Weekend Links July 6-7

ScreenHunter_01 Apr. 02 06.19

Global Macro/Markets:

  • Warren Mosler, a Deficit Lover With a Following – NYT , and further reading
  • Government debt, inflation and money – Mainly macro
  • More on long term returns – Buttonwood
  • Basel plans to toughen up ‘shadow bank’ capital rule – Reuters
  • Basel says how banks add up risks may need reform – Reuters,  our own Deep T has been on about this for years.

North America:


  • Cameron wins symbolic vote on EU referendum – Yahoo! UK
  • Portugal coalition fights to keep its head above water Open Europe
  • Portugal president warns of failure to return to markets – Reuters
  • Portugal crisis to test ECB’s strategy – MacroScope
  • German manufacturing orders disappoint with drop – MarketWatch
  • EU Parliament to launch in-depth inquiry into US surveillance programmes – EU, more from NakedCap
  • European firms ‘could quit US internet providers over NSA scandal’  – Guardian
  • Nokia takes another downgrade – SMH
  • Spain banks do not need new EU aid at present – EC documents – Reuters


  • China admits local government debt levels unknown, could be higher than estimated Reuters
  • China signals will cut off credit to rebalance economy – Reuters
  • Dim sum bonds on the ropes – BeyondBrics
  • Samsung estimates Q2 record profit, misses forecast – Reuters
  • Japan: Conflicted Policy – Global Economic Intersection
  • Would affirmative action help women in Japan? – WSJ Japan
  • China: Luxury dining goes mid-market BeyondBrics


  • Rudd thrown a lifeline on boats The Oz
  • Rudd proposes beef deal with Indonesia –  AFR
  • Queensland hopes for no more IT debacles with new strategy –  Brisbane Times , strategy paper here


  • Egypt Girds for Muslim Brotherhood Protests –WSJ , deadly shots fired at pro-Morsi protests BBC. Egyptian army declares state of Emergency BBC
  • Russia Prosecutor Seeks 6 Years in Jail for Putin Critic Navalny – Bloomberg
  • Miniature human liver grown in mice – Nature
  • It is capitalism the Arab world needs, not democracy – Telegraph
  • European states were told Snowden was on Morales plane, says Spain Guardian
  • The spread of link rot – Felix Salmon
  • Some birds are way smarter than you thought EurekAlert
  • A smart watch from Dell ? – BI



  1. Government debt, inflation and money – Mainly macro

    What I find most interesting about this piece is the commentary where the bloke with the theoretical physics background shows the best understanding of how the whole system might function.

  2. Warren Mosler, a Deficit Lover With a Following – NYT , and further reading

    Government debt, inflation and money – Mainly macro

    Note with both these papers the external account is totally ignored. In the second paper this results in his missing the point that output can be, and is, immediately increased in response to increased money supply.

    With regard to Mosler we have the Mosler statement re the fact of economic accounting entity at the end while the whole article, quoting Mosler, is about totally ignoring the accounting entity. Frustrating!

    Economics has a real problem being almost totally governed by US centric thinking that there is no such thing as an external account or that transactions in the external account never have to be accounted for.

    • What bothers me is that people in general don’t appreciate that an economy can “avoid recession” technically but still deeply suck…

      Stagnation and bi-flationary forces are examples of this – avoiding recession technically but still having a society that, economically sucks to live in…

      My 2c

      • That would be 100% attributed to growth coming from population increase. The nation grows while each-persons wealth DECREASES. Completely designed to suit big business and government. How dumb can we get allowing this to continue? Wonder what the plan is after we hit 50 million? Anyone (reporters) ever, ever challenged politicians on this?

    • I have a lot of sympathy for concerns that there is a lot of untapped human potential in many countries and that it would be better if that potential was tapped.

      The difficulty is working out how to do it and once tapped what that potential should be directed to.

      In general each person will be the best judge of how their personal potential should be tapped and education should give them an understanding of the possibilities and the skills to do so.

      For some this will mean training to be a teacher, a surgeon, setting up a business, working for someone else’s business, for others this may mean chilling and doing just enough to get by, for others it will mean joining a religious order or cult and others raising a family full time. For some it will mean subsisting on handouts from others.

      Every community of people will have some needs that require collective action and the best way of deciding priorities is a representative government.

      That government should have as much freedom as possible in co-ordinating the resources required by those projects and if using some of the untapped human potential in the community is possible that is a good thing. Thus in times of recession there are likely to be shovel ready concepts that can easily tap at least some of the untapped human capacity. But it is likely that not all of it can be as many of the most useful projects will require resources and skills that are currently still in demand. ie the NBN needs lots of skilled workers.

