Higgenbotham wrote:John wrote:There are many comments to be made on this interview, but for now
I'll just say that the economy has much, much farther to go down than
Roubini realizes.
John
First, he is saying that there will be no more failures like Lehman in the banking system.
Next, he says that housing will decline another 12% and half of all mortgages will be under water.
I think his next assumption is that more quantitative easing will be done to provide the money to make up for that and other shortfalls. He says that may create inflation.
But I think the real shortfall is in wages relative to the cost of other things. So unless wages can be inflated faster than household costs, I'm not sure that prevents the ultimate bankruptcy of the system once the inflation moves through the chain.
Also, those businesses that don't receive direct support will go bankrupt because their costs will rise but they will be unable to pass them on to an increasingly impoverished population.
After awhile, the chain reaction of bankruptcies will cause deflation anyway.
What am I missing?
http://generationaldynamics.com/forum/v ... 1990#p4173 and germans CB buying TBills and Not Bund to get past G20 meeting.
Fed's Trade-Weighted Dollar Index against the Major Currencies (Euro, Sterling, Yen, etc) where the U.S. trade deficit isn't and against the OITP (Other Important Trading Partners -- Brazil, Russia, India, China) where the U.S. trade deficit is. In the last 90-days, the dollar has depreciated near 8% against the major trading currencies and only -1.5% against the OITP.
Discern carefully
http://www.tnr.com/article/economy/peki ... r-shoulder but they need to understand that we are at ideological cross roads. Notice today who Mr. Obama anounced and who he did not such as SEC, FINRA ect..... Mr. Obama is tired of the kids in the sandbox. So am I, and I think his education is nearly completed. Gentlemen we have been at the crossroads long enough. This what I do know to date.
"A bank that generates the major part of its income from trading should not be allowed to have a banking license," Volcker, an economic adviser to the Obama administration, said.
Asked about introducing caps for bankers' pay, Volcker said bankers would find a way around that.
"We're seeing it already; it's obscene what they're earning," he said.
One year after the Lehman Brothers collapse, Volcker said he feared Wall Street would return to its old ways and "we will miss the train for reform".
He said he did not think inflation was an immediate threat given the high unemployment and weak global economic growth.
Asked about the high U.S. deficit, Volcker said it was not a problem for the time being.
To tackle the crisis the Federal Reserve had injected an enormous amount of liquidity into the system, he said.
"For now we can absorb this but it could be a problem when the economy starts to grow again".
Volcker said the rating agencies had contributed to the breakdown of the financial system.