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Journalism and other myths.

Blood & Money, On Ice

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No matter how bad it looks, those in charge find a way to make it even worse.  Like a pack of ravenous dogs, they are snarling over the last scraps of meat rather than get together to work things out.  It’s as if they don’t care that it’s all coming down to a dark, bitter end – each wants their own piece and damn the rest.

I’m not writing about the US Congress or anything so big.  This is the state of the National Hockey League (NHL).  The owners and players are in the process of taking a $1.87B per year league down to zero – for the second time in eight years.  Why they can’t just let them strap on skates and beat each other bloody to get it out of their systems before the real negotiations begin, I don’t know.

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Globalizing the Depression

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One of the great features of this global economic slowdown, which I call a Depression, is that it has not been genuinely global.  The developed world – US, Europe, UK, and Japan –  have been mired in slow growth and dogged unemployment for at least four years.  While Europe enjoyed a small boom when the Euro took hold in the 2000s, much of it was fueled by government debt.  The US has not performed well since 9/11 despite an ocean of red ink from Washington.  But the BRIC nations – Brasil, Russia, India, and China – have enjoyed reasonable growth and a net improvement in resilience and stability.

Until now, that is.  The slowdown is finally hitting everyone.  What this might mean is very hard to tell.

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QE3

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What’s a few more billion dollars a month in today’s money?  On Thursday, the Federal Reserve announced that they were going to purchase $40B more mortgage backed securities every month, a total of $85B, with money they more or less print themselves.  It’s the third round of Quantitative Easing, or QE3, but this time they left the dollar amount open ended.  We can guess that by the time they stop the total amount printed will be around $2T.  That’s more like the insane numbers we’ve gotten used to the last four years.

They are doing this because unemployment remains stubbornly high in a weak economy.  Why they picked mortgages and what affect it will really have is another long story, but the bottom line is that election year or not the Fed is on the case and doing whatever it can.  But is it too much?  And what comes after all this money is printed?  There are a lot of questions.  Let’s work our way through them.

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The Big Fight

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The conventions are over and the election is less than two months away.  That can only mean one thing – voters in Florida and Ohio would be better off not watching any teevee.  Who is likely to win?  The race is shaping up to be Obama’s to lose, although it’s unclear how the US House or other key races will come out.

It’s time to make a few predictions as to how it will go – and what we should be watching for.  That way you can make fun of me later.  Here are what I consider to be the key points.  Ready?

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Acronyms vs. Reality

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The European Central Bank (ECB) has come to the rescue!  On Friday, they announced a separate permanent fund to buy €500 billion worth of national bonds from EU member nations.  Markets were up worldwide in response to news that the Euro would be preserved and stabilized.  It’s nothing but good news all around!  Right?

Not so fast.  Like all good news these days, it has its roots in bad news.  Two days earlier, the German government was unable to sell enough bonds at auction, as demand fell for anything tied to the Euro.  Bailing out Greece or Spain was never really on the table, but bailing out Germany is a priority for the Frankfurt based ECB.  And this starts the twisted and difficult tale of the bailout that may or may not culminate in the closing chapter of the Eurosaga that has plagued markets for over four years.

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