What Could Possibly Go Wrong

Detroit Cancels City Blight Tour for Creditors

"Creditors of the city of Detroit aren't interested in the city blight, they want their money. Emergency Manager Kevyn Orr's office announced Tuesday afternoon that a bus tour of Detroit planned for 25 creditors who are being asked to forgive the city's debt has been cancelled, reports AllMichigan.com. Orr has been trying to get city creditors, who are owed billions, to accept massive concessions in order to prevent bankruptcy. And don't think Detroit is anomaly, crises are developing in other cities and some states." Continue reading →

Continue ReadingDetroit Cancels City Blight Tour for Creditors

Italy’s Credit Rating Cut to BBB by S&P; Outlook Stays Negative

"The outlook on the rating, reduced from BBB+, remains negative, the New York-based ratings company said in a statement late yesterday. S&P analysts said that, even with unprecedented easing by the European Central Bank, real interest rates for non-financial companies in Italy exceed the level before the financial crisis. Austerity measures, while enabling Italy to reduce its deficit to within European Union limits, deepened the nation’s slump. With the economy headed for its eighth quarter of contraction and joblessness at its highest since at least 1977, Prime Minister Enrico Letta in the last two months postponed a sales-tax increase and suspended a property tax payment." Continue reading →

Continue ReadingItaly’s Credit Rating Cut to BBB by S&P; Outlook Stays Negative

Mad Latvia defies its own people to join the euro

"EU finance ministers have just given the go-ahead for Latvia to join the euro in January 2014. No matter that the latest SKDS poll shows that only 22pc of Latvians support this foolish step, and 53pc are opposed. This is a very odd situation. The elites are pushing ahead with a decision of profound implications, knowing that the nation is not behind them. No country has ever done this before. The concerns of the Latvian people are entirely understandable. Neighbouring Estonia found itself having to bail out Club Med states with a per capita income two and a half times as high after it joined EMU. Latvia may find itself embroiled in an even bigger debacle." Continue reading →

Continue ReadingMad Latvia defies its own people to join the euro

European Union gives Latvia final OK to join eurozone

"'Yes we are joining the euro as of January 1 next year,' said Prime Minister Valdis Dombrovskis, adding that it was 'good news not only for Latvia but also for Europe and the eurozone.' Asked whether he had any qualms about joining the single currency at such a difficult time, Vilks acknowledged that 'those hard times will last several years at least'. 'We trust Europe and we trust the euro,' he said later, adding that he hoped Latvia would prove to be one of the 'best performers' in the single currency zone. Latvia has been the EU’s fastest-growing economy, having posted GDP growth of more than five percent year-on-year in both 2011 and 2012." Continue reading →

Continue ReadingEuropean Union gives Latvia final OK to join eurozone

Currency Controls in Cyprus Increase Worry About Euro System

"On a visit to Athens this year, Marios Loucaides, a Cypriot businessman, saw an apartment he liked in the heart of the Greek capital and decided to buy it. However, Mr. Loucaides discovered that the euros he had on deposit here in Nicosia, the capital, could not be moved to Greece, even though the two countries share the same currency and, in theory at least, the same free movement of capital.The apartment deal collapsed. And so, too, did Mr. Loucaides’s belief that Europe has a common currency. Tangled in restrictions imposed in March as part of a bailout for the country’s ailing banks, a euro in Cyprus is no longer the same as one in France, Germany or Greece." Continue reading →

Continue ReadingCurrency Controls in Cyprus Increase Worry About Euro System

Japan Government To Change Inflation Calculation Ushering In Even More BOJ Liquidity

"The official explanation for this upcoming adoption of core-core-CPI which also excludes energy prices in addition to fresh food costs (as core CPI does everywhere else in the world) is to 'raise the bar' on Abe's inflation goal. In reality, it will simply grant the BOJ unlimited ammo to continue injecting liquidity indefinitely because absent exploding energy costs (as we have discussed), inflation in Japan is quite dormant. But what will really happen is that inflation will merely become just one more governmentally-determined and goalseeked economic indicator and policy tool, as it is in the US and China." Continue reading →

Continue ReadingJapan Government To Change Inflation Calculation Ushering In Even More BOJ Liquidity

Simulated ‘Street Wide’ Cyber Attack on Wall Street Coming

"A source provides me with this internal advisory put out by the Depository Trust & Clearing Corporation. Always be on your toes when 'simulations' are scheduled. Remember, simulation drills were on going at the time of 9-11 and also at the Boston Marathon bombing." Continue reading →

Continue ReadingSimulated ‘Street Wide’ Cyber Attack on Wall Street Coming

Japanese Are Bailing Out of US Treasury Bonds

"It appears that the bulk of the bonds that Japanese investors sold in May were US Treasurys and the roughly $30 billion were a record amount. This follows the $15.5 billion sales in April. May was the fifth consecutive month Japanese investors have reduced their U.S. Treasury holdings and over this period sold about 8 trilion yen. The second-quarter selloff appears driven to a larger extent by worries about Fed tapering and its potential to push up global bond yields, they said. This is what is going to make it very difficult for the Fed to slow/stop buying Treasury securities. When they slow/stop, there will be even more upside pressure on rates, with very serious sellers." Continue reading →

Continue ReadingJapanese Are Bailing Out of US Treasury Bonds

Bill Bonner: Can the Fed’s “Credit Cure” Really Work?

"The US economy reached a turning point in the 1980s. Natural, healthy, sustainable growth gave way to credit-boosted phony growth. The 'growth' of the last 30 years was not like the growth of the 30 years before it. It was not based on rising productivity, increased wages and real capital formation. Wages stagnated. The only way people could increase their standards of living was by spending money they didn't have. That's where the credit came in, made possible by America's post-1971 flexible paper money system. Spending money you don't have is one of those things that economist Herb Stein had in mind when he said, 'When something can't go on forever, it will stop.'" Continue reading →

Continue ReadingBill Bonner: Can the Fed’s “Credit Cure” Really Work?

eEconomics Episode 10: Austerity

"David examines austerity and its effects on austerity and austerity austerity. Also, austerity is discussed briefly. A note on Reinhart-Rogoff: Who cares? The idea of fiscal responsibility wasn't created in a Harvard classroom three years ago. (a) we don't have austerity (b) two people messing up a spreadsheet doesn't somehow negate the laws of economics. Also, we've actually had deficit spending/stimulus. That's what demonstrably didn't work. But now that's seen as the solution once again because of a spreadsheet advocating a policy we don't follow? It's too insane to really think about." Continue reading →

Continue ReadingeEconomics Episode 10: Austerity