economics

It's 1930 all over again

How true, how true:

While the 1920-21 depression and stock market pattern has been cited as remarkably similar, some are pointing out that whereas now credit is cheap and market valuation still relatively high, in 1920-21 opposite conditions applied.

This is from a very interesting blog which gives every day the news from the same day but from 1930. We have exactly the same financial conditions now .

The difference between the UK and Zimbabwe?

From the Telegraph:

For the only difference between the UK's current policy and Zimbabwe-style economics is that QE involves the creation of electronic balances rather than actual notes.

That last paragraph will have caused a sharp intake of breath among my friends in the higher-echelons of the UK's economics profession. Unable to dismiss me as a "non-economist", they'll say I'm being alarmist – perhaps due to some kind of personality trait.

I would suggest they sit down, turn off their mobile phones, take a cold look at the evidence and then ask themselves if they've got the guts to help expose the madness of the current policy consensus – the debt-funded fiscal boosts, the non-conditional bank bail-outs and, above all, QE.

The Brits don't have to be afraid of the Muslims taking over. They're detonating themselves right now.

Swedish interest rates: minus 0.25%

The result of cluelessness about the economy? It has destroyed empires before (For example, the Roman empire was destroyed because of economic collapse). Governments and central banks are busy doing the same right now. In Sweden the interest rate has now been lowered to - 0.25%. Minus!

In the clearest signal yet that we are still in a potentially devastating global deflationary spiral, The Riksbank, Sweden’s central bank and the world’s oldest central bank, has effectively cut interest rates to minus 0.25% and has started a program of quantitative easing a.k.a printing money.

I won't print my thoughts about what should be done to central bankers, but Keynesian economics is what kids learn at school, the only thing they know, and what will make them destitute, and they won't even know why or how. And the taxpayers are just sitting back and enjoying their socialist state. Do it, while it lasts.

The biggest bill

I just realised I'm in that group...

Not since the second world war have so many governments borrowed so much so quickly or, collectively, been so heavily in hock. And today’s debt surge, unlike the wartime one, will not be temporary. Even after the recession ends few rich countries will be running budgets tight enough to stop their debt from rising further. Worse, today’s borrowing binge is taking place just before a slow-motion budget-bust caused by the pension and health-care costs of a greying population. By 2050 a third of the rich world’s population will be over 60. The demographic bill is likely to be ten times bigger than the fiscal cost of the financial crisis.

Financial problems in Europe

In the US the problems in Europe are seen as even more severe. From the Financial Times:

The details may seem complex. But the fundamental point is not: the European economy gained an illusion of health from unsustainable spending in peripheral countries in its west, south and east. The asset price bubbles, credit growth and investment booms that characterised this spending have all collapsed, at the same time as an even more significant bubble burst in the US. This timing is not, of course, a coincidence. The collapse has devastated activity in the export-dependent countries, of which Germany is much the most important. Moreover, as a result of poor risk management, many European banks have also been badly damaged.

Good I like windsurfing

Meet doomsayer Dmitry Orlov, with a doom score of 95:

Dmitry Orlov sees similarities between the US and the collapse of Russia in the late 80s. His theory is based on the 5 stages of collapse, starting with the financial system, followed by commerce, then the political system, then social and finally, cultural collapse.

His views are deeply informed by his outlook on energy production and consumption. In the future, says Orlov, the only viable form of transport will be sail power.

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