Category Archives: Doomsday scenarios

Pimco’s El-Erian Warns of Central Bank Put Bubble

Earlier today, El-Erian in the Financial Times released a short and apt note on the limits of the central bank put.

Wolf Richter: Punishment of the Spanish Political Class by the People

Spanish Prime Minister Mariano Rajoy has a singular problem: 84% of all voters have “little” or “no” confidence in him. The fate of Alfredo Perez Rubalcaba, leader of the opposition Socialist party, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both.

Is War with Iran Inevitable?

In light of the reader interest in the post yesterday on the impact of sanctions on Iran’s strategic options, this Real News Network interview provides a useful, if sobering, follow on.

Spain is in Trouble

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

As I talked about yesterday the outcomes of the failing policies enacted by European leaders in the face of the economic crisis boil down to a lose-lose struggle between international creditors and national citizens.

European Optimism Fades

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

I genuinely thought the Europeans were getting somewhere in the last few weeks as I detected (or maybe that should be optimistically hoped) a change of rhetoric from some of the more hardened camps and a growing realisation that the current approach to “solving” the crisis is failing. My optimism was helped by the fact that the OMT, like the LTRO before it, has driven down sovereign yields which has given the European leaders yet another opportunity to sit down away from the fire fighting and discuss outcomes beyond a short term market window.

But alas, this is Europe and I appear to have been wrong.

Wolf Richter: Catalonia Cries for Independence While the Spanish Military Threatens To “Crush” The “Vultures”

Yves here. Readers in Spain have dismissed the possibility of a Spanish breakup. But long-simmering regional frustrations combined with a rapidly deteriorating economy have the potential to produce paralyzing levels of civil disobedience.

Europe’s Economy Sinks from Sight

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

Probably best if you spike your morning coffee before reading any further.

Mirabile Dictu! Bloomberg Finally Notices Deposit Flight, a Major Threat to the Eurozone

On the one hand, given that the Eurozone remains a major economic and financial flashpoint, it is good to see a major news service like Bloomberg provide a lengthy report on a continuing existential threat, that of deposit flight, or as we have described it, a slow motion bank run. But it’s a bit surprising it has taken them this long to take notice.

Michael Hudson on How Finance Capital Leads to Debt Servitude

This edited transcript is expanded from a live phone interview with Michael Hudson by Dimitris Yannopoulos for Athens News. It summarizes some of the major themes from Hudson’s new book, The Bubble and Beyond: Fictitious Capital, Debt Deflation and Global Crisis, which is available on Amazon.

Q: How has the financial system evolved into the form of economic servitude that you call “debt peonage” in your book, implying a negation of democracy as well as free-market capitalism as classically understood?

Yanis Varoufakis: The Game of the Two Marios

Yves here. Yanis called this post “Europe’s Modern Titanomachy: How Europe’s future is being shaped by large battles on seemingly small matters (Part C)” but that title obscures the point. His piece works though how the choices of ECB chief Mario Draghi and Italy’s prime minister Mario Monti interact with each other, and what that means for the future of the Eurozone: “Today’s Great Expectations (regarding the ECB’s intervention, banking union, Brussel’s federal moves etc.) are more likely to prive Dickensian than literal.”

Eugene Linden: In a World of Underpriced Risk, What Could Possibly Go Wrong?

By Eugene Linden, a journalist and author of seven books who has written extensively about animal behavior, environmental issues, and markets

On a recent conference call, the strategist of a major international bank (it was an off-the-record call for clients only) laid out the bare bones of what he called the world’s “giant experiment” in debt and interest rates. Never before have so many countries maintained such low base rates for so long; never before in peacetime have so many countries had such huge deficits and debt burdens; never before in U.S. history had long term rates been so low; never before has the U.S. gone so many decades without deflation following inflation. Because we live in these unprecedented times, it’s easy to lose sight just our strange they are… and how dangerous.

Yanis Varoufakis on the Crisis in Greece

In this interview with Max Keiser, Yanis Varoufakis gives a vivid account of conditions on the ground in Greece and why he is still pessimistic for the prospects for the eurozone.

Yanis Varoufakis: Europe’s Modern Titanomachy – How Europe’s Future is Being Shaped by Large Battles on Seemingly Small Matters

Yves here. I’m taking the liberty of starting with the second post of a three post series by Yanis Varoufakis. This is the starting point:

They sound technical and minor when projected against the great scheme of Europe’s extraordinarily rich history. Will there be conditionality attached to the ECB’s bond purchases? Will the bonds that it purchases be treated on a pari passu basis in relation to bonds held by private institutions? Will the ECB supervise all banks or just the ‘systemic’ ones? These are questions that ought to be of no genuine interest to anyone other than those with a morbid interest in public finance. And yet, these questions (and the manner in which they are answered) will probably prove as important for the future of Europe as the Treaties of Westphalia, of Versailles, of Rome even. For these are the issues that will determine whether Europe holds together or succumbs to the vicious centrifugal forces that were unleashed by the events of 2008.

Quelle Surprise! Regulatory Measures to Reduce Systemic Risk Are Proving to Be Ineffective, Possibly Counterproductive

In an perverse case of synchronicity, one headline last night touted regulatory efforts to address systemic risk as another highlighted bank efforts to increase it. And the ongoing efforts of banks to expand risk creation is no accident.

The Poster Child of Austerity is Lost

By Delusional Economics. Cross posted from MacroBusiness.

While we wait for tonight’s announcement from the German constitutional court, there are some interesting developments in the Troika’s latest review of Portugal: