(Crazy) economy news

[mapuc]

Don't know what this step will mean for us the ordinary people

The European Central Bank raises its key interest rate by 0.75 percentage points to 0.75 percent.

The ECB states this in a press release.

Never before has the central bank raised its interest rate so much at once, and with the big interest rate hammer the seriousness of the extremely high inflation in Europe is underlined.

Markus

[Skybird]

It means too little too late and that the net interests for people will remain several percent in the negative. We are in a stagflation, and it will deepen.

Needed would be lets say 15% for several months, but the Club Med would always vetoe this down.

[mapuc]

Originally Posted by JU_88

I wish the WEF was just a stupid conspiricy theory, but its not. Everything they want to achieve is clearly publicized on their own website, they are not some secretive organisation lurking in the shaddows, Klaus and co are very forth coming and transparent about how they want to change/influence the world and how they will go about it.
What they propose sounds like an absolute nightmare to me. bascially a modern version of the days of Kings and peasents, (with no accountablility for the former and no way up for the latter)

People are free to believe in what they want. It's not an uncommon thing for a huge company or companies trying to take over the world-In the term of business or trade.

The great reset-This word was spoken in a meeting(Forgot what it was) This speaker said that we need to reset the economy..somehow it has turned into the great reset.

Today-well within the lastest hour I have read comments about The British Queen Elizabeth that made me so, so sad-

I can also say those who believe in this-is also supporting Putin. Every person I know and who believe in this is also saying it's Putin is is at war with Zelenskyy and WEF.

Edit
Forgot to post this wiki page about The great Reset and WEF
https://en.wikipedia.org/wiki/Great_Reset
End edit

Markus

[Skybird]

I'm putting this here, in lack of a bbetter suited thread.

Bravo! More of this! And across all Europe! The Neue Zürcher Zeitung writes:
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Industrial tycoon Kjell Inge Rökke is one of the richest Norwegians. But he will soon pay his taxes elsewhere.

Switzerland is centrally located, and Lugano is a beautiful city: This is the gist of a letter that the Norwegian industrial tycoon Kjell Inge Rökke sent on Monday to the "co-shareholders and employees" of his company empire. He let them know that he had moved to the same city.

It was a difficult decision, but now it has been made. His group of companies, Aker ASA, which is the country's largest private employer with around 18,000 jobs in Norway and as many worldwide, will of course continue to work in Norway. But he had learned during the pandemic that he could be active as a company leader even when he was not directly on the ground, Rökke wrote.

When Rökke, one of Norway's best-known captains of industry, moves from the posh western Oslo suburb of Asker to southern Switzerland, many millions in taxes disappear with him. The letter says nothing about this, but it was immediately clear to politicians and commentators that this was the reason. A professor emeritus of economics at the Oslo School of Economics did not mince his words: Rökke may extol the virtues of Switzerland, but everyone knows what it is really about. Rökke's move is a "frontal attack on the Norwegian wealth tax," he said.

This has been raised for the fiscal year 2022 by the Social Democrat-led government that has been in office for a year, in line with the Social Democrats' election promise to make the rich pay more for the common good. Prominent Norwegian Social Democrat Hadia Tajik commented on the fact that with Rökke a super-rich person was now leaving with the bitter words that he had thus decided to no longer contribute to the common interests of Norwegian society.

Of course, Rökke must have known that his departure would be interpreted as tax evasion. Therefore, he did not forget to mention in his letter that Lugano was neither particularly cheap nor particularly favorable in terms of taxes. Nevertheless, in the Ticino regulations for a solution based on lump-sum taxation, his specialists must have found a variant that appealed to him.

If one believes the speculations of the Norwegian business newspaper "Dagens Naeringsliv" ("DN"), Norway will lose its best taxpayer with Rökke. Since 2008, the newspaper wrote, Rökke has probably paid the treasury around 1.5 billion kroner, the equivalent of about 145 million Swiss francs, mainly through property tax.

In a recent interview with Rökke, "DN" accused the political left of acting as if it alone had a "moral compass. In doing so, he said, it escapes the fact that someone who has earned a fortune can also have moral and social values. He himself is prepared to use half of his fortune for philanthropic purposes. But he wants to be able to decide for himself and on the basis of his family's values.

Rökke can also point to the fact that he once moved to Norway with a considerable fortune. At the age of 21, he had emigrated to America and, according to his own account, without any education and initially without any means, had a brilliant business career in the fishing industry, which made him rich. When he was 42, he returned to Norway and made his mark there, not least as a supporter of the Social Democrats. Now, at 63, he wants to start a new phase of his life once again.

His departure sets alarm bells ringing among left-wing parties. It is quite possible that other super-rich people will follow Rökke's example. Not only does the government continue to back raising the wealth tax, while the opposition wants to reverse it. It is also apparently considering extending the current five-year period after which emigrants can opt out of the Norwegian tax system altogether.

A Norwegian tax expert told television that many wealthy people in Norway are aware that this period could become longer. For those planning to relocate for this reason, it is therefore "now or never." And there are apparently signals from the circles of tax lawyers that the number of requests for advisory services in this regard has recently increased.