      In sofar as this is what motivates MMT i see no problem but I am unpersuaded that there is as much ‘untapped’ human capacity as they seem to think and to the extent there is that it can be ‘tapped’ simply by government expenditure or things like jobs guarantees.

      Ultimately, the ‘output gap’ is about people and their choices. From time to time during periods of adjustment (especially after debt driven bubbles and other shocks) there will appear to be a difference between what is possible and what is acheived. Filling that gap or filling the demand pot hole in a meaningful and productive way is a lot harder than Keynesians and MMT fans think.

      In recent years in Australia the grand housing bubble economy has cooled and thus a lot of people who were applying their capacity to that industry and related sectors have had to work out how best to apply their capacity to something else – that will take time and ultimately is a matter for them and not winner picking govt – if recent history is a guide it may some new debt driven ‘bubble industry’.

      And yes Flawse I don’t follow their arguments about the external account either!

  3. “It is capitalism the Arab world needs, not democracy – Telegraph”

    I just threw up in my mouth, a little bit.

    Call a spade a spade — the “capitalist” international bankstering usurers want to enslave the Islamic world too.

    • Immolation was due to rent seeker bullies & corruption choking trade & honest livelihoods – by the very same people that are supposed to protect them.

      I wouldn’t want to deal with 29 govt agencies & 500days of red tape just to open a bakery – a good lesson for our agencies as to what they’re doing wrong here.

      World domination by debt slavery has been floating around for a while. Perhaps it’s right, & maybe this is the real reason for continually ripping the scab off the ‘Clash of civilisations’ meme. After all, they are the last holdouts.

      ‘Those who row the boat are too busy to rock it’ – unknown.

      • Egypt ditched a system that has seen it prosper for many decades. It doesn’t surprise me in the least that they didn’t have or are still unable to find an alternative. Things can get bad there considering they have to import over half their food.

        Egyptians (outside the military)function on cigarettes,ludicrously strong coffee, minimal sleep and gossip. Good luck with governing that.

      • Just for the record there GSM, Egypt ditched a system which had been prosperous for the Mubarak family and a select clique for many decades.

        The reason the punters got obstreperous was because most of them didnt feel they were getting their cut.

        Thats not to say I think they will find an alternative easily. My money is on the imbroglio continuing (and being generally supportive of crude prices) for quite some time.

      • Gunna,

        I have been to Egypt enough, worked and still remain friends with enough Egyptians to know how it worked. Our lofty ideals may play well with the city Uni grad crowd but essentially Egypt still retains much of it’s feudal and agrarian styles in it’s national psyche. Islam came along after.

        Not defending the Mubarak system but hey, they had an economy with jobs and food. So before you preach about the lofty ideals of Democracy, which I do support, there are some quite complex things going on in Egypt that can make it potentially ungovernable. It’s called reality, is all I’m saying.

    • Exactly why, when Portugal gives the edge a nudge later this coming week, or Italy or Spain do in about 6 weeks time, everyone should keep an eye on deposits in EU banks – in particular the relevant in the firing line nation, but also banks elsewhere – starting with Slovenia, Hungary and Slovakia, but the big ones will be Italy and Spain.

      There are some Cypriot chickens coming home to roost at some point, and they will look ugly.

    • Note that bank Management still does not have to contribute anything. They get off with all their reckless driven bonuses!

      It’s really fortunate that modern economies and banks don’t need savings and deposits!!!

      There now has to be a quid to be made in running private security safety deposit boxes. The TV advertising for them and the subsequent response from Banks and government would be interesting!!!!

  4. Hey Greg McKenna’s Macro Musings today is well worth a read. He hasnt loaded it onto his website yet http://globalfx.com.au/ but presumably will do at some point in the day.

    He has a medium term target of 0.81 AUD/USD amongst other interesting tidbits.

  5. Rudd proposes beef deal with Indonesia – AFR

    We had one till he and his mates tore it up together with teh livelihoods of tens of thousands of people. But who gives a c..p…That lot won’t change any election outcomes for Labor!

  6. Stop tailoring global warming scenarios to make them “politically palatable” says leading climate scientist

    Many, if not most, of the scenarios proposed are completely unrealistic in assuming almost immediate changes to current emissions trends. Moreover, they typically neglect what is happening in China and India

    Read more