Occupational Therapy

It seems the authorities are tiring of their recent 'give em enough rope' approach to #occupy. In the meantime, Michael Albert has been using the breathing space productively to go visit people involved in the movement all across Europe. Here are his conclusions. Ta, P2P.

EU Finance: the Emperor’s New Haircut

The latest in the great Eurozone Crisis Saga.

And what is a haircut, you may ask?

"Gary Jenkins, head of fixed income at Evolution securities, outlined what a haircut would mean for Greek bond holders. ‘It involves a "voluntary" bond exchange with a nominal discount of 50% on notional debt held by private sector holders with €30 billion provided by the eurozone member states for credit enhancements, and it aims to reduce Greek debt to 120% by the end of the decade.’" Citywire.

Sounds like more of the usual paper-shuffling and prestidigitation to me.

How about recapitalisation?

"To what extent taxpayers have to plug the gap – and whether state aid rules then kick in – could depend on the timescale banks are given to raise the capital. Huertas told Newsnight that the EFSF would be there as a "last resort". He said: "The plan is for banks to access public markets first," before turning to nation states for support – and then the EFSF." Graun.

Yeah, yeah, yeah ….

Maybe commenter Moggoid sums it up better, over at the Slog: “I stumbled upon this article – tying to find out what “recapitalisation of banks” actually means. And I gather it means that somewhere large amounts of money are found and then just given to the bank – Is that right?”

The banks love the deal, which should make anyone who’s not a banker suspicious. The much-courted and fawned over “Markets”* love the deal - but then they loved the glistening 2000s bubble that preceded the 2008 Crash, didn’t they. So what do they know.


*The "Markets" - basically a bunch of saddoes with nothing better to do than play Crackberry with large numbers and screw the rest of us.

No Rest for the Wicked

Having already had their holidays delayed by one emergency session, on Wednesday July 20th, for a statement by the Prime Minister on the News of the World Hackgate Scandal, followed by lengthy discussion, Westminster politicians faced further mutterings as both European and North American economies experienced ever worsening crisis.

This then culminated in an emergency recall of both Houses today to shake heads over 4 days of civil disorder in cities across England, and yes, a statement from the Chancellor on the economy.

As Lord Knight put it in Lords of the Blog: "The Government faces a big challenge. It has to manage two crises. One of economic growth and the other of social breakdown. As the Prime Minister said in his statement, [get this!] “crime has a context, and we must not shy away from it”..."

“We can argue about whether some of the measures in response to the economic crisis will exacerbate the social crisis, but most important is the Government putting an absolute priority on tackling the twin challenges"

"Parliamentary time is limited between now and next May when the current session finishes. This unprecedented set of economic and social problems are such that I don’t think Parliament has the luxury of being able to legislate and debate anything else of substance."

In the current state of affairs we can only take bets as to whether hard-done-by parliamentarians will be able to spend the rest of their holidays in relative tranquillity, or no.

As for Eurocrats, they aren't having it much easier either, because "the Socialists & Democrats party bloc in the European Parliament has called for MEPs to be recalled from the summer recess to tackle the eurozone crisis."

Hey ho. 

The Ever-Elongating Minsky Moment

There’s just no second-guessing the cold hard uncertainty of life is there?

From Wikipedia: “The financial crisis of 2007 to the present was triggered by a liquidity shortfall in the United States banking system … The collapse of the housing bubble, which peaked in the U.S. in 2006, caused the values of securitities tied to real estate pricing to plummet thereafter, damaging financial institutions globally."

I seem to remember that last year it was only “the financial crisis of 2007 - 2009.”

These economists! Just grasping through the mist for any substantial thing, can somebody, anybody, explain to me intelligibly whether Paul McCulley was advocating, mocking or merely predicting when he said “"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism”?

And Paul Krugman, NYT in 2002?

One economist who truly did have the wit to see what to many of us non “masters-of-the-universe” was horrifyingly obvious, namely that what goes up must come down, and that perpetual growth is as impossible as perpetual motion, was Ann Pettifor:

“There were some unkind comments on my column of August 29 2006. In it, I argued that last summer's fall in house sales in Florida and California were canaries in the deep vast coal mine of US credit; that the impact of a credit/debt crisis in the US would have a much greater impact on us all, than the crisis in Lebanon ..."

"The scale of the crisis is beginning to be grasped. However, deniers are still at work, spreading disinformation, delusions and, in some cases, downright lies about the real state of the international financial system. "

But if I may venture to disagree with Pettifor, it seems to me that the full scale of the crisis has NOT been grasped.

There is no going back to business as usual. You can try, but it won't work.