Stockman explains our current "crazy economics"

David Stockman: This Is a Giant Ponzi Scheme, It's Just Debt on Top of More Debt 

See short interview with Stockman about the greatest bubble the world has ever seen

Après nous le deluge

Bank of Japan Joins Fed, ECB in Record Stimulus

By Brendan Murray & Scott Lanman

The world’s monetary floodgates are swinging wide open.
After watching Ben S. Bernanke take unprecedented steps for four years to rebound from the worst recession since the Great Depression, the Bank of Japan (8301) is signaling that the Federal Reserve’s full-throttle approach to stimulus is the way to end 15 years of deflation.
New BOJ Governor Haruhiko Kuroda’s move this week to embark on record easing means the world’s four biggest developed-market monetary authorities -- the BOJ, the Fed, the European Central Bank and the Bank of England -- are aligned in their commitments to spur growth and return their economies to full strength.
“This is unprecedented on many levels,” said Pippa Malmgren, president and founder of Principalis Asset Management LLP in London and a former financial-market adviser to President George W. Bush. “Not only do you have the most in terms of size of economy or number of central banks, but the effort is a record effort. We’ve never seen such unconventional methods used to create as much inflation as possible.”
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Comment: The real tragedy is that there is no more a place to hide. The flood will drown us all.

Japan on the wild side

BOJ to pump $1.4 trillion into economy in unprecedented stimulus
(Reuters) - The Bank of Japan unleashed the world's most intense burst of monetary stimulus on Thursday, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows.
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Comment: Thank you, Mr Haruhiko, for your demonstration that economic policy is actually utter madness.

Krugman calls him cranky

Better listen to what David Stockman has to say.
Watch

State-Wrecked

State-Wrecked: The Corruption of Capitalism in America

David Stockman

"... So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.

When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.

THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy..."

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Comment: In the end it wasn't Soviet nukes that wiped out America, but the meltdown came from within, led by the most secret weapon that America's enemies ever have had: US top economists such as Bernanke.

Euro rally ahead

Cyprus Said to Reach Tentative Deal to Avert Default

By Rebecca Christie, James G. Neuger & Svenja O’Donnell

News

Comment:  It has become almost a ritual for the international media to produce storms in a tea cup even when almost nothing is at stake.

Watch out for Europe's rebound

Even Greece Exports Rise in Europe’s 11% Jobless Recovery

By Simon Kennedy - Mar 21, 2013

Europe’s crisis-torn nations are paving an escape route to recovery.
From Ireland to Spain, the austerity demanded by policy makers in exchange for aid amid three years of debt woes is starting to deliver the competitiveness needed to restore economic growth even as the turmoil risks reigniting in Cyprus.
At the price of a doubling in unemployment and near-10 percent plunge in labor costs, the so-called peripheral euro nations are reviving manufacturing and trade. In Spain, exports reached a record 222.6 billion euros ($287 billion) in 2012. PSA Peugeot Citroen (UG) is hiring there and in Portugal.
“The countries that were highly imbalanced are undoubtedly, progressively, but very effectively, correcting these imbalances,” former European Central Bank President Jean- Claude Trichet said in a March 3 interview. “The current- account deficits of countries that have been under stress diminished over the last years considerably.”
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Comment: Expect more news of the same line soon.

British malaise

Cameron Evokes Black Wednesday as Pound Weakens 7%: U.K. Credit
By Gonzalo Vina & Lucy Meakin
When Cameron and Osborne took office in May 2010, they predicted the economy would grow more than 5 percent over the next two years, a budget deficit equal to 11 percent of gross domestic product would fall to 2 percent by April 2015 and the U.K. would keep its top credit rating. Instead, output rose 1.1 percent, the deficit is still 8 percent of GDP and analysts say Fitch Ratings and Standard & Poor’s will follow Moody’s in downgrading Britain’s credit score after today’s budget.
Credit-default swaps insuring gilts rose 69 percent from a more than four-year low of 26 basis points on Nov. 1, the most among 67 governments tracked by Bloomberg. The premium investors demand to hold gilts rather than German bunds has increased fivefold since August to 52 basis points.
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Comment: Too bad Cameron can't blame the euro for Britain's malaise.

