Dodd/Frank is five years old today. Infanticide was called for but like so many truisms of the past six years I suppose that this creature is going to remain around in some perverse form until the next crisis which will prove it to be totally useless very much like the IMF...which brings me to friend Carter.
Carter asks "why is the IMF useless," pointing to the fact that it outed the BS quotient in the Greek drama as to the impossibility of the paying of Greece's debts. Hell, Carter, I told everybody that 3 years ago and nobody listened then either, so if that is the value of this clown show why not pay me 10% of the billions that it takes to run that place and let's get on with it. I'm funnier than Mme. Legarde as well. Anyway, let's get serious.
The international Monetary Fund was founded at the Bretton Woods conference in 1946, just after the close of the Big One. The first thing one should ask is, "where in the hell is Bretton Woods." and one will find that paradoxically no one knows. So, for the record, Bretton Woods is in the state of New Hampshire, USA, the state motto of which is, "Live free or die," and is noted primarily for, in the summertime, the densest concentration of viciously-biting black flies and mosquitoes of any place on earth save for the Alaskan tundra. Moose have been known to commit suicide to stop the torment. Moose. SUICIDE! Anyway, that's is where the economic leaders of the world gathered back then to create an organization that would insure the monetary stability of the world's currencies and to avoid the killing devaluations that accompanied the Great Depression. I kid you not. As an American politician said a few years back, "How's that working out for ya?" I mean like, can you say, "Quantitative Easing?"No? Well, how about, "Screw your neighbor or trading partner." Funny, it is pronounced the same way in English, German, Japanese, Chinese and any other country's national language that comes to mind. Hell it's more understood and recognized than Coke Cola.
It's not that it wasn't a good idea, it's just that no one cares anymore and the organization is focused on that most natural of all animal endeavors, self preservation. Part of doing that is making yourself look as though you are needed, hence the brilliant expose of the real state of Greece's financial condition. Problem is it was never about Greece, it was about the EZ, the Euro, the reputations of a couple of hundred politicians, the stability of the banking system and when all of these things are what really count, don't screw things up at the last minute by pointing out what everybody already knows except for the Great Unwashed who may, somehow, queer the entire deal in a fit of pique from having been conned all along. This mob is also known as "voters." Dumb, truly dumb. For whether one agrees or not, this exercise was really about some important things
Now why would the IMF do something like that you might ask? I did and I led you wrong last week. Chrissie was up to her wonderful Gaelic nose in this one. Chrissie wants out and the next job is Madame Le President. And Chrissie wants to be able to say that she always spoke the truth. And so from its storied and bug-infested beginnings, the Fund is now the launching pad for a run at the Elysee Palace. Maybe this one works. I am sure Chrissie will not succumb to base instincts like her predecessor. Alons enfants!
And finally, thanks to Carter, who of course knew all of this but made damn sure he was going to keep me honest...and give me a topic. We need more like him. I need more like him. I'm pretty sure of that.
Showing posts with label Carter. Show all posts
Showing posts with label Carter. Show all posts
Tuesday, July 21, 2015
Friday, January 31, 2014
WHY SHOULD I WORRY
Krugman has it figured out in his Times column today. Beginning with a brief history of crises starting with Mexico in 1982, which was apparently caused by the onset of deregulation and banker aggressiveness (his words, not mine) that led to the "sudden stop" of lending in 1982 and to economic implosion. From this explanation all else follows in a logical pattern, for Paulie is nothing if not logical. Unfortunately, as if too often the case, Paulie is dishonest and incorrect in his assessment.
Prior to 1982, and right at in the middle of the real estate bubble of the early 70ies, we had this new event called OPEC and the great oil shut off to which the West capitulated resulting in a massive increase in oil prices and unheard of new wealth throughout the middle east and in certain countries in Latin America. It also led to massive amounts of liquidity flooding American and international banks, unusable at home, creating a need for it to be "recycled." The recycling went through many of the very countries producing the bonanza whereby future revenues were targeted for repayment of present loans designed for infrastructure development. Make no mistake, this lending was greatly encouraged by governments both here and overseas and banking regulators. Remember, "Countries don't go broke."
