Thanks CoffeeJoeJava for the link!
via Yahoo
No one is talking about it, but all these sanctions have done is to push the biggest economy in Europe (Germany) into the red, sank the Italian economy (they're back in recession..the third largest economy) and will soon affect the US.
The world is spiraling toward recession and these idiotic "sanctions" policies will be the blame. Congratulations globalist, the world is so intertwined that we're all victims of weak, passive, ineffective foreign policy.
via Yahoo
PARIS (AP) — President Hollande: France suspends plans to deliver warship to Russia amid Ukraine tensions.Interesting.
No one is talking about it, but all these sanctions have done is to push the biggest economy in Europe (Germany) into the red, sank the Italian economy (they're back in recession..the third largest economy) and will soon affect the US.
The world is spiraling toward recession and these idiotic "sanctions" policies will be the blame. Congratulations globalist, the world is so intertwined that we're all victims of weak, passive, ineffective foreign policy.
Sol, I love the blog but have to offer some words here. I am a trader on Wall Street and follow the economic situation around the world 24/7. Italy did not grow between 2001 and 2007 when the rest of the world was doing quite well. France did little better. Both countries refuse to make the necessary labor market and business regulation changes necessary for their economies to grow. Italy's GDP last year was $2.17 trillion and its exports to Russia were only 14.1 billion. That is .6% of GDP, so even if their exports to Russia were cut in half it would only shave .3% off of GDP. That is a hit no doubt, but hardly a massive blow. The other elephant in the room is the disastrous policy from the European Central Bank as dictated by the Germans. This could take a long time to explain but basically the Euro zone is heading towards deflation like what happened to Japan in the 1990s after their bubble burst. Once you get in a deflationary situation getting out is unbelievably hard. For these European countries to blame their economic problems on what flimsy sanctions they have currently enacted is preposterous and their leadership's lack of understanding of modern economics will be the undoing of those societies.
ReplyDeleteexplain this then. from my layman's point of view Germany is simply pushing austerity measures while the rest of the EU is shouting for increased deficit spending. additionally while this austerity is being pushed through you're seeing a slowdown in spending that while painful is actually just what is needed to break the artificial economy that has been feeding the likes of Wall Street.
Deletei admit thats a layman's view but where am i wrong?
lets talk company earning! double digit increases year after year and no one is batting an eye? no one is calling that artificial? seriously?
this is meant as a pushback on your theme and not a personal attack. tell me where i'm wrong.
Could you point articles on the deflation subject? I am rather interested in it's implications.
DeleteHere Brunus: http://mises.org/daily/4602
DeleteFor an even better idea of how the financial world really works, I'd recommend the (free) book by Murray Rothbard, called "The Mystery of Banking": https://mises.org/Books/mysteryofbanking.pdf
Put simply, the normal action of banks is inflationary. Because in the process of making loans, they constantly increase the total money supply (inflation). This causes prices to go up generally.
When more loans are repaid than lent out, the money supply shrinks (deflation). This causes prices to go down. Because each dollar/euro/yen is worth more.
The guys at the top of the financial pyramid love inflation, because they get the free money first. This lets them buy goods and services before prices have a chance to fully adjust. At the bottom of the pyramid, you just see prices going ever higher. By the time the free money gets to you, prices have adjusted completely. So you gain no advantage from it.
Deflation, on the other hand, works in the opposite direction. The guys at the bottom see their prices go down, while the guys at the top have to repay loans with dollars/euros/yen that are suddenly worth more than when they were originally borrowed.
The last deflationary period in the US coincided with Clinton’s final term as president. Which for most regular people was a very prosperous time economicaly.
@William, so you are one of the a$$holes who got us into this mess? Shut. Up.
DeleteNope. Graduated college in 2006 and have been working at a hedge fund since. Not everyone on Wall Street is an insider trading Gordon Gekko wannabe.
Delete"The other elephant in the room is the disastrous policy from the European Central Bank as dictated by the Germans"
DeleteYet compare their economies. Germany is drinking Europe's milkshake, to include the UK.
German policies are anything but disasterous
This is unexpected... very welcoming news but unexpected. I would never bet that French had balls to do this.
ReplyDeleteFrench president is a shame for the country : we need balls to keep selling the ship, not to cancel it !
DeleteThis president won't finish his mandate, somebody would get his head..
He just choose on what side of barricade he want to stay. And for now he choose West over East and Europe over Asia.