How we are ruled

False Flags, Fake Media Reporting, Deceiving the Public: Social Engineering and the 21st Century “Truth Emergency”
On March 9, 1995 Edward Bernays died at the age of 103. His professional endeavors involved seeking to change popular attitudes and behavior by fundamentally altering social reality.[1] Since he laid the modern groundwork for deceiving the public we are for better or worse living out his legacy today.
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Aniversary

Twenty Lies About the Iraq War
maybe even more
http://www.globalresearch.ca/twenty-lies-about-the-iraq-war/5327386

Obama News Ticker

President Obama: There Is No Debt Crisis

By Jonathan Karl | ABC OTUS News

There has been no shortage of dire warnings about the mounting US national debt, but President Obama is now offering a different assessment: no big deal.

"We don't have an immediate crisis in terms of debt," President Obama said in an exclusive interview with George Stephanopoulos for "Good Morning America." "In fact, for the next 10 years, it's gonna be in a sustainable place."

It's an assessment that will throw cold water on the latest attempt to achieve a so-called grand bargain to reduce the deficit. After all, a grand bargain would require excruciatingly difficult decisions for both sides - for Republicans, it would mean raising taxes, and for Democrats, cutting future spending on cherished programs like Social Security and Medicare. If there is no crisis, why would either side do it?

So, what happens if this latest effort to reach a deficit agreement falls through? Once again, the president's answer was, essentially, no big deal.
"Ultimately, it may be that the differences are just too wide" to get a deal, President Obama said. "That won't create a crisis. It just means that we will have missed an opportunity."

The president's reasoning is that the series of 11th hour agreements he has struck with Republicans over the last two years - to prevent a government shutdown, raise the debt ceiling and avoid the fiscal cliff - have resulted in enough deficit reduction to get the debt under control.

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Comment:  Obama's message to the Americans - first step: ignore your debt. Second step: stop paying for something that don't exist.

Beware of the quack doctors

A parable by Robert Higgs

Don’t Rely on a Quack Doctor

By Robert Higgs | Monday March 4, 2013 at 8:36 PM PST

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A man goes to his doctor for a routine checkup. The doctor performs a perfunctory examination and informs him that unless he receives an experimental treatment the doctor has devised, he will soon become disabled. “What’s it cost, Doc?” the man asks. “Well, unfortunately it’s not cheap, Mr. Smith, and I can’t tell you exactly how much the total cost will be until the entire treatment has been completed, but unless you get this treatment, you will soon be in big trouble.”
The man agrees to undergo the treatment. He has to sell some of his possessions and go deeply into debt to pay for it, but, relying on the doctor’s advice, he believes that the alternative to getting the treatment would be catastrophic.
After the treatment, however, the man actually feels worse than before. So he visits his doctor and is startled when the doctor reports that he has relapsed and must undergo the same treatment again or he will probably die. As before, the doctor cannot say in advance how much the treatment will cost.
So, the man sells more of his possessions and goes even further into debt to finance the treatment. To his surprise, shortly after its completion, he feels even worse, and the doctor informs him that he has relapsed again and will have to undergo the treatment again lest he die shortly.
The man sells his remaining possessions, exhausts his capacity to borrow, begs money from his relatives, and has the treatment a third time. After its completion, he feels horrible. Once more, the doctor reports that his condition has not been improved and therefore he will have to undergo a fourth round of treatment.
This time, however, the man is completely broke, so he resigns himself to his imminent demise, puts his personal affairs in order, spends as much time as possible with close friends and family members, and waits to die.
But he doesn’t. Indeed, after a year, he is still alive and feels much better than he did immediately after his treatments. To everyone’s astonishment, he returns to work, feels fine, and considers himself lucky to have had a spontaneous recovery from a disease that threatened to take his life.
Having repaired his financial condition after ten years of normal, happy, healthy working life, the man’s curiosity gets the best of him and he visits a different doctor, an old Austrian, who examines him thoroughly and reports: “There is absolutely nothing wrong with you; nor do I see any indication that anything was seriously wrong with you before you began the treatments. You appear to have been misdiagnosed and treated for no good reason, and the treatments made you sick. When the treatments stopped, you returned to your previous, normal, healthy condition.”
(The foregoing is a parable about government intervention in the economy.)
Source
Comment: Quack doctors are everywhere, particularly in politics