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[Skybird]

Prices in this country are rising unabated. The recent rash of producer prices in Germany does not bode well for the further course of inflation. In an interview with "Mission Money," economist Hans-Werner Sinn explains when price inflation will peak.

Our industry has become heart-sick, diagnoses Germany's best-known economist Hans-Werner Sinn in an interview. With our partner "Mission Money," the former Ifo president also explains how far inflation will rise. Here's an excerpt:

Question: Inflation in Europe is at nine percent. Was that it already, Mr. Sinn?

Sinn: No, it wasn't. And the reason we know that is because we have a leading indicator for consumer goods price inflation. These are industrial producer prices and they are moving much faster. In Germany, we ended up with over seven, or about 37 percent, inflation.

In the case of industrial producer prices, [one can follow this] empirically in Germany quite well, how consumer goods inflation and producer price inflation are related. Because we have both series back to 1950, we can see what kind of correlation there is. The result is that one-third of industrial producer price inflation rates carry over into consumer price inflation rates, but with a certain time lag of three months plus X. This is how it has been in the past. It is, of course, only an average stochastic relationship, not a deterministic one.

But that's how it was. Everybody can check that. And if we use this measure again - 1/3 of 37 percent - that is more than the 8.8 percent that Eurostat is currently reporting for Germany. We are in the double-digit range.

Prost Mahlzeit. Things will get worse, and for years to come. I expect onflation two stay two digits for years, and gas prices not dropping to comparably normal levels again for most if not all of this decade. If ever. We are hanging on America's drip (LNG).

[Jimbuna]

It's certainly looking like doom and gloom atm but hopefully that will be short lived.

[Skybird]

AdG writes:
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The continent of the living dead

A state-made flood of money lies between the illusion of wealth and reality - for now. "Rich Europe" has long been a graveyard of the living dead. It is caught in a snowball system.

"I'm not sure there will even be a Europe next year," said an American financial commentator in early September. The Norwegian energy group Equinor had just announced an estimate that European energy companies face margin calls of €1.5 trillion. Margin is a security payment in forward transactions. Buyer and seller enter into a long-term supply contract. Price and quantity are fixed in advance. If the price now rises above the contractually fixed one, the risk that the seller will no longer deliver increases, as it is a losing business for him.

As security for the buyer, the seller is now called upon to deposit the difference between the agreed price and the current market price - a margin call. And the energy companies will soon have to service this. So the difference between long-term agreed delivery prices of the European energy companies and market procurement prices is 1.5 trillion euros. And the Norwegians say they have estimated conservatively. The European states are now stepping in to save their energy companies. They promise to pay for the losses without making anyone poorer in real terms. That is the promise of the modern welfare state. And it has kept it since the end of the Second World War.

Since the 1970s, public and private debt have been rising steadily. In the past, before the Second World War, economic crises could be read very well in the development of private debt. A crisis was followed by a painful deleveraging of the private sector. Unprofitable firms no longer received credit, had to generate surpluses or disappeared from the market. Households slid into abject poverty. The dead were declared dead and buried. But growth quickly resumed.

After the Second World War, private debt remains as calm during the crisis as the sea during a calm. It rises comfortably and steadily. Crises can now be seen in government debt. Losses are borne by the state. Companies do not disappear from the market and households do not become poor. It's a Ponzi scheme. The state steps in with transfers wherever there is a shortfall and promises growth in return, with which the increased national debt can be paid in the future.

The markets believe in the countries' promise of growth and finance the debt. The population believes in the state and believes that it will absorb every risk - or can you survive without a supermarket? It believes that the currency is a safe means of transaction that can be exchanged for goods tomorrow just as well as today. As long as everyone in the chain believes in the promises made, the living dead shuffling through the streets are not even noticeable. If all the promises made can be kept, they are no big deal.

Welfare states are in debt far beyond their officially stated levels. In addition to the explicit debt, which in the case of Italy is currently equivalent to 150 per cent of annual economic output, there is the implicit national debt, i.e. all the promises made by the state to pay pensions, social security and health benefits in the future. According to a calculation by the financial scientist Bernd Raffelhüschen, these promises currently add up to almost 330 percent of GDP for Germany. This means that Germany does not have the stated 71 per cent national debt, but 400 per cent national debt.

A country in which - according to a recently published study - every second full-time employee would like to have a four-day week with full wage compensation. Yet Germany would have to work for four years to be able to pay for the promises made. The fact that no one has believed in this for a long time can be seen from the fact that the volume of euro government bonds bought by the ECB now corresponds to 95.5 percent of the newly issued debt instruments of the euro member states. This is a good old-fashioned Ponzi scheme. We don't realise it yet, but we have long since become so much poorer. Only the veil of the flood of money still lies between the illusion of wealth and that of reality. Rich Europe" has long been a graveyard of the living dead. Only the enormous national debt bubble stands between us and eternal rest.
Debt in itself is not the problem. It is a wonderful way to benefit today from future productivity gains. For example, burdens can be spread over several generations. 30 billion for Uniper here, 400 billion loans for the implementation of the European Green Deal there, short-time working allowance, fuel rebate, pension level, nursing care insurance, health care, infrastructure. Can be done. When interest rates are low and growth is high.

