Deathbed of Keynesian Economics Will Be in U.K.

By Matthew Lynn

Feb. 23 (Bloomberg) -- The U.K. has produced notable economists over the years, but John Maynard Keynes, the guru of government intervention, was one of truly global significance.

So it may be fitting that the U.K. will also become the deathbed of Keynesian economics.

Britain has been following the mainstream prescriptions of his followers more than any developed nation. It has cut interest rates, pumped up government spending, printed money like crazy, and nationalized almost half the banking industry.

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Comment: This article makes a good point, Keynesianism is on its deathbed - much like global warming - but the much like that issue the troops will circle the wagon and toss out red herring after red herring to save the Orthodoxy.

Mark Faber: Social obligations will lead Western states to default

The United States’ top credit rating is at risk, with its triple 'A' status warned it may be downgraded if the economy grows at a slower pace than expected, says ratings agency Moody's.

“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff,” Faber warns. “I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war.”

The investment guru also says the cracks in the system are starting to spread, naming other countries that could follow suit. “Portugal, Ireland, Italy, Greece, Spain… I think, eventually, they will all default – because if one defaults, then the next would say why should we pay and will also default. The obligations of Western governments are far too high; they won’t be able to pay.” Faber suggests that governments raise the retirement age to 70 years old and cut on social spending, but he believes even that won't be enough.

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The Next Leg Of The Housing Crisis In Five Simple Charts

Everything that the government has done so far, with a few minor detours, has been almost exclusively focused on maintaining home prices high, by tweaking either the supply or the demand side of the housing equation. As the bulk of consumer net wealth is concentrated in the housing sector, and a wealthy and confident consumer, much more so than the banking system, is critical to the recovery of America's economy, the Administration will do everything in its power to achieve its goal of artificially manipulating the housing market, thereby not causing an incremental loss of wealth to those still stuck with overpriced houses, while the real intersection of actual supply and demand curves would indicate a materially lower equilibrium price. This is ironic, as proper price discovery is critical for a true recovery, since Americans realize all too well that buying a house at prevailing levels in advance of the second down-leg in housing is senseless, the continued pursuit of such flawed policies by the Fed and President Obama merely pulls the market ever further away from its equilibrium, thereby making the anticipated second dip so much more likely and not that far off in the distant future. Below are 5 simple charts the highlight just how precarious the housing situation in the U.S. is, and how likely the second, and probably much more fierce, leg down in the markets is going to be.

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JPMorgan vs. Goldman Sachs: Why the Market Was Down 7 Days in a Row

We are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Rubin/Geithner). The bodies left strewn on the battleground could include your pension fund and 401K.

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Most U.S. Union Members Are Working for the Government, New Data Shows

For the first time in American history, a majority of union members are government workers rather than private-sector employees, the Bureau of Labor Statistics announced on Friday.

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Computer-driven trading raises meltdown fears

Trading in equities and derivatives is being driven increasingly by mathematical algorithms used in computer programs. They allow trading to take place automatically in response to market data and news, deciding when and how much to trade similar to the autopilot function in aircraft.

Analysts estimate that up to 60 per cent of trading in equity markets is driven in this way.

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Is The U.S. Economy Being Tanked By Mistake or By Intent?

The government wants Americans to believe the greatest economic collapse in history was the result of ineptness and mistakes yet still have confidence in their financial institutions.

Should American bankers be let off the hook because they self-declare, before an investigational panel, that the failure of their newly invented risk swaps and other highly leveraged investment schemes was simply due to "mistakes"? Not malfeasance – just every-day mistakes? Bankers just fell asleep at the helm at a critical juncture in American history. Is that what we are being led to believe?

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One in 7 U.S. mortgages foreclosing or delinquent

NEW YORK, Nov 19 (Reuters) - A record one in seven U.S. mortgages were in foreclosure or at least one payment past due in the third quarter, according to fresh data signaling the recovery in the housing market will be tepid at best.