DeleteDeal with it.
There are two ships of this type contracted for - this is but the first. Work has begun on the second already BTW.
DeleteDoes anyone know when the contract was let out? Before or after April of 2009? Since France was not a member of NATO from 1966 - 2009. Just curious.
The historical position of france, between 966 and 2009 was to be independant, not being wasted by the politic of a superpower like USA or URSS. De gaulle went to this position after a CIA backed coup in Algeria.
DeleteChanging this was a trahison, and continuing in too.
@ Kaitland:
DeleteFrance has always been part of NATO. Between 1966 and 2009, the difference was there were not part of the integrated military command of NATO. The deal was announced on december 24th 2010.
@ fabsther: CIA backed coup in Algeria ? Are you on some kind of drugs ? I'm sure the 4 French generals who plotted the coup would be happy to know they were actually working for the CIA. Go and tell your fairytales somewhere else ... I'm sure you'll get plenty of listeners on Area 51 forums ...
And BTW, joining NATO military command again was treason ? WTF ?!! Are you a communist ?
Thanks Hecate, I should have put that they weren't a part of NATO "for all intents and purposes" as I do not consider non contributing members to be worth much to an alliance. What I was interested in knowing by asking that was if the made the deal after they "re-joined" or while they were disconnected from the real world.
DeleteKaitland, i dont think they ever got disconnected from the real world ... They had their reasons I suppose wether I approve or not. Didn't prevent them from cooperating with NATO and the US on the real important things. Besides they were probably more in the real world then the bush administration wen they opposed an invasion of Iraq in 2003.
DeleteMaybe France should raise their extremely low tax rate even more. LOL
ReplyDeletehttps://www.youtube.com/watch?v=ZElTNn8xutA
ReplyDeleteWell they just putting delivery on hold til November hoping this way they won't get too much shit from NATO partners at Cardiff summit. Don't think for one second they won't deliver the ship in the end ! Guess after having antagonized their allies they're now antagonizing current and potential clients .. Great stuff by this French government !
ReplyDeleteHecate you will not believe the shit that appear with that info... most of trolls start to scream that in this move NATO just start WWIII. Some of them try to act more Russian then Russians themselves. But really, screaming that we are all dead because France put on hold plans of weapon delivery to Russia... sound a little, hysteric? Don't you think?
DeleteYes, this is justo on hold. Nothing more. It would be interesting to watch the russian reaction. If they push to much the french on this they could make them more on the anti-russian bandwagon, on the contrary they could have their ships, if the things in Ukraine end in some diplomatic arrangement. The situation is so confuse with both sides making bullshit propaganda..wait and see.
DeleteAgree with you shas cadet ;-) ... Let's not get carried away by this move ! I guess it's also a way for the French to deflect any request for Ukrainian membership in NATO ... Giving up a pawn so they not pushed too much into corner they don't want to be. If they don't deliver the ships in the end they'll have huge penalties to pay to Russia which sort of defies the whole purpose of sanctions being already imposed ... French maoeuvered themselves into corner ... They made this pudding so they got to eat it up
DeleteI wouldn't be suprised if the ships are behind shedule
DeleteAS far as I know, ships are on schedule, first one already on sea with Russian crew being trained in French Shipyards where it's been built. Must be akward for them ...
DeleteYeah, the first one is full ready as ship, sea worthy and all. It's luck weapon systems if I remember as they would be installed by Russians in Russia. The Russian crew train on them, I may be mistaken but there were some also Russian helos there to train landing(?)
DeleteThe crew will probably stay there, maybe not on the ship but on the land. Te sell is on the hold, not canceled so they can just wait this thing off. Payed vacation in France on gov. account. Or they can be called home.
Let's start with deflation. There has been a massive debate over the last few years as whether or not quantitative easing should be done and what its affect are. The US did it in size, and Europe did not and the results are in. Our economy is about 10 percent bigger than it was in 2007 and theirs is slightly smaller. That's quite a difference. QE does have some inflationary affects, but what the gold bulls got wrong is that the affects of the great recession created tremendous deflationary affects like lower housing prices, lower wages, and fewer workers. The QE helped to offset some of the hangover of the recession by keeping interest rates low so that financing costs for homes, credit cards, business investment, ect would be lower leaving more money for consumption or paying down principal. Basically all major economists left right and center in the US think that the Euro is an inherently poorly designed currency. Spain's unemployment rate is 25 percent, while Germany's is about 5. The both have the same monetary policy, because they are both members of the Euro. However, the appropriate policy for Germany is totally different than for Spain given their vastly different situations.