In a 2019 speech, former IMF chief economist Olivier Blanchard urged countries to take on more debt in the face of persistently low interest rates. As long as growth exceeds interest rates, a country can simply grow out of debt; the debt to economic output ratio automatically shrinks. If the low interest rate environment persists and economies continue to grow, the debt path is sustainable.

Today, Blanchard would certainly not deliver his speech like that. He is not a bad economist and knows that government debt itself affects the interest rate, but also growth. It was not for nothing that economists Reinhard and Rogoff called their 2008 book on the financial crisis "This time is different!" - this time is different. Crises become crises because before they erupt enough people assured us that there was nothing to worry about because this time everything was different. Meanwhile, the zombies sit on the debt bubble like beanbags, smiling moronically.

What Blanchard ignores is that the state always spends its money most inefficiently. The intertwining of business and public administration create opportunities for lobbying power and favours. They create new incentives to use the centralised system for their own purposes. If the market no longer believes in the promise of growth, the interest rates at which the state can borrow rise. The welfare state receives a margin call. It is supposed to deposit a security for the promises it has made. And it can't. Work for four years, just to pay off their debts. After a few days they die of thirst.

The emperor is naked. Europe is a graveyard. Either the losses are now real. As before the Second World War, a crisis suddenly makes people poorer again. As in any Ponzi scheme, the loser is the one who is still invested when the music has already stopped. However, no politician has any interest in this. People fed on zombies will hardly vote for them. It is better for everyone to sit quietly on the debt bubble. The central bank steps in. It feeds the losses in the real economy with new money until the debts are no longer worth anything due to the inflation that has been caused. In November 1923, the 164 billion marks in war debts of the German Empire were equivalent to 16.4 pennies. National Socialism fed on this misery.

Such a margin call was served on some British pension funds this week. Regulatory requirements oblige them, like all other regulated pension vehicles, to invest in low-risk long-term assets. According to the government regulator, government bonds have zero risk. They are absolutely safe. So says the state. When the British government unveiled a debt-financed mini-budget on 23 September, the pound and government bonds took a tumble. The market repriced the risk of a sovereign debt crisis. Holding pounds became less attractive for fear of rising inflation. The government's promise of being able to repay debts easily through more growth in the future was no longer enough of a security. The fall in prices put pension funds in such dire straits that the Bank of England launched a £65 billion purchase programme to stabilise the price of government bonds. The Bank of England finances the budget deficit of the British government. Continental European conditions on the island.

At the presentation of the gas price cap on 29 September, Finance Minister Lindner mentioned several times that German budgetary policy was not comparable to the British. The "German government bonds [are] the gold standard in the world". Ultimately, the ability of the political system of the welfare states to reform will determine whether and how well they will survive this sovereign debt crisis that has been building for decades. The UK and the US are built on intelligently designed political institutions. Checks and balances and the tradition of the Scottish Enlightenment are an important ace up the sleeve, though no guarantee of weathering the perfect storm. They have historically identified and corrected policy aberrations. The Fed continues to raise interest rates, contrary to market expectations, and sells securities purchased during the crisis.

Perhaps the next US president will introduce austerity, reform entitlements to the state. Competition among the states is the kind of subsidiarity that the EU now seems to despise. Britain has been able to break away from the centrally planned and unreformable institutional structure of the European Union. That alone promises better growth prospects for the island than for any member state. The Bank of England will also start a balance sheet contraction, selling £80 billion of securities over the next 12 months. These countries all have a large graveyard but still have a village square where a well-attended weekly market takes place. There is still hope that the inhabitants can oppose the zombie apocalypse.

The EU, on the other hand, is a zombie itself. Everything we are currently witnessing in the Eurozone's monetary and fiscal policy is ghouls. The sustainability of the sovereign debt of the euro countries is only given if interest rates for government bonds remain low. The ECB would rather accept inflation rates beyond its mandate than let Italy go bankrupt and sink the euro. The ECB has lost its credibility. It raises interest rates, triggers a recession and in the same breath stabilises the government bonds of stumbling euro countries. In other words, it is heading for yield curve control. This means that a central bank buys a country's paper until the desired interest rate is reached. Yield curve control was used by the Fed during the Second World War, for example, to keep the costs of the enormous war debt under control.

The new "Transmission Protection Instrument" allows the ECB to intervene whenever member states have to pay the wrong price - i.e. higher interest rates - for their debt on the market. Without a significant reduction of the balance sheet - i.e. the destruction of money massively created in recent years - the ECB will not be able to get a grip on the monetary phenomenon of inflation. But that would not only break Italy's neck. The recession in the real economy will be absorbed by the new public debt subsidised by the ECB. The welfare state continues to breathe life into the zombies. The reconstruction fund, which for the first time gives the Commission the right to borrow and tax, is not subject to any effective control.

