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What ever happened to deleveraging? Spence

McKinsey notes that gross debt has increased about $60 trillion – or 75% of global GDP – since 2008. 

A global economy that is levering up, while unable to generate enough aggregate demand to achieve potential growth, is on a risky path.

Michael Spence, Project Syndicate 27 April 2016

Anything Trumps Hillary, Libya mail - Stockman

No one in their right mind could have concluded that the aging, pacified, tent-bound Moammar Khadafy was a threat to the safety and security of the American people.

 Even the community organizer from South Chicago wanted to keep the American bombers parked on their runways.

But Hillary’s infamous emails leave no doubt that it was she who induced Obama to embrace the folly that quickly created yet another failed state, hotbed of jihadism and barbaric hellhole in the middle east. Indeed, her hands are doubly bloody.

When Hillary bragged that “We came, we saw, he died”, it turns out that not just Khadafy but thousands of innocents have died, and not just from the chaos unleashed in Libya itself. 

The former dictator’s arsenals and mercenaries have now been dispersed all over North Africa and the middle east, spreading desolation in their wake.

David Stockman 27  April 2016

När Khaddafi fick jobb som EU:s gränspolis
I början av oktober 2010 åkte EU-kommissionär Cecilia Malmström till Libyen
Annika Ström Melin, Signerat, DNs ledarsida 24 augusti 2011

Storbritanniens utrikesminister William Hague anlände på lördagen till rebellfästet Benghazi i Libyen, efter att Nato för första gången använt brittiska och franska stridshelikoptrar i intensiva luftstrider.
DN 4 juni 2011


Friedman soft in his criticism of Keynesian doctrines - Glasner DeLong

Friedman famously held the Fed responsible for the depth and duration of what he called the Great Contraction…

in sharp contrast to hard-core laissez-faire opponents of Fed policy, who regarded even the mild and largely ineffectual steps taken by the Fed… 

as illegitimate interventionism to obstruct the salutary liquidation of bad investments, thereby postponing the necessary reallocation of real resources to more valuable uses…

Brad DeLong 27 April 2016

Money market rates at the zero bound for 90 straight months - Stockman

Once it punts again at the June meeting owing to Brexit worries it will have effectively pegged money market rates at the zero bound for 90 straight months.

There has never been a time in financial history when anything close to this happened, including the 1930s. 

Nor was interest free money for eight years ever even imagined in the entire history of monetary thought.

So where’s the fire? What monumental emergency justifies this resort to radical monetary intrusion and repression?

David Stockman 30 April  2016

Comment by Rolf Englund:

Stockman writes that:

The truth is, there can never by an honest shortage of “aggregate demand” because the latter is nothing more than spending for consumer and capital goods that is financed from the flow of income and production.

As “Say’s Law” famously and correctly insists, “supply creates its own demand”.

End cit

We can read at Wikipedia that

Say's law was generally accepted throughout the 19th century, though modified to incorporate the idea of a "boom-and-bust" cycle. During the worldwide Great Depression of the 1930s, the theories of Keynesian economics disputed Say's conclusions.

Scholars disagree on the question of whether it was Say who first stated the principle, but by convention, Say's law has been another name for the law of markets ever since John Maynard Keynes used the term in the 1930s.....  more

Why is Stockman wrong when he writes that "US actually didn’t borrow its way out of the Great Depression; it saved its way out"

As I documented in The Great Deformation, total public and private debt at the end of 1938 amounted to 210% of GDP, but by the end of 1945 it had dropped to 190% of GDP.

 David Stockman 28 April 2016

”Det som satte stopp för trettiotalsdepressionen i USA var ett massivt underskottsfinansierat program för offentliga arbeten som kallas andra världskriget”.

Carl Johan Gardell, Understreckare SvD 13 augusti 2009

Pensions are under enough pressure - Authers

Risk has been pushed back to individuals, through 401(k) plans, personal pensions and the like, 

while those public bodies and big corporations still guaranteeing an income to their members face large and mounting deficits. 