The second most important thing to remember is that not all of this liquidity could be sopped up in this manner. There was no capital market for sovereigns in the emerging markets; all the lending was done by banks. There remained A LOT of liquidity.
The third thing to remember is Jimmy Carter was President and Jimmy Carter was an idiot.
The fourth thing to remember is inflation went through the roof and to combat it Jimmy did the only smart thing he did in four years…he appointed Paul Volker as Chairman of the Fed, and finally,
The fifth thing to remember is Paul killed inflation, stone, cold, dead with interest rates north of 15% but at the same time he killed Latin America as well.
Now little Paulie wont tell you all that because his solution to everything is for western governments to engage in huge amounts of deficit spending which will create demand which will cure all things otherwise we will face bubbles and recessions forever. Unfortunately, near history--not theory--seems to suggest that improper fiscal management is what buggers things up and nothing has proven worse than the nonsenses of the Carter years and the economic disincentives of the present administration coupled with fiscal mismanagement over the past dozen years that encourages…nay, almost forces--investors to seek yield in places most really shouldn't be.
Why should I worry? Well, because I don't think this emerging market thing is over nor do I think it's a mere blip. This could get worse and as I said the other day who cares about Turkey or the Venezulus or Argentina as stand-alones. But throw in India, the weak guys in Euroland and certainly Brazil, and you have the makings…of…something. Don't look for leadership from Uncle; The Leader and his party are in full election crisis mode not that anyone would listen to them in the first place. Unfortunately, though unavoidable on the international stage we command absolutely no credibility. So do us all a favor, Paulie Bubbala, go sit in a corner somewhere and play with your Nobel which you earned when you used to be an economist rather than a political enabler. Crap like your latest effort we don't need.
Prior to 1982, and right at in the middle of the real estate bubble of the early 70ies, we had this new event called OPEC and the great oil shut off to which the West capitulated resulting in a massive increase in oil prices and unheard of new wealth throughout the middle east and in certain countries in Latin America. It also led to massive amounts of liquidity flooding American and international banks, unusable at home, creating a need for it to be "recycled." The recycling went through many of the very countries producing the bonanza whereby future revenues were targeted for repayment of present loans designed for infrastructure development. Make no mistake, this lending was greatly encouraged by governments both here and overseas and banking regulators. Remember, "Countries don't go broke."
The second most important thing to remember is that not all of this liquidity could be sopped up in this manner. There was no capital market for sovereigns in the emerging markets; all the lending was done by banks. There remained A LOT of liquidity.
The third thing to remember is Jimmy Carter was President and Jimmy Carter was an idiot.
The fourth thing to remember is inflation went through the roof and to combat it Jimmy did the only smart thing he did in four years…he appointed Paul Volker as Chairman of the Fed, and finally,
The fifth thing to remember is Paul killed inflation, stone, cold, dead with interest rates north of 15% but at the same time he killed Latin America as well.
Now little Paulie wont tell you all that because his solution to everything is for western governments to engage in huge amounts of deficit spending which will create demand which will cure all things otherwise we will face bubbles and recessions forever. Unfortunately, near history--not theory--seems to suggest that improper fiscal management is what buggers things up and nothing has proven worse than the nonsenses of the Carter years and the economic disincentives of the present administration coupled with fiscal mismanagement over the past dozen years that encourages…nay, almost forces--investors to seek yield in places most really shouldn't be.
Why should I worry? Well, because I don't think this emerging market thing is over nor do I think it's a mere blip. This could get worse and as I said the other day who cares about Turkey or the Venezulus or Argentina as stand-alones. But throw in India, the weak guys in Euroland and certainly Brazil, and you have the makings…of…something. Don't look for leadership from Uncle; The Leader and his party are in full election crisis mode not that anyone would listen to them in the first place. Unfortunately, though unavoidable on the international stage we command absolutely no credibility. So do us all a favor, Paulie Bubbala, go sit in a corner somewhere and play with your Nobel which you earned when you used to be an economist rather than a political enabler. Crap like your latest effort we don't need.
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