In view of the Ukraine and energy crises, there are also repeated calls to set up a similar instrument. On the part of both monetary and fiscal policy, a change of direction is simply no longer possible. The recent announcement by the Commission to create an emergency instrument for the internal market is the final nail in the coffin for the market-based system. The price system - the best allocation mechanism of scarce goods that we know - is shattered. After all, back then I had to think about what inscription my gravestone should bear for my profile in the Abi book: Lisa in the sky with diamonds. John Lennon is said to have alluded to LSD with the title of the song. Perhaps the only way to experience a zombie apocalypse, at least in beautiful colours.

https://www.achgut.com/artikel/der_k...lebenden_toten

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Good night, sleep well. I wish the consequences of this status quo would escape my lifetime, unfortunately I believe to know they wont. Maybe I will have a lucky accident just in time.

The only solution to the system crisis is the destruction of the system. System collapse. But the breed of smart minds who have brought us to this pass are standing ready to establish a copy of the very same system afterwards.

Its not about attacking capitalism. Its about attacking FIAT money and lobbyism, the two root evils and gravediggers of every economic system, planned economy or market economy alike. FIAT money leads to lacking fiscal discipline, lobbyism leads to monopolism, both singular or in combination they are lethal for every state and civilization - always.

[Skybird]

FOCUS disillusionises us again.

---------------------------------

In Europe, inflation is not only being allowed to drift, it is being fueled. In these days, of all times, when all politicians promise on TV to fight it. The explosive thing is that European politicians and central bank governors know what they are doing.

The galloping inflation and the heating up of the world climate have one thing in common: Both do not come over us like a force of nature. Both are man-made. It's man-made, as they always say at climate conferences.

Only the climate catastrophe, and that's where the difference begins, is being fought with united forces. Presidents and Nobel laureates, business leaders and a dozen international conferences have made sure of it: the decarbonization of Western economies is a done deal. War and energy price explosion may delay it, but they can no longer stop it.

Inflation is going a different way. In Europe, it's not just being allowed to drift, it's being fueled. In these days, of all times, when all politicians promise on TV to fight inflation, in reality the next big push is being prepared.

The German state sets a bad example

Without coordinated counteraction - all currently available data say so - we have entered a decade of exorbitant demonetization, which will please the debtor and mean tangible, even painful, losses of prosperity for all other citizens.

Many companies, and indeed all those that cannot pass on the effects of inflation to their customers, will not survive this decade. Inflation will first depress - and then destroy - their profits.

We cannot accuse European politicians and central bank governors of ignorance in this fateful hour: They know what they are doing.

1 The German state, which promises everything to everyone in social policy, is setting a bad example. The debt brake of the Basic Law is being circumvented by borrowing outside the federal budget. Meanwhile, unofficial debt exceeds official borrowing by more than five times.

The government subsidization of energy prices is not the last stroke, but it is the most massive so far. 200 billion euros, or 1.5 times all DAX profits in the pre-crisis year 2021, is available for this consumptive expenditure. The money will not be invested in a green technology of the future, but will be burned up in the truest sense of the word.

The Chancellor's Office has softly denied this

2 The bad example has a contagious effect on the other Europeans, who are now insisting on equal rights. The continent is facing a new debt orgy; on the sidelines of the EU summit in Prague, Scholz signaled his openness to joint borrowing for all of Europe, as Bloomberg claims to have learned exclusively from the chancellor's entourage.

The chancellor's office has softly denied this with the words "nothing is known of such plans". The truth is: Germany is helping to stabilize the high price level with its government gas price brake, which is causing outrage in Italy, Sweden and elsewhere.

German assistance as a loan guarantor and thus as a lender of last resort for the capital market - as already happened in the case of the Corona reconstruction program - fits in with the checkbook diplomacy in Europe to date.

At the ECB, many no longer want to fight inflation but recession

3. there is already no longer any inclination in the ECB to continue a tighter interest rate policy during the recession. At the next meeting of the ECB Executive Board, there is likely to be another upward move in interest rates.

But for the coming year, when the effects of the recession, the winter and the energy price explosion will be felt by all, important forces in the central bank's leadership circle no longer want to fight inflation, but recession.

The historical experience that you end up with both inflation and recession cannot slow down the southern countries in their ambition to fire up the money printing machine again.

They want to inflate their debts and in no way adjust their spending patterns to actual revenues. They regard the ECB Tower in Frankfurt as an oversized ATM.

The second-round effect is coming as surely as the Amen in the church

4. employee representatives all over Europe will soon be making their contribution to driving up prices. That is what their members expect. Just yesterday, the Verdi union and the civil servants' association demanded 10.5 percent more income for federal and local government employees. IG Metall will enter the collective bargaining round with an 8 percent demand.

Companies are now also calculating with significantly rising wages. In view of this historically high rate of monetary devaluation, there is no ethical justification for denying the working population, of all people, this compensation payment.

The so-called second-round effect will come as surely as the Amen in the church. Any union leader who calls for moderation now is risking his job.

