The Undollar Digest

Archives of October 2011

A Long, Steep Drop for Americans’ Standard of Living

Think life is not as good as it used to be, at least in terms of your wallet? You’d be right about that. The standard of living for Americans has fallen longer and more steeply over the past three years than at any time since the US government began recording it five decades ago.   Read more»

The Volcker Rule and the Plan for Gradual Default on US Debt

- – - Click Here for Audio Interview – - -

Bill Meyer Show on KMED with Will on 10/14/2011

Will and Bill take your calls, and break down Occupy Wall Street/Medford, and dig into the root causes of the meltdown and problems.

Bill Meyer Show on KMED with Will on 9/29/2011

Will talks w/Bill about the crazy swings in gold and silver prices, more of your open calls follow, including the pot raid topic.

Bill Meyer Show on KMED with Will on 9/15/2011

Will talks w/Bill about the dollar, world situation on money. More of your calls, too.

Bill Meyer Show on KMED with Will on 8/25/2011

AN ENCORE PRESENTATION – A Warning From Weimar

(Today we will revisit one of the most devastating economic events in recorded history. It all began with the efforts of a few, well-intentioned government officials.)

Originally, on this day (-2) in 1922, the German Central Bank and the German Treasury took an inevitable step in a process which had begun with their previous effort to “jump start” a stagnant economy. Many months earlier they had decided that what was needed was easier money. Their initial efforts brought little response. So, using the governmental “more is better” theory they simply created more and more money.

But economic stagnation continued and so did the money growth. They kept making money more available. No reaction. Then, suddenly prices began to explode unbelievably (but, perversely, not business activity).   Read more»

The Austerity Myth: Federal Spending Up 5% This Year

When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in passing a bill advertised as cutting $38 billion from fiscal 2011’s budget. Then in August, they pushed for a deal to cut an additional $2.4 trillion over the next decade.

Some analysts have blamed these spending cuts for this year’s economic slowdown.

But data released by the Treasury Department on Friday show that, so far, there haven’t been any spending cuts at all.   Read more»

Doug Noland’s Credit Bubble Bulletin

[Selected Notes]

Money Notes:

M2 (narrow) “money” supply rose $14.3bn to $9.618 TN. “Narrow money” has expanded at a 11.5% pace y-t-d and 10.2% over the past year…

October 13 – Financial Times (Richard Milne and Rachel Sanderson):  “Italy’s benchmark borrowing costs on Thursday reached their highest premium over those of Spain in the euro era, in a worrying sign of how investors are more worried about Rome than Madrid.  The spread between Italian and Spanish 10-year bond yields reached 65 bps, higher than the previous high in late 2008… ‘The political cloud in Italy is so dense that it is very hard to make a call so the market struggles to put a value on their bonds,’ said a senior eurozone banker.”

October 14 – Bloomberg (David Mildenberg):  “New York, California and Florida are among states reporting revenue collections trailing forecasts in the fiscal first quarter, prompting preparations for a fresh round of budget reductions.  California’s receipts fell more than 3% short of estimates for the three months through September, raising concern that school aid may be cut. In fiscal 2013, New York state may face a $2.4 billion deficit because of smaller Wall Street bonuses and job cuts, Comptroller Thomas DiNapoli said… States are projecting combined budget gaps of $31.9 billion in fiscal 2013, according to the National Conference of State Legislatures in Denver…”   Read more»

Ring-Fencing

“…[T]he markets have been content to continue accommodating the  U.S.’s extreme fiscal and monetary measures, with massive federal borrowing and spending for now lowering the odds of the “falling off  a cliff” scenario for the frail U.S. economy.”

“Throughout most of the “developed” world, I expect badly maladjusted economic structures to ensure that market-induced “austerity” programs become destabilizing…”

From October 4th (a mere week ago Tuesday) lows, the S&P500 rallied 12.3%.  The S&P400 Mid-Cap index jumped 14.5%, and the Morgan Stanley Cyclical Index surged 17.1%.  The Nasdaq 100 jumped 13.9% from October 4 lows.  The CRB Commodities index jumped 7.8%, with crude oil up 13.7%.  The Australian dollar jumped 9.2% and the Brazilian real rose 7.2%.  Italian CDS fell 50bps.  China CDS dropped 63 bps.  “Risk off” and bearish bets were pulverized.

Last week’s CBB highlighted how the global financial system seemed to have reached a critical juncture back on October 4.  Since that point, risk markets have rallied strongly, with participants generally assuming that global policymakers are finally demonstrating the required keen sense of urgency.  They haven’t done a whole lot, but they’re working on it.   Read more»