ReplyDeleteNO! Our economy is not 10% bigger than it was in 2007. If the US economy had simply kept up with the official (under-reported) inflation numbers, it would be 14.9% larger in *dollar* terms. Thus, we have (at least) a 4.9% shortfall.
DeleteQE helped nobody but the banksters, as they were the first to receive that money. Once they spent it, prices rose generally, until by the time the QE trickled down to the rest of us, it did nothing but erode the value of our wages and savings. Destroying the middle and lower classes.
The real answer is to do what only Iceland had the balls to do. Which was let the insolvent banks fail. Had we done that, there would have been a couple of years of pain, but we'd all have been FAR more prosperous afterward. We certainly wouldn't have the banksters continuing to fleece us and cry for more QE while giving themselves record bonuses.
Well said sandwyrm.
DeleteWith its 4 percent unemployment rate, Iceland is not doing too shabby Ill say. What they did worked
I agree what Iceland did worked well for them, but what is appropriate for a country with less than 300k people is not appropriate for the United States. We had a series of awful options, and we took the least bad one. I know that's not what people like to hear, but again compared to Japan from the 1990s and the Euro area now we have done much better. Historically the growth rates after financial crises is always low. Read the book "This time is different" by Rogoff and Reinhardt. Their research has won awards. In regards to QE, if you have a borrower it has helped you. If you owe money on a home loan, car loan, credit card, rates are lower than they otherwise would have been thus giving you the ability to pay down principal. Again, it is FAR from a perfect policy, but better than the alternatives.
DeleteGermans are terrified of inflation, having been destroyed by it in the 1920s. The Germans on the ECB board prevented Europe from getting the QE they needed and are now paying the price. Most of Europe is back in recession, and the structural reforms that Fraince, Spain, and Italy need will be painful in the short term. From what I see there is no will to make serious reforms. Right now Spain and Italy are already in delfation, while France is close. Once you get to that point you are highly likely to resemble Japan which never truly recovered from its 1990 stock market crash. Sol, as to how earnings are going up. Great question. First and foremost companies are using all their cash to buy stock. Remember EPS is earnings per share so if you buy stock in the open market and reduce the share count then EPS goes up (corporate profitability). Also there is no wage growth in most industries. This is bad for the average worker but great for stocks. Then you have entire sectors that are transforming the economy like the shale plays in Texas, Pennsylvania, and North Dakota. Also the cures being found in biotech are profitable and amazing. As a final note, do not read zerohedge. That blog is often pathetically inaccurate. The editor has been bearish on the stock market since 2008 and indulges in conspiracy theories to explain why he has been so wrong. People on Wall Street consider him to be an enormous joke.
ReplyDeleteWilliam, to respond to Sol's question about "company earnings", maybe you should explain the concept of "Double Irish Dutch Sandwich" (aka Double Irish with a Dutch Sandwich).
DeleteThe only way to control inflation and manage huge deficits is to STOP SPENDING MONEY YOU DON'T HAVE. There is no magic wand to wave the debt away with. Governments only get away with this insanity because they can borrow themselves into destruction.
Deleteprobably it's on hold until they load a few NEURONs onto the ships...
ReplyDeleteThe Russians cannot win in an all-out sanction fight against the West. The reason? Russia needs Western food more than the West needs Russian hydrocarbons. You can't eat oil.
ReplyDeleteyeah but you can't stay warm without oil...or natural gas. winter is coming and if Europe decides to play hardball they're gonna face either sky high prices OR rioting by the poor in their cities OR both.
Deletesocial disruption is a bigger danger in the West than it is in Russia.
It's not that bad Sol', it's not bad at all even. Norway will supply more of gas without problem, if EU will remove restrains on shale gas extraction the more nations will go in to almost gas independence from Russia. Algeria already say they will double gas & oil export to Europe. The US will probably soon also remove restrain in gas exporting. The internal storage in many nations give the gas reserve to survive whole winter even if the pipe line would be shut of. Let me underline that the gas from Russia is mainly used in industry not homes, the local production supply that.
DeleteIf there would be a drastic move and gas would be cut of, the Europe have options to replace the supplier, we will pay more but not that much more. In other words we can survive without Russian gas... Russia can't survive without European cash.
The gas & oil will flow.