naked capitalism Sun 2010-02-28 13:08 EST

Martin Wolf is Very Gloomy, and With Good Reason

Martin Wolf, the Financial Times' highly respected chief economics editor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson's Doomsday cycle post from yesterday...With the private sector debt overhang as great as it is, I doubt there is a way out of our mess that does not involve a period of debt restructuring and writeoffs. That process, no matter how adeptly handled, results in dislocation and has a chilling effect on bystanders...Swedish Lex interestingly sees another possible brake that may become operative prior to another bubble/bust cycle. He believes that the EU has much less tolerance for underwriting zombie banks than the US. The EuroBanks have written off less in the way of losses than their US peers, are also exposed to any EU sovereign debt defaults, and yet the biggest are still crucial parts of the international capital markets infrastructure (and therefore still tightly coupled to the very biggest US/UK firms). While any EU sovereign debt defaults could morph into a full blown crisis, the EU responses to the joint sovereign/bank debt overhang could lead to more radical changes in EU banking rules and practices that could blow back to the very biggest US banks in unexpected ways.

gloomy; good reason; Martin Wolf; naked capitalism.

Jesse's Café Américain Tue 2009-11-03 20:12 EST

Nine More Banks Fail with CIT on Deck for a Packaged Bankruptcy While Gold Shines

Jesse

...The current state of economics is most remarkable for its arrogant complacency in the face of two failed bubbles, a near systemic failure, a pseudo-scientific perversion of mathematics exposed, and an incredible capacity for spin and self-delusion. The people wish to believe, and Wall Street and the government economists are all too willing to tell them whatever they wish to hear, for a variety of motives. And there is an army of salesmen and lobbyists and econo-whores touting this fraud around the clock...There are good reasons for this failure of American "monetary capitalism," and it has to do with an oversized financial sector and a surplus of white collar crime that both distort and drain the productive economy. The current approach is to pump money into a failed system without attempting to reform it, to fix its fundamental flaws, to make an honest accounting of the results. The result are serial bubbles and the foundation for long duration zombie economy with a grinding stagflation that may morph into a currency crisis and the fall and reissuance of the dollar, as we saw with the Russian rouble. It will stretch the political fabric of the US to the breaking point. This is how oligarchies and their empires fall.

banks failed; CIT; deck; gold shines; Jesse's Café Américain; packaged bankruptcies.

Thu 2009-02-26 00:00 EST

Daily Kos: State of the Nation

Chocolate Covered Cotton, by billmon; ``taking a look at how the stinking heap was created''; securitized lending morphing to fatal innovation, collateralized obligations; ``full nationalization still would be less expensive and messy than creating the kind of Potemkin markets the Geither plan seems to envision''; ``ncreasingly desperate attempts to maintain a phony façade of free markets and private enterprise, in an economy now utterly dependent on the federal safety net''

Daily Kos; nation; state.

Sat 2008-04-12 00:00 EDT

Hillary's Flimsy Case : Rolling Stone

Hillary's Flimsy Case, by Matt Taibbi, Rolling Stone; Obama "running as a symbol of a new politics...But if it were to get out that he's not that...then he quickly morphs into a different kind of symbol, a symbol of how an essentially bankrupt political system can seamlessly repackage itself to a fed-up marketplace by making cosmetic changes, without altering its basic nature." "In American politics, always look for the worst possible scenario to emerge triumphant"

Hillary's Flimsy Case; Rolling Stone.