jawfish

It’s Time To Give Up On Mainstream Economics
john posted in The Emperor is Naked on December 29th, 2011

A Failure To See the Obvious

Prior to 2008 it was generally understood that the profession hardly merited its claims of its own predictive utility. So the failure to assign enough risk to such a crisis as befell the developed world in 2008 was, frankly, no surprise. But in the aftermath of the crisis, economics, in its professional form, has revealed itself to be damagingly disconnected from observable reality.

A glaring example of this is how it cannot come to any agreement as to how the debt crisis occurred, and accordingly remains quite confused in its proffered solutions.

Mostly the profession remains curiously naive about the nature of debt, an understanding of which is more critical than ever as the developed world enters a ‘slow’ to ‘no-growth’ phase of its history. Indeed, many of the papers, interviews, and op-eds from central bankers and economists in the face of our present-day sovereign debt crisis are little more than an eerie restatement of the discussions which took place about private-sector debt from 2006-2008.

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via It’s Time To Give Up On Mainstream Economics – Blogs at Chris Martenson.

Europe: Danger Of A Systemic Collapse Is Far Greater Today
john posted in other, The Emperor is Naked on December 29th, 2011

via Chris Martenson Blog

Why New Danger Of A Systemic Collapse Is Far Greater Today Than At Almost Any Time .

Martin Weiss: Some stock investors never seem to learn. They hope and pray for a new government rescue from Washington or Brussels. They wait with bated breath for each official sign of money printing, interest-rate cuts, or financial bailouts.

Then, as soon as something is finally announced, they breathe a sigh of relief, applaud with enthusiasm, even buy a stock or two.

But it’s a fool’s game. Because within a few months — or even just a few days — the government rescue crumbles, investors run for cover, and, ironically, they begin a whole new cycle of hoping and praying for the NEXT big rescue.

Just this year alone, European authorities have held 19 high-level emergency meetings … proposed dozens of rescue packages … and delivered an endless stream of promises.

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Oil Trades Near One-Week Low on U.S. Stockpiles, European Crisis – Businessweek
john posted in Fin de siècle on December 29th, 2011

Oil Trades Near One-Week Low on U.S. Stockpiles, European Crisis

Just one market comment among many, but it struck me how it loosely strings together some themes:

Oil falls in price – thats a sign of European collapse due to recession, not cause for growth.
Euro weakened relative to the dollar – relates to using oil and currency as hedges.
Sovereign debt

Elsewhere Bloomberg reports on the Italian debt sale – short term rates fell, long term rates are unsustainably high.

This bond sale is also covered in the media as a sign that Italy is recovering and the bond markets suddenly have confidence (yay!), or as a sign the ECB is lending huge sums to banks which are buying sovereign debt (whoa!).

Anyway my points are:

Its a mess.
Debt, oil, currency, end-of-growth, recession, trade are all bound together in a chaotic mix.
Economics looks more and more like weather forecasting.

Oil Trades Near One-Week Low on U.S. Stockpiles, European Crisis
December 29, 2011, 11:30 AM EST
By Moming Zhou

Dec. 29 (Bloomberg) — Oil fell after a U.S. government report showed supplies unexpectedly rose last week.

Inventories rose 3.9 million barrels to 327.5 million in the week ended Dec. 23, the Energy Department said today. Stockpiles were forecast to decline 2.5 million barrels, according to the median of 10 analyst estimates in a Bloomberg News survey.

The American Petroleum Institute, an industry-funded group, said late yesterday that crude supplies climbed 9.57 million barrels last week.

Crude oil for February delivery fell 73 cents, or 0.7 percent, to $98.63 at 11:05 a.m. on the New York Mercantile Exchange. Oil traded at $98.56 a barrel before the release of the report at 11 a.m. in Washington, a day later than usual because of the Christmas holiday.

Oil also fell as the euro weakened against the dollar to the lowest level since September 2010 after Italy auctioned 7.02 billion euros ($9 billion) of bonds, short of the target.

The euro fell as much as 0.6 percent to $1.2858 and 10-year Italian notes slid after the Italian bond auction. A weaker euro and stronger dollar reduces oil’s appeal as an investment alternative.

vis Businessweek/Bloomberg

Why Oil Prices Are Killing the Economy – Blogs at Chris Martenson
john posted in other on December 21st, 2011

Why Oil Prices Are Killing the Economy – Blogs at Chris Martenson.

A discussion of how oil prices affect the economy, including some (polite) explanation of the technical economists positions who disagree that it does.

Have rising oil prices just put the final coffin nail in the entire 2009-2011 economic recovery?

Given the slowdown in China, the new recession in Europe, and the rocky bottom in the US economy, it certainly seems that way.
Oil’s Relentless March Higher

Oil prices emerged from their spider hole over two and half years ago. Having fallen from the towering heights of $148 a barrel in the summer of 2008, the early months of 2009 saw a return to prices in the $30s. Interestingly, during that great oil crash, the price of West Texas Intermediate Crude Oil (WTIC) spent only 20 trading sessions below $40. That is the exact price that most analysts only three years prior believed oil could never sustain as the world would pump “like crazy” should prices ever reach such “impossibly high levels.”

Given the enormous debt troubles the West is currently facing and the fact that oil has averaged over $100 during several months this year, it does seem reasonable to suggest that, once again, the economy has been pushed off a ledge by oil. Let’s take a look at oil prices over the past several years.

Worse Than 2008 – Blogs at Chris Martenson
john posted in other on December 21st, 2011

Worse Than 2008 – Blogs at Chris Martenson.

Martenson talks about the gathering storm attacking market confidence. There is a great graphic from the BBC showing who owes what to whom.

One of the most important things we need to track is simply untrackable, and that is market perception. When faith in a faith-based money system vanishes, the game is pretty much over.

If you have been reading my work (or anyone else’s) with a decent macro view, you likely lost your faith in the system a while ago and marvel that it can continue along for another moment, let alone all the years it has been creaking towards its eventual date with reality. But along it creaks, day after day, week after week, and month after month, threatening to wear down the observant and vigilant before finally letting go.