News from around the web: 2009-10-07
"there is no macroeconomic recovery occurring in the United States. What’s unfolding currently is snap-back from last year’s crash, which led us to the bottom of a spider-hole. The positive bits of macro data, dribbling out here and there, are really just about getting us back to zero. A kind of steady-state, expected to carry on for some time to come. And that’s a best-case scenario"
Morgan Stanley Asia chairman Stephen Roach argues that the only way to put Asian growth models on a sustainable footing is to introduce social safety nets.
"When will China finally realize that it cannot accumulate dollars forever? It already has more than $2 trillion. Do the Chinese really want to be sitting on $4 trillion in another five to 10 years? With the U.S. government staring at the long-term costs of the financial bailout, as well as inexorably rising entitlement costs, shouldn’t the Chinese worry about a repeat of Europe’s experience from the 1970s?"
Desperate times mean you have to raise money any way you can. "Japan said Tuesday it has concluded a contract with Latvia to acquire rights to emit 1.5 million tons of greenhouse gases in terms of carbon dioxide to help achieve its reduction goal under the 1997 Kyoto Protocol."
"Unless there is a major change of direction among global economic and financial officialdom, we are at risk of ending up with a world in which liquidity provision is privatised and insolvency risk for banks is socialised. This would be the exact opposite of what makes sense: solvency is (or should be) a private good and liquidity is (or should be) a public good."
"One thing was clear from Mr. Rubenstein’s speech — he is not a very bullish guy."
"Business is booming at the Blue Lagoon. One evening last week at the hot springs on the lava fields above Grindavik, dozens of bathers were still enjoying the warm geothermal waters even as the last trace of daylight faded from a sleet-filled Icelandic sky. Almost all were foreign tourists, part of a surge in visitors – August’s numbers were up 12 per cent on 2008 – since last year’s bank crash sent the krona plummeting. But the thriving tourism trade, while welcome, is a rare piece of good news amid a mostly gloomy outlook for the storm-tossed island on the cusp of the Arctic Circle."
Hat tip Yves Smith. "I thought I’d take the opportunity to list some things that people tend to think they know about Iran, but for which the evidence is shaky."
"The central bank needs to watch asset prices and raise rates quickly when it decides the time is right." But they ARE watching asset prices. They want them higher.
"The big question on the domestic front right now is whether President Obama understands the gravity of the employment crisis facing the country. Does he get it? The signals coming out of the White House have not been encouraging."
"A Pew Research Center for the People & the Press survey released today found 61 percent of Americans would support a military strike. Twenty-four percent said it is more important to avoid conflict even if that means Iran will end up building nuclear arms."
"It seems to me that we are at an inflection point in the economy. The government has blown pretty much all of its money and the economic recovery and the economy is still sputtering along. No surprise there. So what’s going to happen? I believe that we’ll have another economic downturn which is going to push the dollar to new lows, push gold to new highs, and push the equity markets back down to their March lows."
"Math dictates that if the US is running a trade deficit someone else mathematically MUST run a trade surplus. Whether someone wants to hold dollars or not is irrelevant… So there are lots of reasons countries might want to hold dollars. Bear in mind, some of them are senseless, but since when do governments have policies that make any sense?"
"how could millions of people… be persuaded that the president is foreign?… A part of the answer may lie in what’s called implicit social cognition, which involves the deep-rooted assumptions we all carry around and even act on without realizing it. " Read the comments as well for a fuller picture.
Betsy McCaughey goes off – and not in a good way.
"Can’t check Facebook or Twitter from the office? You’re not alone. In fact, you might be in the majority. "
Prime Minister Valdis Dombrovskis had asked the state chancellery legal department to prepare amendments so that a borrower’s “liability to a lender connected with the purchase of a sole home is limited to the value of the collateral”.
Hilarious photo montage as analogy for markets’ animal spirits
"TechCrunch installed a new Facebook Share button on every article, next to the Tweetmeme Retweet button. When we first installed it, we set the Facebook button up with the default settings that included a share count, and the ability to pop open a new window to complete the share. These default settings are awful."
"In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading."
"As we reported earlier, The Independent appears to have rocked the world on Tuesday with its Robert Fisk exclusive exposing a secret plot by international central banks to topple the US dollar."
"You’d think they’d at least be consistent and apply the same arguments to other third party apps. At least until this whole FCC thing blows over. But Skype’s calling app, which uses Wifi, is totally fine. And yesterday, the Vonage iPhone app, which seems to be just as much of an issue as Google Voice based on that quote at the top, got the green light, too."
"while markets cheered today’s news that Goldman Sachs — who many consider to be the "smart money" — was upgrading the large banks, based on their track record so far this year, shouldn’t investors have been selling those shares — and the overall market — instead?" Exactly.
Distraction of the Day: Drunk mom passes out in car, kids wander the streets.