China Financial Markets Wed 2010-09-15 19:28 EDT

What do banking crises have to do with consumption?

Michael Pettis

For the next several years, as Keynes reminded us in the 1930s, savings is not going to be a virtue for the world economy. It is more likely to be a vice. In order to regain growth the world desperately needs less savings and more private consumption, but I think it is not going to get nearly enough to generate growth. Why? Because in all the major economies the banking systems are largely insolvent, or about to become so, and desperately need to rebuild capital...With all of the major economies facing banking crises, they must clean up the banks by forcing the household sector to pay the bill. This will put downward pressure on household disposable income and wealth for many years...For twenty years Japanese consumption growth has limped along [due to paying for] their banking crisis...Chinese consumption dropped from a very-low 45% of GDP ten years ago to an astonishing 36% last year just as -- no coincidence -- Chinese households were forced to clean up the last banking crisis...

bank crises; China Financial Markets; consumption.

zero hedge - on a long enough timeline, the survival rate for everyone drops to zero Thu 2010-08-19 16:25 EDT

Commercial Real Estate Lobby Ask For Taxpayer Aid To Help Recapitalize Banks Saddled With Billions In Underwater CRE Loans

The problem that nobody is talking about, yet everyone continues keeping a close eye on, namely the trillions in commercial real estate under water, is quietly starting to reemerge. In the attached letter from the Commercial Real Estate lobby, it reminds politicians that the hundreds of billions in loans that mature in the next several years won't roll on their own, and we see the first inkling of the lobby asking congress for much more taxpayer aid, in this case in the form of Shelley Berkley's proposed legislation...

billions; Commercial Real Estate Lobby Ask; dropped; Help Recapitalize Banks Saddled; long; survival rate; taxpayer aid; Timeline; Underwater CRE Loans; zero; Zero Hedge.

billy blog Thu 2010-07-15 16:58 EDT

We have been here before ...

The daily rhetoric being used to promote fiscal austerity maybe couched in the urgency of the day but we have heard it all before. In this blog I just reflect on history a little to remind the reader that previous attempts to carve public net spending, based on the ``expectations'' belief government was not going to tax everybody out of existence, failed to deliver. The expected spontaneous upsurge in private activity has never happened in the way the mainstream macroeconomic supply-siders predicted. Further, the chief proponents usually let it out in some way that the chief motivation for their vehement pursuit of budget cuts was to advance their ideological agendas. Of-course, the arguments used to justify the cuts were never presented as political or class-based. The public is easily duped. They have been in the past and they are being conned again now. My role is to keep providing the material and the arguments for the demand-side activists to take into the public debate...

Billy Blog.

Culture of Life News Sun 2010-01-31 11:46 EST

US Dollar No Longer Main FOREX Currency

Elaine Supkis

A meteorite came crashing through the stratosphere on Tuesday. A reminder about what real danger is all about. The US dollar is breaking apart in the stratosphere, too. The FOREX holdings of all our major trade rivals is rapidly changing from sucking in US dollars to sucking in yen and euros. Both Japan and the EU hate this but can't stop it. As I predicted in July, 2007, the final result of the US, EU and Japan demanding China strengthen the yuan while not demanding Japan strengthen the yen, has led to this global shift in dollar holdings.

Culture; Dollar; Life News; Longer Main FOREX Currency.

Jesse's Café Américain Mon 2010-01-18 09:56 EST

Franklin Roosevelt's First Inaugural Address: A Fitting Reminder For Our Crisis Today

Jesse

...I never read it in full, but like most people just remember the famous quote about fear. It's worth reading this. It shows a mindset in terrible, overwhelming times that was determined to set things right, not to take care of business, but to address the business of the people directly, and not only the immediate concerns of the crisis but the long term problems that caused the financial collapse in meaningful ways...

Crisis; fitting reminder; Franklin Roosevelt's; inaugural addresses; Jesse's Café Américain.

zero hedge Wed 2009-11-25 12:13 EST

Two Opposing Amendments Emerge That Seek To Either Perpetuate The Fed's Secrecy, Or Overturn It

As the time to make or break the Fiat Money Overlords (no, not Chrysler), aka the Successor to the Second Bank of The United States which President Andrew Jackson managed to disassemble in 1832, yet which came back with a vengeance in 1913 under the guise of the Federal Reserve, approaches, two independent amendments emerged today: one drafted by Fed transparency proponents Ron Paul and Alan Grayson (found here) and one by Bank of America and Citigroup's favorite Congressman, North Carolina democrat Mel Watt (found here). As a reminder, here is a list of the Congressman's top contributors and sources of money in 2007-2008, which may explain some of his motivations: #1 Bank of America;#2 Wachovia Corp;#3 American Express;#4 American Bankers Assn.

Fed's Secrecy; Opposing Amendments Emerge; overturn; perpetual; seek; Zero Hedge.