And yet many assume equity returns of 7 per cent.

The Long View, FT 29 April 2016

The baby boomers, those born between 1946 and 1970, were the richest, and largest, generation that the world has ever seen.

Unsurprisingly, they created a truly golden age for housing, auto sales and overall consumer demand.


Republican-controlled Congress is "obsessed with this deficit to a point that I think it's almost pathological." Carl Icahn

"I do believe in general that there will be a day of reckoning unless we get fiscal stimulus," he said, pointing to the Federal Reserve's maintaining low interest rates, and potentially creating "tremendous bubbles."

On the fiscal side Icahn argued that "you certainly could do more spending."

"The Republican party that I used to be more sympathetic with — I'm right in the middle now, although as you know I'm for (GOP front-runner Donald) Trump — but what I would say is Congress is in this massive gridlock obsessed," he said, explaining that the Republican-controlled Congress is "obsessed with this deficit to a point that I think it's almost pathological."

Icahn: Markets will have 'a day of reckoning', CNBC 28 April 2016

Is the World Getting Crazier, But We No Longer Notice? Charles Hugh Smith


Investors face damaging losses if yields rise even a little A half-percentage point increase would wipe out $1.6 trillion

Time Bomb Ticking In The Global Bond Market

$17 Trillion Of Governments Yield Less Than 1%, 

Duration Risk Soaring

Bloomberg Business 26 April 2016

Cheap borrowing has funded dividends, stock buybacks, and M&A, Authers

Corporate America is swimming in cash. 

There is no great news about this, and no great mystery about where it came from. 

Seven years of historically low interest rates will prompt companies to borrow.

A new development, however, is that investors are starting to ask in more detail what companies are doing with their cash. 

And they are starting to revolt against signs of over-leverage.

John Authers, FT 27 April 27, 2016


Portugal - The Euro's Next Existential Crisis

So long as at least one of the four rating agencies judges Portugal to be worthy, its government debt remains eligible to participate in the ECB's bond-buying program. 

But if the country drops to sub-investment grade at all four, the ECB’s own rules forbid it from buying any more Portuguese government securities - purchases which have ballooned to almost 15 billion euros ($17 billion) in the program's one-year lifetime.

En märklig sak med svensk politik är att stora skandaler kan inträffa utan att någon tar ansvar för dem.

Hansson, Belfrage, Bildt och Magdalena Andersson

Karin Pettersson Aftonbladet 2016-04-24


Famous skeptic, SocGen's Albert Edwards

"I have long recognised my own contrariness (or is it bloody-mindedness) and hopefully put it to good use in my chosen profession. If you want the consensus bull-market cheerleading nonsense, readers know it is amply available elsewhere."

I am neither monetarist nor Keynesian. I see merit and demerit in both sides of a very fractious argument. 

But what I do know is when in the last few weeks I have heard that Janet Yellen sees no bubble in the US, when Ben Bernanke hones and restates his helicopter money speech, and when Mario Draghi says that the ECB's policy of printing money and negative interest rates was working, I feel utterly depressed 

Zerohedge 22 april 2016

Albert Edwards at IntCom


Feldt, Englund och Keynes

Sveriges riksbank sprutar in dopningsmedel i kreditmarknaden med en extremt expansiv penningpolitik för att få igång inflationen. Men det går inte utom på bostadsmarknaden där prisstegringarna ses som en samhällsfara.

Finanspolitiken har i vårt land liksom i andra hållits fången av en doktrin som med anspråk på vetenskap säger att penningpolitik är det enda styrmedel som kan åstadkomma både stabilitet och tillväxt. 

Doktrinens resultat kan vi nu se i en värld som skakas av kriser och utebliven tillväxt.

Kjell-Olof Feldt, Dagens Industri 21 april 2016

- Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.

Det skrev jag på min blogg första gången 
den 5 december 2009.

Keynes, Krugman, Secular Stagnation and The Death of the Rentiers

Izabella Kaminska, FT Alphaville, 23 January 2014