Normally we see the gory details only after a firm collapses, like Enron or Lehman, when vultures tear open its guts to fight over shriveled assets that had appeared fat and healthy on paper, and some of them had been written up repeatedly to create—which our accounting system encourages us to do—paper income. Other outfits get bailed out. JPMorgan among them. Yet, they still hollow out their balance sheets. And JPMorgan’s soon-to-be $7 billion trading loss shows how.
Is The Inexplicable American Consumer Rebelling?
by Wolf Richter • • Comments Off on Is The Inexplicable American Consumer Rebelling?
The strongest and toughest creatures out there that no one has been able to subdue yet, the inexplicable American consumers, are digging in their heels though the entire power structure has been pushing them relentlessly to buy more and more with money they don’t have, and borrow against future income they might never make, just so that GDP can edge up for another desperate quarter. But it’s been tough.
No Functional Miracle Weapons To Fight The Debt Crisis
by Wolf Richter • • 2 Comments
It must be infuriating for Mario Draghi, the hapless President of the European Central Bank, to see how masterfully the Fed and the Bank of Japan control their respective credit markets, how they manipulate them for the benefit of the banks, and how they’re allowing their governments to fund huge deficits at near zero cost. Draghi just doesn’t seem to be able to wrap his arms around it.
Is Germany Preparing for a Spanish Default?
by Wolf Richter • • 10 Comments
Hope persists that Germany would not only bail out Spain and the rest of the Eurozone but would also tolerate the Fed-ization of the European Central Bank. Even Treasury Secretary Tim Geithner was hounding German Finance Minister Wolfgang Schäuble, who was on vacation. Yet, Deutsche Bank, Germany’s de-facto vice-ministry of finance whose CEO serves as éminence grise behind elected officials, well, that venerable institution at the core of Germany Inc. appears to be closing the book on Spain.
The Coming Unholy Alliance in Natural Gas
by Wolf Richter • • Comments Off on The Coming Unholy Alliance in Natural Gas
Natural gas traded at $3.22 per million Btu at the Henry Hub on Monday, a seven-month high, and a jump of 69% from its April low. Breathtaking when you think that a few months ago, the doom-and-gloomers, who’d been right for a very long time, were predicting chillingly that the price would hit zero by the fall, when storage would be full and excess production would have to be flared. But the pains for the industry are far from over.
Beer, A Reflection Of The World Economy?
by Wolf Richter • • 7 Comments
As a kid in Germany, I engaged in underage beer drinking. I was too young to drive, so it didn’t bother anyone, except me the next day. It was when German beer consumption peaked at 151 liters per capita, the highest in the world. But then I went to America … and German beer consumption took a multi-decade dive. In the US and other Western countries, the beer industry is now morose as well, but it’s booming elsewhere.
War Of The Central Banks?
by Wolf Richter • • 2 Comments
The coordinated confidence-inspiring words from the Eurozone’s fearless leaders yesterday and today about doing whatever it would take to save the euro wasn’t about Greece anymore. Politicians have apparently given up on it. Instead, the fearless leaders were afraid of Spain. Its vital signs were deteriorating. It had threatened with default. So the ECB caved. And in doing so, it threw down the gauntlet.
The Ballooning Cyprus Fiasco
by Wolf Richter • • Comments Off on The Ballooning Cyprus Fiasco
In June, Cyprus had held its nose and requested aid from the Troika, those despised austerity thugs made up of the European Union, the European Central Bank, and International Monetary Fund that have wreaked so much havoc in Greece. This week, these despised Troika inspectors are swarming again over Cyprus. And each time they do, the numbers balloon. How can such a small country blow through so much money? Well….
Foreign Money in US Elections: And There Is A Winner
by Wolf Richter • • 2 Comments
Mitt Romney is venturing overseas to spend two days each in the UK, Israel, and Poland. It will hone his international credentials, give him an opportunity to look “presidential,” and allow him to establish or refine connections. He will also court Americans living abroad. Every vote counts. Campaign brawls will stay “at the water’s edge,” so no speeches or news conferences. But there will be fundraisers. And foreign corporations are donating to both sides.
The Extortion Racket Shifts to Spain
by Wolf Richter • • 2 Comments
After 21 summits to save the euro, followed by dog-and-pony shows to calm the markets, followed by confidence-inspiring pronouncements about insurmountable firewalls and pandemic structural reforms, the euro is in greater danger than ever before. Spanish Prime Minister walked away from the last summit in June with a victory smile. Now, Spain is on the brink. And word is out: default.