High wages, and therein lies the problem, dampen the impact of current inflation on individuals, thereby driving up future inflation. Prices drive wages, whereupon wages drive prices. These are precisely the ingredients for long-lasting inflation.

5 High interest rates alone, which further complicates the situation in Europe, are not enough to stop currency devaluation at present. This is because, unlike in the U.S. - where the government's nearly two trillion dollar stimulus program drove up inflation - in Europe it is the supply side that is driving up prices - i.e., lack of energy and broken supply chains.

Political calculations rule when it comes to fighting inflation

Prof. Lars Feld says: "Industry either doesn't produce because it finds energy too expensive, or it can't produce because it doesn't have the parts and there's still a supply chain issue." That means inflationary pressures are intensifying because supply can't expand at all into government-increased demand.

6. In the climate change movement, it is always Follow the Science. This does not apply at all to the fight against inflation. Here, political calculations rule, and the voice of economists is considered rather annoying.

Yesterday's surprising downward forecast of inflation for 2023 by Economics Minister Habeck is based on the rose-tinted assumption of laws that have not yet been passed and goes against the advice of all economic research institutes. They expect inflation to continue rising. Habeck versus the rest of the world.

Conclusion: this policy is short-sighted, not sustainable. The state does not want to eliminate our suffering in the present, only to narcotize it. The savior appears as the perpetrator and prepares that wave of inflation which it claims to eliminate. Next to us the deluge.

----------------------------------

Some more deelaying of the already inevitable collapse, thats what its about. Additionally bad is that the German spendings are not investments, but one-time-fires fueling good mood in the electorate for some weeks - and then the money is gone, the debts are up, and no structural change and investment has been done. Nothing is diffrerent to before - just that immense additional credit has been blown up.


Needless to say: with thes ehuge debt bruden and interests to be paid, the states have practically no space for active and cretaive pöolicy-,making anymore, all taxes are spend on pensions, social payments and interest payments.


The situation is an utmost and complete desaster already now. I am certai n they know and, when cams and mikes ar eoff, they tlak amongst each other that the Euro and EU already are done. Stupidity meets criminal energy.

[Skybird]

FOCUS writes:
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After a long period of appeasement, the ECB now also sees the dangers of inflation. The protocol of the last meeting, which have now been published, paint a gloomy picture of the situation.



LINK: https://www.ecb.europa.eu/press/acco...fb03f3.de.html



The ECB's Governing Council will hold its next meeting on October 26. It is almost certain that there will be another major interest rate hike. This is because there is no sign of any easing in the inflation situation. The inflation rate for the euro zone is now ten percent.

What the central bankers think about the situation is revealed in the minutes of the last meeting , which were published a few days ago. Several interesting things become clear in them:

1) Not all Governing Council members realize the seriousness of the situation.

Not all members of the Governing Council are behind the latest interest rate hike of 0.75 percentage points. The minutes only mention a "very large number" of Council members who voted in favor. Other central bankers argued for a smaller move. According to the minutes, they considered an increase of 0.5 percentage points to be sufficient to make clear the will to further normalize monetary policy. To be honest, I think that's a hammer. In the current situation with inflation rates, it is hard for me to believe that hesitant action is enough.

2) Even an economic downturn might not be enough.

In addition, it was argued that the nature of the inflation process had changed. Inflation had begun to reinforce itself, so that even a projected significant slowdown in growth would not be enough to bring inflation back to target levels. That doesn't sound good at all either. After all, that's actually the mechanism: lower demand (due to a weak economy) leads to falling prices. So there will be no quick fix to the inflation problem.

3) Inflation can still rise despite falling incomes

Another concern of the euro central bankers fits in with this: according to the minutes, they fear that the impact of the war and the pandemic on the economy's production capacities will be greater and more protracted than expected. If the supply side is more affected than the demand side, they say, this could increase inflationary pressures even as real incomes fall. Translated, this means that if supply and demand fall in equal measure, the inflation problem will not change. There is still too little supply for too much demand - just at a different level. So either supply must increase for the same level of demand, or demand must fall more for the same level of supply. Again, this suggests that only a hard recession can lower inflation.

4) People are losing faith in the ECB

Finally, central bankers talked about how a number of indicators suggest that longer-term inflation expectations are no longer anchored. In July (and again in August), the median inflation expectation for the next three years in an ECB survey was three percent. In other words: More and more people no longer believe that the ECB can bring inflation back down to two percent in the medium term as promised. This is also a cause for concern: Rising inflation expectations are a serious problem, as they can quickly become a self-fulfilling prophecy. Only by raising interest rates further can the ECB make a credible case that it is serious about fighting inflation. So one can only hope that the ECB's Governing Council will not buckle when the recession feared by many becomes visible. After all, what happens if inflation expectations were to become completely unanchored is shown by Turkey as an extreme case. Here, inflation is now over 80 percent.

