KOO on eurocentric:
For more than a decade I have been warning that those rating agencies which do not understand balance sheet recessions could downgrade countries in the midst of such recessions based solely on economic weakness and the size of their budget deficits and jeopardize these countries’ ability to carry out the fiscal stimulus needed during this kind of recession. The recent actions by Standard & Poor’s are a case in point.
Going forward IMO:
Academic economics responded to these empirical challenges to its accepted theory in the time-honoured way: it ignored them.
KOO on sanity issues:
This is akin to a doctor telling a patient suffering from pneumonia to go on a diet and get more exercise. While exercise is important, it assumes a healthy patient. If the patient is sick, he must build up his strength until he is physically capable of exercising again.
The yields on JGBs therefore remained anchored at low levels even as Moody’s downgraded Japan’s credit rating to below that of Botswana. And it was domestic investors’ reasoned behavior that enabled Japan’s economy to emerge finally from the balance sheet recession.
I would consider they are stocking commodity's and will debase. The next few quarters will decide IMO.
KOO: If nothing is done, however, the private savings flowing into Germany from Spain and Ireland will not be spent and will effectively represent a leakage to the broader eurozone income stream. In that sense, Germany’s refusal to serve as the “borrower of last resort” is accelerating the eurozone’s plunge into a deflationary spiral.
Funds naturally flow to government bonds when private sector is not borrowing.
So basically the private sector is not needed in his opinion.
This is in direct context to actual multiplier effects. Print more and still be unable to meet coupon payment?
We are right on target to what we already know.
http://www.dailyjobcuts.com/
KOO: If banks cannot meet lower capital targets, public funds should be injected.
If lenders have difficulty meeting even the lower 7% capital requirement, the authorities should inject fresh capital into the banking system. Government capital infusions during a credit crunch caused by a shortage of capital have a leveraged effect, and the economic impact is correspondingly large. If banks’ inability to meet a 7% capital requirement is at the heart of the credit contraction, a capital injection would support lending equal to 1/0.07 = 14.3 times the value of the government’s investment. In my view this represents a very effective use of taxpayer money.
Effective use of further debased Fiat. Hayek was correct on the course to means of production and the intrinsic values of fiat.
Interferes in actual production in a most dangerous manner since it is impossible to mark and measure moral hazard malinvestments from a premise of credit collapse with out marked to market seeking stabilization. <are we seing this in a broader context?>
Would anyone here invest in diluted PPI net working capital markets since the bear eats the slowest runner in a
http://www.jstor.org/pss/1805447 rent dissipated reality ? Tiny bubbles are consumers we conveyed before here in the forums.
As a household we have managed debt ratio's, mantained and increased education opportunity, Ponder how the extent of current ideas
can resolve centralized solution to balances under the duress of gradualism missed by the passage of time over the last few decades.
