And in other news this week…
The EU referendum has continued to unleash a journalistic torrent of soaring analysis and riveting debate not witnessed since the last time the England football team lost to Germany on penalties, or possibly even as far back as the 1980 debate on ‘Who shot JR Ewing?’
Over recent weeks the FT have informed us that leaving the EU will push the UK into a year-long recession, kill off the UK Finance industry, tempt the imminent outbreak of World War Three, and in the most disturbing news of all - delay the implementation of vital new EU regulations on toasters and kettles.
On Wednesday the editor revealed that ‘Vote Leave is damaging Britain’s political culture’, with news that the Brexiteers have accused the Governor of the Bank of England, Mark Carney, of being biased, thus besmirching the dignity of his office.
In an attempt to offer moral support to the editor and his damaged cultural sensibilities, I volunteered that it is an absolute disgrace for Mr. Carney to have his dignity besmirched in this way, adding that it would be far more appropriate for his dignity to be besmirched for his utter failure to achieve any of his objectives since taking the job. Alas my sympathy fell on stony ground.
As the ‘besmirchment’ debate unfolded, the guilty Brexiteers were nowhere to be found. Nigel Farage was on a fact finding mission in a local pub and unavailable for comment, whilst a spokesman for Boris Johnson said ‘Boris is tied up today', but emphasized that Mr. Johnson, whilst adamant that Mr. Carney is a ‘plonker’, denied suggesting that the Bank of England has ever had ties with the Third Reich, adding ‘Don’t mention the war’.
Finally, a spokesman for the newly formed European Union Council of Regulation, Administration and Procedure (EUCRAP) said he’d never heard of Mark Carney, and was far too busy organizing the inaugural meeting of the ‘Toaster and Kettle Regulation Rescheduling Committee’.
Meanwhile in Japan…
…The G7 got underway to great fanfare and with much relief for the Presidents and Prime Ministers in attendance…grateful as they are to have the opportunity to ‘have a good whinge’ with other poor souls who are as unpopular as they are.
The financial press go into full ‘elite mouthpiece mode’ during the G7, taking the opportunity to lay the groundwork for whatever mindless drivel that is expected to come next. After eight years of thoroughly moronic monetary policy, the assorted scribes, academic freeloaders and Treasury Secretary wannabes are laying the ground work for eight years of thoroughly moronic fiscal policy, during which the central banks will monetize present and future government debt, whilst inflating away old government debt.
On Wednesday Martin Wolf was straight out of the blocks with his pretense at criticizing monetary policy, whilst actually promoting the continuation of it:
“Without negative real interest rates, countries might end up in a prolonged period of deficient demand, elevated unemployment and weak investment”
I could not contain myself at that point, though of course I made no attempt to do so:
“End up? Bravo Mr. Wolf! Said without the slightest hint of irony...not a tad of recognition that this is a great description of what we have currently. And please don't tell me that the US is at 'full employment'. Three part time jobs held by the same 55 year old are counted as three jobs, discouraged workers who have given up are taken off the register, and the non-participation rate is near an all time high. That may be ‘full employment’ on the spreadsheet of a charlatan or a central banker, but it is not full employment for the growing number of people who can't get a breadwinner job, for the youngsters living in mum's basement, or for anyone paying attention to the surgical prowess of the Bureau of Labor Statistics.
Almost 20 years of low interest rates, QE, and ZIRP have brought forward consumption, increased debt, delayed the failure of zombie companies, and destroyed the pricing mechanism that forms the basis of capital allocation and long term investment.
The money printers will eventually get the idea that NIRP will prove to be deflationary, because E.G. older people who would normally be spending more will not do so because they're not getting any interest. In Japan, this year's fastest growing consumer item is household safes. Yes, even Mrs. Watanabe, the most loyal citizen on the planet, is getting the idea that her government does not have her best interest at heart - pun fully intended.
But thanks for the heads-up Mr. Wolf. This is a trailer for the sound of helicopter engines...I look forward to the impending arrival of an article from Larry ‘Professor NIRP’ Summers. Yum yum”
We did not have long to wait…the following morning…Professor Summers' helicopter landed on his FT Blog to deliver the message that infrastructure should be the first home for the next batch of freshly printed greenbacks. But in an attempt to demonstrate his ersatz empathy for America’s growing disgust with its government and its 'elites', the title of the article was this:
“Why Americans don’t trust government”
In a nutshell the professor suggests that Americans will accept a massive increase in their debt burden...if...the money is used for infrastructure...and if...the government reassures them it has finally learned how to spend their taxes wisely*
* 'Wisely' - the way in which people who’ve had to earn the money tend to spend it.
"The right response is to advocate for reforms in procurement policies, regulatory policies and government procedures to make the investment process more efficient and effective. This is all clear enough"
Regular readers of the Professor may reflect that very little is ever ‘clear’ where his policies are concerned. Personally, I find his missives riddled with obfuscation and hidden agendas:
“Wrong – that is not remotely clear enough. The right response is to clear out the corrupt cronyism that infects Washington and other governments around the world - the contracts for political donations and kickbacks for politicians. E.G.: The pork barrel express that runs from Capitol Hill to Wall Street to K Street, to the Pentagon and back to Capitol Hill via assorted other skimming stops.
Unfortunately this is not nearly clear enough, for the totally unsurprising reasons that:
1. The various 'skimmers' involved would prefer to operate outside the glare of the public eye, and…
2. Their lackeys in Congress are obliged to comply, and…
3. Government insiders like Professor Summers are very happy not to talk about it
The system is rotten Professor Summers – that’s why people are increasingly suspicious of government. The fact that you guys couldn’t run a bath is secondary”
Finally, whilst we’re on the subject of corruption - anyone who would like to read a sobering account of the biggest financial scam of the 21st century (so far), might enjoy a new book by two of the US Attorneys who litigated on behalf of the victims of the Bernie Madoff Ponzi Scheme. It is entitled ‘JP Madoff: The unholy alliance between America’s biggest bank and America’s biggest crook’.
You will probably be disturbed, you may well be shocked, but perhaps you will not be surprised.
And that was the other news…Saturday 28th May 2016...a good weekend to all…MarkGB