Inflation problem will not disappear so quickly

All in all, the record makes clear just how big the inflation problem is. And it shows that it will be difficult and painful to get it back under control.
------------------------------------


The German government already glosses over it, expecting a yearly inflation in Germany of 8% this year and 7% next year. Ha! We are at officially 10% right now, I say the real inflation is severla points higher already and since many months, and it will get much worse over the next year.


The rightly much-feared wage-inflation-spiral has started.



Its horrifying to see how history repeats itself and nobody wants to see it. Everybody is busy with spilling ever more kerosin into the fire. The war has not caused this, Corona has not caused this - both are only catalysts speeding up the speed of the process.


Turkey has just preceded us. Their inflation now is 80%. The ECB's policy is not much better than Erdoghan's decisions.Personally I do not want to completely rule out ECB zone inflation rates in the twenties. Its possible. The interest rate rises by the eCb will soon be bropught to a stop and then revers,e when Club Med economies are in danger to collapse. Instead one will buy them a few days of tiem at the price of letting it all collapse later on.



One must hope almost that the recession will rattle everbody right to his bones that he looses his senses, and will kill a huge, huge ammount of the zombie economy there is. Wont get any pretty, but a bloody mess. If there is a chance left still, then here: a bone breaking, earth-shaking recession. The social costs will be accordingly, but we must go through this needle's eye. And even then its not certain the EU and ECB zone will recover. Messy administration for too long time causes messy consequences. Reality knows neither pardon nor sentimentality.


Personally I think realistically seen the battle already is lost.

[Skybird]

According to a survey, a quarter of companies in Germany are planning to cut jobs because of the rise in energy prices. Fifty-seven percent said they wanted to postpone planned investments because of this. And 17 percent of the companies planned to abandon energy-intensive business areas altogether, according to the Ifo survey published on Monday for the Family Business Foundation. In April, the companies had answered the same questions much more optimistically.

According to the survey, 13 percent of the companies are thinking about stopping production, nine percent about relocating operations abroad. According to the survey, almost all companies (90 percent) want to increase their prices in order to absorb the burden of energy costs.

Rainer Kirchdörfer, Chairman of the Foundation, called the results of the survey an alarm signal: "For some time now, we have been seeing a creeping relocation of industrial value creation. We will only feel this as deindustrialization and loss of prosperity in years - but then irreversibly." This "fatal" development in Germany as a business location is accelerating, Kirchdörfer continued. Companies are scaling back manufacturing in Germany or relocating production to places where energy costs, taxes and bureaucratic burdens are lower.

(Die Welt).
--------------------------

It has begun. Next year the massacre will become much more apparent. Euro crisis, debts crisis, inflation, broken logistics chains, Corona, energy prices - thats some crisis too much. The wage-price-spiral has started to turn, and is accelerating its pace more and more.

[Skybird]

This opinion piece includes economy, but goes beyond it. The NEUE ZÜRCHER ZEITUNG writes:
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Who is footing the bill for the insanity of recent years?

Since the financial crisis, central principles of democracy and the market economy have dissolved in the frenzy of cheap money. Inflation is now raising the question of who are the losers in an era of excess.

They called Donald Trump a clown and triumphed when he was voted out. They called Boris Johnson a clown and triumphed when he had to resign. Defenders of liberal democracy bathed in the frothy feeling that they had beaten and weakened the populists.

How wrong one can be. Post-fascist Giorgia Meloni has made her dream come true and has been Italian prime minister for a week. The right-wing populist Sweden Democrats are effectively part of the new coalition in Stockholm. Most worryingly, however, Emmanuel Macron's government only used a decree to get its budget through parliament, which is packed with right-wing and left-wing extremists. In the long run, such emergency measures destabilize any regime - and that in the EU's second hegemonic power after Germany.

The odd couple of Johnson and Trump is also experiencing a second spring. One is experiencing a renaissance among the Tories as prime minister of the heart. Compared to the state of affairs in his party, he seems almost a paragon of predictability.

The other hovers over American politics as a nemesis; the only open question is whether he will run himself in 2024 or leave the presidential candidacy to a person of his choice.

With every crisis, capitalism does away with itself a little more

The advocates of liberal democracy made the mistake of confusing cause with effect. Neither Trump and Johnson nor the motley crew of other populists represent the central problem. They are only a symptom.

The challenge that, while not destroying liberal democracy, is putting considerable strain on it is the crisis of legitimacy of the market economy. It began with the near-collapse of the financial system and has continued ever since.

The distortions are economic in origin. However, those responsible have demonstrated an astonishing technical mastery in keeping the machinery running despite ever new shocks - whether Greek bankruptcy, pandemic or Ukraine war. It is more difficult to contain the political fallout. Liberal democracy is experiencing an ongoing crisis of accountability and trust.

In 2008, we all learned a term from the unwieldy slang of the globalized economy: "too big to fail." Anyone deemed relevant to the survival of the system must be bailed out by the state.

Initially, financial institutions such as UBS and Commerzbank benefited from this. Now, the illustrious circle of the indispensable also includes energy companies such as Uniper in Germany and Axpo in Switzerland.

