonsense. The Central bank’s power to print money is unlimited. Infinite. Infinity always wins over countervailing forces that are finite. There is nothing to stop the Fed from buying up the entire remainder of Fannie and Freddie bonds. When they do QE4, they will buy mortgages, and this will goose the stock market even more. They can buy non-agency mortgage bonds after they have bought all agency debt. They can even buy stocks directly. The Fed will stop at nothing to prop up the stock market, because the whole house of cards is totally dependent on the stock market. The solvency of virtually all pensions, insurance companies, and banks depends on the stock market staying up. If stocks collapse, everything goes down with them, and the Fed knows this.
The Eurocrats will wait for the most opportune time. They will wait for maximum crisis. Then they will seize power over all the EU (at least the EuroZone part). They will ignore the Bundestag or any other State parliament, just as the US Federal Government ignores State legislators and Governors. They will draft the unemployed masses into a new EU Army, paid for by money printing. Then they will seize the “Force De Frappe” (French Nuclear Arsenal) with that army. Once all the instruments of force are theirs, they will establish the new EU order. One Caesar, One Reich, One Europe.
Remember, the ECB is the only truly Sovereign EU agency. It controls the currency. It has the exclusive power to print money. That fact in itself makes it Sovereign. And once the ultimate weapons are also under its command, it will be Supreme.
