Maybe March will prove the cruelest month -- this year at least.
It started simply enough -- the stock market perked up on rumours of higher earnings at the zombie banks. Then Gentle Ben sees light at the end of his 12 month-long tunnel vision; and don't my ex-boss, the skirtchaser from Omaha shown below, agree --
... Yup, the banks are back!
We must be cheered, eh? Notice, pinko onlookers one and all, the sly implied syllogism here: the private banking system is "reviving"; private banks are the heart of our credit system; therefore, the credit system has turned the corner.
Comes now the sorites: the credit system is the heart of our real economy -- the one our phoney-ass jobs hang from -- so therefore, we're about to get back on track -- give or take a few quarters of growing joblessness, while the markets work through their inevitable "transmission lags".
All bullshit of course; but here's a nice fact:
Nearly half of the credit flow before the great crumble was securities based, and those markets, the ones for securitized debt, whether over the counter or under, are not even visited these days by our reanimated giant zombies.
So they're like a vast dance hall full of bloated corpses. Play all the polkas you want; these bastards ain't gonna get up and into it.
Gentle Ben suggests we need to revive these securities markets too, before we can declare it's hammer time again in America. But that's not all, folks.
Even if the credit system could be restored to its condition as it was, say, one day after 9/11 -- you still won't see a revival this time round 'cause you can't lend what no one will borrow.
Even if this is a false spring, a real springtime for banking is coming, and maybe fairly soon, but here's the point:
That was the story from say mid-1933 on. The banks were spiffed up, re-opened, ready to lend. But the credit didn't really start to flow till Hitler absorbed the Danzig corridor. For six long years the corporate sector remained on Polonian(*) strike. That's right, six years; and FDR had to employ millions on lightweight gummint projects, just to keep the place from exploding.
For six years the corporate Scrooges horded their cash, borrowed near nothing, and sat out the twilight of the New Deal in a grump.
Okay, Paine, you say -- don't think I don't hear you muttering out there -- what about us credit-constrained waifs and waifettes? What about you and your pard and the pizza parlor down the street?
Well, we ain't got collateral, now do we? Mr Potter is not interested in taking a chance on love.
----------------
(*) OP is presumably thinking of Hamlet I:3, not of the much-invaded
Eastern European kingdom.
--Ed.
Comments (10)
I heard the chatterers on CNBC today talking about the resuscitating credit system, and predicting the effects could start to show up (in possible company earnings) six months from now. They desparately need someone to start buying stocks again.
Posted by seneca | March 20, 2009 9:39 PM
Posted on March 20, 2009 21:39
this post was prepared
before gentle ben's
latest trillion buck
feder-vention
started rolling
thru these very same
hideously moribund
debt securities markets
spring freshet or march madness ??
can uncle atlas
single handedly
with one more mighty boost
hoist the credit globe
out of it's shit bath ???
or is he just
u know
.... silly uncle mesmer
trying another stupid dollar trick
either way
must be great
running
the earth's designated digital mint
"top of the world maaaah"
Posted by op | March 20, 2009 10:57 PM
Posted on March 20, 2009 22:57
Aside from the folly and hypocrisy of the Fed's policies, are you worried about inflation, OP? I sense this is a right-wing thing, but Moon of Alabama -- hardly a scare-monger -- is convinced it's inevitable.
Posted by seneca | March 21, 2009 10:30 AM
Posted on March 21, 2009 10:30
Sen:
Inflation of what
What's to worry about
The rate of change and the direction of change
in the price level of
Assets
products
or
raw commodities ?
We've obviously seen
Assets and raw commodity prices
Ride a roller coaster this decade
But product prices have remained anchored by slow growth of nominal wages right?
If its product prices that worry u and the gang at lunar dixie
...Why. ?
The most common
Policy driven reason to induce a rapid price level change in product prices
Is existing high levels of debt
At the household level
Which can be
"Escaped"
by a rapid
Change in product prices
Because
This means
. Faster rising nominal corporate surplus and wage income
A prospect that delights a clear sighted. Petty form of viewer
And prole well wisher eh?
...
So long as u
have a job or small business
Fear of product inflation
Among the people
Originates among
Those existing on a thin fixed stream of asset income
or the vagaries of the social system of doles
Posted by paine | March 21, 2009 1:14 PM
Posted on March 21, 2009 13:14
MoA's argument is that inflation will be induced by the tsunami of new money, and the devaluation of the dollar, required to fund the deficit when China and others stop buying our treasuries.
I've always thought of inflation as merely a ploy to justify not pursuing full employment, but these are strange times, and old words are being used differently. Now, "everything is upside down in a liberal empire, Alice!"
Posted by senecal | March 21, 2009 4:56 PM
Posted on March 21, 2009 16:56
even with the new QE etc. the original post is still right. QE is driving up the convenience yield of commodities like oil, but doing nothing that can actually sustain general price inflation expectations.
That may change if Geithner's new plan (that leaked today) to buy all the garbage from the banks goes through, but I think it might turn out to be a bridge too far for Timmy G., so soon after the AIG fiasco. Krugman, Galbraith & co. are already having a conniption about it, and once it starts getting out into the public I think there might be some heavy opposition.
Posted by bob | March 21, 2009 7:06 PM
Posted on March 21, 2009 19:06
" inflation will be induced by the tsunami of new money, and the devaluation of the dollar, required to fund the deficit when China and others stop buying our treasuries"
sen ...that's practically gibberish
briefly :
"inflation will be induced by the tsunami of new money..."
the fed can sell back the securities its now buying and raise interest rates stengthen the dollar
"...the devaluation of the dollar, required to fund the deficit when China and others stop buying our treasuries"
china needs a strong imperial dollar
to maintain its export offensive
a strong dollar "requires" china
to support it
by buying our debt
out of its trade surplus earnings
bama eve's scenario
has mutually repulsive elements
too bad you couldn't see these hysterical
fear constructs
not "appear " to fly which
....they can't
in a tunnel test
they zoom dive and crash
like poorly designed gliders
Posted by op | March 21, 2009 10:21 PM
Posted on March 21, 2009 22:21
".... QE is driving up the convenience yield of commodities like oil, but doing nothing that can actually sustain general price inflation expectations"
an enigma wrapped in a jargon
say whatever.... but say it plain bob
obviously u have much to add
but for the life of me
this passage yields me
no pass thru light
" ...it might turn out to be a bridge too far for Timmy G., so soon after the AIG fiasco"
very sensible conjecture
Posted by op | March 21, 2009 10:29 PM
Posted on March 21, 2009 22:29
The sentence as written WAS gibberish, OP, but if you take out the dependent clause about devaluation of the dollar, and make it a separate sentence at the end -- a result of the other two clauses -- the other two are unexceptionable or at worst redundant.
I'm only pretending to know what I'm talking about here -- I'm an English major for crissakes! -- but I sense we are falling into the Latin American pattern of devaluation and inflation -- the victim of our own economic hit men.
Posted by senecal | March 22, 2009 8:55 AM
Posted on March 22, 2009 08:55
"I'm only pretending to know what I'm talking about here"
where as
i am only pretending to talk what i'm knowing about here
Posted by op | March 23, 2009 8:47 AM
Posted on March 23, 2009 08:47