In the past, however, company bosses at UBS, for example, regarded the use of state aid as the ultimate failure and resigned, but today bailouts are seen as inevitable as rain and snow.

Christoph Brand, the CEO of Axpo, is making no move to step down. Even the company's owners, some Swiss cantons, are only looking at their toes with embarrassment, leaving the bail-out to the central government in Bern. Federalism has obviously degenerated into a fair-weather event.

Individual responsibility, the basis of every market economy, is eroding. A creeping process of habituation makes the anomaly not exactly the rule, but no longer a scandal either.

When a select few receive the accolade of systemic relevance, the broad masses do not want to follow suit. "No company should run the risk of falling through the cracks of vital support." This is not said by a trade unionist or a functionary of a social association, but by Albrecht von der Hagen, CEO of the German Association of Family Businesses.

In the past, bankruptcies were still part of capitalism. Today, even entrepreneurs are calling for subsidies in a stern tone. Who could blame them in view of high energy prices? Even during the pandemic, many industrialized countries distributed so much money that fewer bankruptcies were recorded than in normal years.

With every crisis that capitalism settles in this way, it gets rid of itself a little more. When responsibility dwindles, so does trust. People are prone to envy and resentment, so it is easy to assume that others are benefiting from the windfall while you yourself are getting too little.

The syndrome of the presumed short-sighted is one of the most dangerous driving forces in politics and one of the sources from which populism draws.

The era of exaggerations seems like an evil haunting

In an age of ultra-loose monetary policy and emergency bailouts that can only be counted in trillions, you don't have to be a conspiracy theorist to wonder who is footing the bill for the perceived insanity of recent years. If the high inflation does not end next year, the middle class will discover that they are among the big losers. The savers, the prudent and the high performers will then be the dumb ones. This arouses fears of relegation. These are reinforced by the feeling of being ruled by anonymous powers.

Who is to understand why low-quality real estate in the USA is triggering a global financial crisis. Who doesn't think negative interest rates and stock markets driven to all-time highs by crises of all things are evil spooks? Is high government debt the devil's work or a blessing, as a growing crowd of economists claims? The answers are so complicated that they only create new feelings of powerlessness.

In the global and European financial crises, central banks grew in importance far beyond their original mandate of monetary stability. They became the last lifeline of the system. At the same time, their special independent position relates only to their narrowly defined actual mandate.

Restraint and political tact would therefore be called for. The opposite is happening. The obviously overburdened president of the European Central Bank, Christine Lagarde, also wants to save the climate. Instead of fighting inflation with all her might, she is also squinting with one eye on Italy's national debt. Lagarde is venturing even further into the forbidden zone of government financing.

The gap between the scope of such decisions and their democratic legitimacy has widened in the last decade. This is also true of constitutional judges, whose expertise does not keep pace with their judgmentalism. The German Constitutional Court, for example, feels called upon to issue detailed guidelines on climate policy.

Judges and central bankers, the entire caste of parastatal functionaries has gained considerable influence. They act with technical virtuosity, but have never been confirmed in a popular election. This, too, is part of the ambiguous phenomena of this epoch.

Neoliberalism has won itself to death

The usurpation of powers, however, fits into a time in which state authorities feel responsible for everything. The refrain is: Necessity knows no commandment, and it often serves to undermine or abolish proven control mechanisms. This damages democracy, which is based on the separation of powers, clear responsibilities and trust in the predictability of the rules of the game.

Power is being dissipated - not because ministers, central bankers or constitutional judges are striving for dictatorial powers, but because parliaments and the media can no longer find a precisely defined addressee for their claim to control.

Neoliberalism came into being with the promise of less state and more private initiative and thus an allocation of responsibility. It has won itself to death. The opposing forces have long since gained the upper hand.

After the collapse of the financial world, which was only narrowly averted in 2008, Joe Ackermann boasted that Deutsche Bank did not need state aid. He was met with scorn and derision when the Frankfurt-based bank later went into a tailspin. But he was right. He insisted on the responsibility of managers to make their companies crisis-proof in good time. Ackermann just didn't realize that he belonged to a world that had disappeared. The new era calls for other role models: politicians who open up rescue packages; managers who willingly slip under them; and citizens who turn into grateful charity recipients because of all the rescue packages.
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[Jimbuna]

Meant to post this a couple of weeks ago.

[Skybird]

The AdG writes:
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Madame Clueless and the balance sheet fraud at the highest level

The price value of the ECB's bond-buying programs urgently needs to be adjusted downward. But this is not happening. This is balance sheet fraud at the highest level. But the ECB is a notorious lawbreaker. The question, however, is how long this game will last without citizens revolting.

At 2:45 p.m. on 10/27-22, an increasingly uncertain-looking ECB President Lagarde attempted to explain the Governing Council's monetary policy decision to raise all three interest rates by 0.75 percent. This non-news - the markets had already anticipated such an increase - hides the ECB's ever-growing problem: that in the "targeted longer-term refinancing operations" (TLTRO-III), it no longer wants to keep its promise to banks to bonus the loans lent out by means of special fees.

