The General Economics Thread

The unwinding of the Gold and Silver bubble.

@ Greenmantle: Oh dear, that's not good @ Night shifts being unhealthy for memory and sanity.

Inflation Targeting is pointless, as Inflation is a rate whose ideal target is always shifting. Do not behold the 2% inflation rate as the ideal.

edited 4th Nov '14 6:40:22 AM by PotatoesRock

The IMF pretty much admits it fucked up by embracing fiscal austerity in the face of the 2008 financial crash.

It took 6 fucking years to admit they screwed up.

6. Fucking. Years.

(Sorry, I just feel pissed off in regards to their sheer incompetence)

edited 5th Nov '14 2:11:37 AM by Quag15

Economics is very political. Much like everything these days.

Meanwhile, I'm wondering what's going to tank the world economy, since the Eurozone's basically showing coughs of economic deflationary spirals and triple dip recessions.

• The Eurozone desperately sticking fiscal austerity like a boyband crush?
• China's economy finally stalling and slowing down? (There's no way in hell it isn't)
• The US's end of QE and the incoming Republican Congress?

Old 'Chinese' Curse: May you live in interesting times.

edited 5th Nov '14 2:38:43 AM by PotatoesRock

It's been interesting since 9/11.

And it just keeps getting more and more interesting all the time. I just hope I manage to live to see what good comes all of these messes.

I can't view Tumblr at work. Could you describe the gold/silver bubble article?

Basically the "get cash for Gold/Silver" market/just general market for precious metal commodities has started popping. Why? People accepted an economic recovery is/was happening, the lack of inflation and bond vigilantes never materialized, and the dollar hasn't imploded or collapsed. The world returned to semi-normal, and thus doomerism took a hike. As well, emerging markets are suffering lukewarm income growth, the US is trending stronger which is creating a financial headwind.

Long story short, banks are fairly healthy, as is Wall Street, so everyone's mostly calm on those ends.

What's a "bond vigilante?"

A bond vigilante is a bond market investor who protests monetary or fiscal policies he considers inflationary by selling bonds, thus increasing yields. In the bond market, prices move inversely to yields. When investors perceive that inflation risk or credit risk is rising they demand higher yields to compensate for the added risk. As a result, bond prices fall and yields rise, which increases the net cost of borrowing. The term references the ability of the bond market to serve as a restraint on the government's ability to over-spend and over-borrow.

Basically there was a lot of predictions bond investors would be dumping bonds left and right in the face of the Fed's Weimarian money printing schemes. It never happened.

Speaking of which. I wonder if/when the Fed will be audited. Wheeeee.

Europe could use the European Investment Bank to encourage growth, but it could cost the bank its AAA Credit Rating.

Even the top 10% or so don't feel rich: Whether it be the costs of actually using their expensive vehicles disuading them from being used, their worth isn't how much they're taking home, or the owner of a company who can't take a break to spend more time with his family. Perhaps it isn't all sunshine and flowers for the wealthy either?

The same AAA rating that was given to a lot of things which in 2007-2008 turned out to be junk? Yeah, not sure if anybody would miss it, really.

Luxembourg tax files: how tiny state rubber-stamped tax avoidance on an industrial scale.

It's a long article, which has many quoteblock-able paragraphs, but it's such a detailed investigation it's seriously worth everyone's time.

Krugman argues Japan should really really avoid the temptation of hiking consumption taxes again in the middle of their recovery.

Some of the world's worst Business Decisions: Giving George Lucas' the merch rights to Star Wars, Eddie Lampert generally existing, and Enron's idea bonuses.

To seize the future (and growth), states must be willing to seize the chance for innovation. (It's chiefly focusing on the Nevada 'it' company, Tesla Motors), but most of the lessons here apply elsewhere.

Lucas and Bill Gates were geniuses, seeing the bigger picture when others didn't.

Also, that article (your first link) is blocked at work. Could you give me the highlights?

edited 6th Nov '14 11:54:22 AM by BonsaiForest

They're more saying it was Fox's incompetence for letting Lucas get it, since Lucas got them by accepting a 20,000 drop in pay.

And what I listed with the link is pretty much what was listed (Also Enron made downloadable movies 10 years before it became viable.)

With US, Japan and Europe unable to raise inflation, are their central banks losing market credibility about said inflation?

Ugo Panizza "Rashomon in the Eurozone"

Crazy hedge fund billionaire Paul Singer suggests hyperinflation price of rich people stuff due to bidding is proof of hyperinflation throughout the economy.

edited 6th Nov '14 12:37:55 PM by PotatoesRock

Ben Bernanke states it will be hard for the ECB to do QE like the U.S. Fed did. He also blasts back at critics saying U.S. QE would lead to Weimar-ization.

Employment gains continue without a healthy growth in terms of wages.

edited 7th Nov '14 9:52:35 AM by PotatoesRock

A combination of the Russian central bank no longer propping up the ruble, stagnant economic growth, OPEC tanking the cost of oil, and western sanctions is causing fairly rapid inflation of the ruble inside Russia.

edited 7th Nov '14 9:13:01 PM by PotatoesRock

• CBI conference: Increase free childcare and cut taxes for the low paid, business leaders urge
• Payday loan charges cap announced by FCA

edited 11th Nov '14 2:56:25 AM by Greenmantle

Payday loans are problematic to regulate, because the industry only works because it's predatory. They charge ridiculously high interest rates because their clients can't get credit at any reasonable rate, and if the industry were to collapse, the poor would simply not get credit, which is a bad situation to be in when you've had a disconnect notice on your gas in the middle of the winter. Still, this particular haircut won't damage the industry enough to make it take its ball and go home, so it's probably a good one

Then again, the payday loan industry has partially collapsed in the UK as the market has come under increasing regulation — indeed, their name has become so bad that the firms stopped advertising for a while.

Tim Duy analyzes Yellen's latest speech, but feels concerned that the Fed isn't taking the collapse of 2 year yields seriously enough.

Jesse Eisinger at ProRepublica suggests most of the habits of the Hedge Fund Managers complaining about bubbles and fears of inflation is due to many of them becoming adults in the 1990s and the early 2000s which had bubbles, and have essentially spent their formative professional years watching the madness of crowds enabled by central banks printing money.

Banks are still screwing people in the U.S.: Debts cancelled by bankruptcy are still marring consumers at their credit scores, thus forcing borrowers to make payments on bills they no longer legally owe.

Leaked Geithner interview quoted by Peter Spiegel reveals some interesting information about Europe:

• Greece getting hit as hard as it was, according to Geithner who went to many of these meetings during the early parts of the crisis, was all about teaching Greece a morality lesson.
• German officials are basically paranoid that they won't get actual reforms from their periphery neighbors if they loan out money, as many of the countries have had a history of going "fuck you" in the past.
• Germans and the French (Sarkozy and Merkel) were pushing for more stability, but they wanted Berlusconi out of power.
• It looks like there was a behind-the-scenes push for a fiscal union, but Sarkozy ended up killing it because it was bad politics for France.

edited 13th Nov '14 6:16:01 AM by PotatoesRock

Their attempt at teaching Greece a morality lesson is going to get the hard-left SYRIZA party in power.