“I’m very happy with the result,” Merkel told the cameras. But the agreement may be illegal under EU law and may devastate weaker economies. It elevated Germany to a leadership role that other countries perceive as domineering. By isolating the UK, it cut a deep gash into the EU. And it can’t be put into a treaty. But it did offer a compromise of sorts.
In his “enough’s-enough” speech in Hawaii, Obama castigated China for its currency peg, a perennial complaint. Congress too regularly hyperventilates about the yuan being “artificially undervalued.” If China just allowed the yuan to trade freely, they say, it would solve the U.S. economic quagmire. Cheap political posturing—and full of bitter ironies.
In what may be a precursor of a monumental shift, Toyota and Honda are planning to export U.S.-made vehicles to South Korea. Apparently, it’s now cheaper to produce cars here and ship them halfway across the world than it is to produce them in Japan. But to what banana-republic levels will the dollar and real wages have to sink before U.S. manufacturing is competitive with China?
The season’s ditty: companies announce big profits after they jack up prices. But even the inexplicable American consumer, the toughest creature out there, struggles with these prices as misery spreads into the middle class. Now add HoneyBaked to the list, just in time for the holidays. But there is hope.
The members of the congressional panel on deficit reduction are struggling to come up with something that will—I mean, let’s be realistic—get them reelected and fill their campaign funds. Even if they come up with a plan that will reduce the gargantuan budget deficits, Congress won’t follow through. Because it doesn’t have to, thanks to the Fed.
Consumer confidence indices have collapsed to levels not seen in years or even decades. Yet the toughest creature out there that no one has yet been able to beat down struck again. Consumer spending increased at an annual rate of 2.4% during the third quarter, though the mood has become outright morose since.
The ugly numbers speak volumes on how the Fed’s policies hurt the real economy. But those policies enable Congress and the White House to run up ruinous budget deficits that make those of the Eurozone look benign.
That’s inflation—not jobs, wages, or GDP.
“A shame that we can’t see Japan because of the marine layer” is an old joke in San Francisco. The premise that the fog over the Pacific keeps you from seeing Japan is just as false as the premise that running up huge deficits and printing trillions of dollars can create a healthy economy. Yet, that’s the line propagated by the status-quo media and its economists.
Deflation phobia broke out again. Fed governor Bullard grumbled about inflation expectations being too low and threatened to print more money, while deflationistas paint the Japanese “deflation spiral” as sheer horror. So here is my experience with that horror.
Alas, in one category, deflation has hounded us for 10 years.
The FOMC’s often and clearly stated policy of creating sufficient inflation has been effective: up 36% from January 2000. But there are victims: the middle class and ultimately the economy.