Already in 2019, in the third phase of the TLTRO operation, which is technically difficult to understand, voices had been raised rejecting a central incentive control of lending through bonified loans by the ECB in view of the overflowing liquidity. Today, the ECB is faced with the difficult-to-communicate problem that TLTRO-III has become a significant source of income for banks, which must now be shut down. The business model enabled by the ECB was quite simple: banks borrowed low interest TLTRO and reinvested the money at the ECB/Eurosystem since the interest rate turnaround because deposit rates there were 0.5 percent. These windfall profits - not even discovered by Madame Lagarde for a long time - were increasingly problematized by the expert public.

So while the ECB chief was ranting about cultural diversity and her faith in people in summer interviews with tabloid media, the more knowledgeable staff at her institution were addressing the TLTRO danger. In the Oct. 27 press conference following the Governing Council, the decision-makers within the ECB did not want to overwhelm Madame Lagarde with explanations of the TLTRO course change. Therefore, shortly after the conference, the end of the TLTRO program in its current form was published as a "technical recalibration statement."

How long will this game last?

Quite incomprehensible are the decisions to continue the reinvestment of the bond-buying programs, which is flushing triple-digit billions onto banks' balance sheets and flooding the market with liquidity at a time when liquidity-absorbing measures would be appropriate given the inflation rate of over 10 percent for October. Again, the ECB is at odds with reality and failing to meet its obligation to justify its actions.

Of course, Ms. Lagarde's amateurish statements fail to mention the ECB's crucial problem. The interest rate hikes that will now follow will reduce the market value of the approximately 5 trillion bonds in the euro system. With a reduction in value of an estimated 400 billion euros per one percentage point of additional interest, the ECB or the euro system would have to report considerable losses, which would even eat up the equity cover of the national central banks - not to mention their own capital cover. Ms. Lagarde does not say a word about this, because the ECB has authorized itself to continue buying bonds at the historical purchase price in the future.

This is balance sheet fraud of the highest order. But the ECB is not only a sovereign dictator, it is also a notorious lawbreaker. The question, however, is how long this game will last without the citizens revolting. After all, central banks belong to the respective people, not to anonymous technocrats in Brussels. This also applies to the Bundesbank. Dr. Joachim Nagel, its president, should remember this as soon as possible.
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This super-stupid woman is a hollow torso without a brain, and she always was like this. Babbling stupid drivel all her "careers" long, I cannot recall to have ever received a signal from her that could qualify as a sign for intelligent life.

Ein warmer Furz im Abendwind.

[Rockstar]

Master of the obvious

Hedge fund giant Elliott warns looming hyperinflation could lead to ‘global societal collapse’

https://www.marketwatch.com/story/he...se-11667470081

Elliott executives warned clients that the idea that “‘we will not panic because we have seen this before’ does not comport with the current facts.”

They blamed central bank policymakers for the current global economic situation, saying they had been “dishonest” about the reason for high inflation. They said lawmakers had shirked responsibility by blaming it on supply chain disruption caused by the pandemic instead of loose monetary policy imposed two years ago during the COVID-19 peak...

The firm, led by billionaire Paul Singer and Jonathan Pollock, told its clients that “investors should not assume they have ‘seen everything”because they have been through the peaks and troughs of the 1987 crash, the dot-com boom and the 2008 global financial crisis and previous bear and bull markets.

They added that the “extraordinary” period of cheap money is coming to an end and has “made possible a set of outcomes that would be at or beyond the boundaries of the entire post-WWII period.”

The letter said the world is “on the path to hyperinflation”, which could lead to “global societal collapse and civil or international strife”

Ya think? I’d say we’re well on our way already.

[Skybird]

^ Its a multi-factorial crisis, and it all comes down on us now simultaneously.

- The FIAT money crisis since Bretton Woods collapse.
- Population explosion and aggressively expanding emerging markets/economies.
- Cheating fiscal policies and the central banks' fractional reserve keeping.
- Keynesianism and overspending by credit taken not based on consummation saved, but taken form the future (which makes this credit conusammaiton that in the future will lack).
- No lessons learnedf from 2007/08.
- Climate crisis.
- A pandemic, corona lockdowns and collapsed logistical supply chains.
- War.
- In the West: inner political destabilizations triggered by by external hostile sabotage and home-grown radical populists.
- Gallopping inflation.
- Suicidal debts.
- Killing energy costs, and (in Germ,any at least) wanted further cutting of energy supplies to push costs even further.
- Unrealistic green "ideologism".
- The beginning of an exodus of the producing industry from Europe to Asia where energy costs less.
- Monumental incompetence and unscrupolousness of the political personell, a high grade of lobbyistic corruption and conspiration.
- Mass migration.
- Cancerous bureaucracy that strangles everything and everyone.


A system completely out of controlability and managability. Half-hearted attempts to tackle problems too late, by too little.

No, I do not see how we get off this train again before it derails. Its too uch, and we have been indoifferent for way too long. Now its to late, i fear we are beyond the point of no return.