U.S. mortgage delinquency rates and the percentage of loans that entered the foreclosure process also jumped to records from July to September, the Mortgage Bankers Association said on Thursday.

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Marc Faber: The Next Thing You Need To Worry About Is The PIIGS

The countries most likely to blow up this time around are the "PIIGS": Portugal, Ireland, Italy, Greece, and Spain. One ore more of them, Faber says, will likely default in the next couple of years. And, that could result in the death of the Euro currency.

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Dollar Crisis Looms if US Doesn't Curb Debt: Experts

The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

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How nation's true jobless rate is closer to 22%

Fact 1: The next employment report will be worse.

When the Labor Department puts out the January employment figures on Feb. 4, they will include an assumption that a lot of companies went out of business.

This is something called the birth/death model that is used by the department. Last year it caused 356,000 jobs to be subtracted from the January job count.

So, the next employment figure should be shockingly bad.

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Goldman E-Mail Lays Bare Trading Conflicts - DealBook Blog - NYTimes.com

In an e-mail message to select clients, Thomas C. Mazarakis, the head of Goldman’s fundamental strategies group, acknowledged that his unit often provided investment ideas that the firm had already traded on. Sometimes Goldman has even taken the opposite approach, betting against particular instruments that the group has recommended.

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Prosperity Through Road Construction: Shoveling Something Other Than Dirt

By William L. Anderson

One of the constant themes of modern socialism (and Keynesianism) is the belief that we can create prosperity through government spending on roads. Mind you, roads can help an economy if they are located in places where they can aid commerce by making it possible for relatively cheap transportation that permits wider uses of division of labor.

However, that is not why people like Paul Krugman and other socialists champion tax-funded road building. Instead, they insist that the money spent in itself will revitalize the economy, and that is pure nonsense. Interestingly, this past year has seen a huge amount of government "public works" spending, but the effects have not been what the Krugmanites/Socialists have claimed.

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SEC order helps maintain AIG bailout mystery

NEW YORK, Jan 11 (Reuters) - It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group (AIG.N) because of an action taken last year by the Securities and Exchange Commission.

In May, the SEC approved a request by AIG to keep secret an exhibit to a year-old regulatory filing that includes some of the details on the most controversial aspect of the AIG bailout: the funneling of tens of billions of dollars to big banks like Societe Generale, Goldman Sachs (GS.N), Deutsche Bank (DBKGn.DE) and Merrill Lynch.

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Arizona treasurer says checks will bounce amid budget crisis - Phoenix Arizona news, breaking news, local news, weather radar, traffic from ABC15 News | ABC15.com

Martin said unless the capitol buildings are sold before the end of the month, there will be no more money meaning, "If they continue to issue checks without having money from the sale of the buildings, I have to bounce them."

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cryptogon.com » JP Morgan: Largest Provider of Food Stamp Benefits in the U.S.

What Is The True Unemployment Number?

Let's take at a look at some of the statistical manipulation needed to come up with a 10% headline unemployment number.

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Federal Reserve Seeks to Protect U.S. Bailout Secrets

Jan. 11 (Bloomberg) -- The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history.

The U.S. Court of Appeals in Manhattan will decide whether the Fed must release records of the unprecedented $2 trillion U.S. loan program launched after the 2008 collapse of Lehman Brothers Holdings Inc. In August, a federal judge ordered that the information be released, responding to a request by Bloomberg LP, the parent of Bloomberg News.

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7 million lost jobs: Gone forever?

NEW YORK (CNNMoney.com) -- A two-year string of job losses appears to be near an end, if it hasn't ended already.

When the government releases its jobs report for December on Friday morning, some believe it will show an increase in hiring. That would be the first rise in payrolls in two years, although the consensus of economists surveyed by Briefing.com is for another loss of 35,000 jobs.

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Geithner’s New York Fed Told AIG to Limit Swaps Disclosure

Jan. 7 (Bloomberg) -- The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

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