Austerity that works

Making Austerity Work

by Antony P Mueller

Those who favor more government expenditures in the face of a public debt crisis suggest that the very same strategy that has led to the calamity would also be its solution. Yet the debt crisis as such cannot provide any rationale to borrow more. Indeed, the very fact that a debt crisis has shown up reveals that already too much debt has been already accumulated. In order to overcome a debt crisis, a stimulus for private business is needed instead of more public spending.....
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Taleb explains quite well what's going on

http://dailybail.com/home/taleb-if-i-were-president-id-fire-bernanke.html

Before the Keynesians put us out of business

Barbarous Relic

Joseph Salerno, professor of economics at Pace University and author of Money, Sound and Unsound, recently taught a course in Austrian Macroeconomics at the Mises Academy. For a $59 registration fee that included all the reading material, anyone with access to the internet could sign up. As with all Academy courses, the lectures were recorded and are made available to students indefinitely.

In his final lecture Salerno presented the Austrian Business Cycle Theory and showed how, during a recession, the policy prescriptions of the Austrians differs from those of the Keynesians. The chart below summarizes and contrasts the policies.

What follows is my understanding of the chart, and any errors of interpretation are mine alone. In English, the chart reads as follows:

Fiscal policy, Austrians: Lower Taxes (down-arrow T), reduce government spending (down-arrow G), and balance the budget (Taxes minus government spending equals zero). Note: Paul Krugman would likely condemn this policy as “fiscal austerity,” and it is - for the government. But obviously not for the taxpayers.

Fiscal policy, Keynesians: Lower taxes, increase government spending, and run deficits (government should spend more than it collects in taxes). Note: Lowering taxes in a recession is the one area where Austrians and Keynesians agree, though President Obama, who in other ways follows the Keynesian playbook, has raised taxes.

Monetary policy, Austrians: Freeze the money supply M (delta M equals zero), let the interest rate adjust according to the time preference of market participants.

Monetary policy, Keynesians: Goose the money supply (up-arrow M), annihilate the interest rate (down-arrow i).

Microeconomic policy, Austrians: Repeal all laws keeping the market from clearing, including policies that prevent wages W and prices P from adjusting to supply and demand.

Microeconomic policy, Keynesians: Use the power of government to keep wages and prices from adjusting to market conditions.

Regulatory policy, Austrians: Remove government regulations and allow the market to perform its regulatory function instead.

Regulatory policy, Keynesians: More government regulations, especially in the financial sector.

No one in the seats of power saw the financial crisis coming because, we’re told, financial crises are a lot like “earthquakes and flu pandemics,” difficult to predict. Not coincidentally, none of those in power are Austrians. After five years of Keynesian and other anti-market “remedies,” Europe overall is in recession, while U.S. growth in the last quarter of 2012 declined by $4.9 billion even with a $165 billion “stimulus” behind it. Before the Fed and the government decided to “do something” about a floundering economy, crises lasted on average 18 months to two years. Although this last one was officially over in 2009 - see Robert Murphy's take on what this means - unemployment is still high, while optimism among consumers and small business owners remains very low.

I don't recall reading any restrictions that would've prevented central bankers and senior government officials from registering for Salerno's course. It's too bad for them but especially for us, because given their track record we can expect even bigger calamities down the road. If they found the registration fee too pricy but would otherwise be willing to take the course, I would be glad to empty my piggy bank on their behalf the next time it's offered.

We need to let the market breathe before the Keynesian maestros put us out of business.
Source