Can We Survive Another Four Years Of Central Bankers?
I suggested this topic. “Can the nation survive another four years of Bernanke?”
A reply, “Now that we have perma-QE its only matter of time until it all comes crashing down. It seems that they refuse to see the 800 lb gorilla in the room, namely that the world is awash in goods that low paid workers around the globe have no hope whatsoever of being able to afford or buy. Meanwhile the middle class has become an endangered species in the first world. Who is supposed to buy all the crap?”
One asked, “What does the inevitable collapse look like? He may win his battle but at what cost?”
A reply, “I say yes, but it won’t be pleasant. Our economy has a lot of inertia. I’ve seen large companies take decades to dwindle after their business model no longer worked. We have been sitting here watching this meltdown in suspended animation for the better part of a decade already.”
“Half the country is so happy with where we’ve been for the past few years that they want to keep the current administration. Then we’ll get six more years of Bernanke. The other half is so clueless about what is happening, they think a new, yet clueless administration will make everything better. The very few who think we have more than a flesh wound to deal with cannot be heard over the party music.’
“I don’t believe we will get any real changes from our leadership until a significant number of the citizens see clearly what has happened and get animated about it. Change will come when the pols are more afraid of the citizens than they are of their campaign contributors. We are not even close to that.”
Another question, “Can a nation free itself from behavioral economics? Can they reverse 6 decades of quick gratification consumerism? Will the population shrink? There will always be another chairman like Greenspan/Bernanke but will there ever be another Volcker?”
One had this, “All I know is that the last 7 years has been a big waste as far as the Powers doing anything that would correct the problems that got us into the jams to begin with . Nothing but policies designed to either bail out the Money Changers or keep the corrupted systems going. I won’t be able to stand another 4 years of Ben Bernanke.”
And another, “Instead of moving to protect consumer deposits from the Wall Street gambling machine, breaking up the TBTF entities, nothing of consequence has been done to reign in Wall Street over the four years since Lehman.”
“The US economy is morphing from one where a cautious financial sector serves to provide loans to the real economy, we’ve moved to a system where the rest of the economy is bled to keep Wall Street profitable. This makes a small group of people fabulously wealthy. Is this sustainable? Is it just?”
And finally, “Can I expand the question slightly? Can the World survive another four years of central bankers?”
From MarketWatch. “The Federal Reserve’s third round of asset purchases should put some downward pressure on home-mortgage rates and help the housing sector recover, Sandra Pianalto, president of the Cleveland Federal Reserve Bank, said Thursday. ‘These lower rates should provide further support for the housing sector by encouraging home purchases and refinancing,’ she remarked in a speech.The program might help bolster consumer confidence if it can help stabilize housing prices, she said.”
The Financial Times. “Guido Mantega, Brazil’s finance minister, has warned that the U.S. Federal Reserve’s ‘protectionist’ move to roll out more quantitative easing will reignite the currency wars with potentially drastic consequences for the rest of the world. ‘It has to be understood that there are consequences,’ Mr. Mantega told the Financial Times. The Fed’s QE3 program would ‘only have a marginal benefit [in the U.S.] as there is already no lack of liquidity . . . and that liquidity is not going into production.’”
“The Bank of Japan on Wednesday said it would buy another Y10tn ($128 billion) of government bonds, expanding its asset-purchasing program to Y80tn – an operation aimed in large part at weakening the yen. Mr. Mantega said Brazil had ’so far only seen the consequences of a change in expectations’ from the launch of QE3 as the resources had not yet been released. ‘Risk aversion has fallen and animal spirits have increased,’ he said.”
The Telegraph. “(At) the World Economic Forum in Tianjin last week, Jamil Anderlini from the Financial Times reported a pervasive tone of ‘despondency and cynicism’ from Chinese officials and economists, in marked contrast to the bullish certainties — or naïveté? — of foreigners at the event. ‘I believe China is going to experience a very serious economic downturn and I think it has already started,’ said one leading economists. ‘The government is trying now to stabilize the economy but the instruments they have are very limited. If it can’t turn things around then I expect huge and widespread social unrest.’”
“The Politburo clearly misjudged the difficulty of deflating a property bubble after letting loans grow by almost 100pc of GDP in five years (IMF data), almost double the rate in Japan over the five years before the Nikkei bubble burst or in US before the sub-prime peak. Let us not forget that reserve accumulation — the side-effect of holding down the yuan to pursue export share — was the prime cause of China’s credit bubble in the first place.”
“It automatically forced China to import a US monetary policy that was far too loose for the needs of a fast-growing, over-heating economy, as Alan Greenspan warned at the time. It seemed to work marvellously, but Faustian Pacts come due. This powerful process is now going into reverse. Lombard Street Research estimates that capital flight has reached $320bn over the last year. Monetary policy is tightening by default.”
“‘It is a massive shift down through the gears for the monetary printing press. And if the capital outflows accelerate, the next gear may yet be reverse,’ said Albert Edwards from Societe Generale.”
“China’s $3.2 trillion reserves may be large at 22pc of the M2 money supply, but they were even larger — 35pc — for the Asian Tigers just before their currencies buckled in 1997. The reserves prove nothing either way. The issue that matters is whether they are enough to overwhelm the actions of China’s own elites, should they continue to squirrel money abroad as fast as they can.”
From News Talk CJME. “They say a housing boom is a good indicator of how a city’s economy is doing, but in Regina the housing market is also helping increase our economy. That was the finding of a new Conference Board of Canada report issued on Tuesday. It says the city’s economy is expected to improve by 3.7 per cent in 2012 thanks in part to our on-going housing surge. Both the Conference Board and the Regina Home Builders Association agree that the city will likely see 2500 new housing units built in 2012. If that number seems high, that’s because it is.”
“Stu Niebergall with the Regina Home Builder’s Association says the housing boom leads to a lot of positive spin-off effects for the economy. ‘That translates into a little over $1 billion worth of investment, over 5,000 jobs in new construction, renovations and related fields, over $300 million dollars in wages which will certainly show up in purchases across the whole regional economy, and actually millions and millions of dollars contributed to three levels of government through taxation of fees and levies,’ he said.”
“Dundee Development’s Paul Moroz says they are building as fast as they can. He explains the market has simply undergone a formative change in recent years. He says the old Regina market, with two-story houses on 50 foot lots and bungalows on 40 foot lots with a few condos in corners around the city, isn’t the reality today. ‘That was six or seven years ago when you could get that big house on the 50 foot lot for $150,000. That world doesn’t exist anymore,’ Moraz commented.”
“He points out that the new norm is for smaller lots and denser construction. He says basement suites are routinely being built into new homes in the area, something that would have been inconceivable just a few years ago. ‘We’ve had to change our entire business model so that we can build stuff that people can actually afford. Things are getting smaller, smaller and smaller - density is getting higher and higher and higher,’ Moraz explained.”
