News Updates 4 U: Madness'

Showing posts with label Madness'. Show all posts

Saturday, April 13, 2013

Inspired By Economic Madness

Do not expect any government or central bank to learn much from history, especially Japan and especially now.

For example, please consider this bit of “inspirational madness”: Bank of Japan Finds Inspiration in a 1930s Iconoclast.

The bank’s governor, Haruhiko Kuroda, announced a “new dimension in monetary easing,” vowing to double the purchases of government bonds and expand the monetary base. The BOJ also formally adopted a previously announced two-year target of 2 percent inflation. Quantitative easing will be the bank’s core business for the near future, a strategy that resembles the Federal Reserve’s response to the collapse of Lehman Brothers Holdings Inc.
The BOJ’s actions also mark a return, at least partly, to the unorthodox efforts of Japan’s finance minister in the early 1930s, Korekiyo Takahashi, who was praised by Fed Chairman Ben Bernanke for “brilliantly rescuing Japan from the Great Depression through reflationary policies.”

Takahashi has recently received renewed attention from economists, historians and policy makers. In Japan, the number of popular publications on him suggests a Takahashi following. A biography by Richard Smethurst, “From Foot Soldier to Finance Minister: Takahashi Korekiyo, Japan’s Keynes,” became an academic hit when it was published in Japanese in 2010.

Rest of the Story

My friend Pater Tenebrarum on the Acting Man blog shared these thoughts via email.

“For some reason, no-one seems to want to talk about how Korekiyo Takahashi’s policies ended. Here’s the rest of the story…. Eventually Japan went into war that ended in hyperinflation and total destruction of the Japanese economy. Praising the economic policies of Takahashi is quite a bit like praising the economic policies of Hitler. It’s totally absurd.“

Yet here we are in the throes of Keynesian absurdity.

Historical Yen Chart

click on chart for sharper image

More Revised History

While on the subject of revisionist history, I would like to point out a correction to a statement expressed by Wolfgang Münchau in Eurointelligence Founder Wolfgang Münchau, Once a Staunch Euro Supporter, Now Welcomes the Anti-Euro Party “Alternative for Germany”.

Münchau stated “Thatcher’s Industry Minister Nicholas Ridley said in 1990 in a careless interview in The Spectator that the planned monetary union was a German conspiracy with the aim of seizing power in Europe.“

Tenebrarum responds “This was and is nonsense. Germany was practically forced into the euro by the French, who wanted to emasculate the Bundesbank. They threatened to hold back their support of German reunification if Germany didn’t agree with adopting the euro.“

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mish’s Global Economic Trend Analysis

Inspired By Economic Madness

Thursday, April 4, 2013

Competitive Easing Madness; Japan to Double Monetary Base; Draghi Signals More Easing; Yen Plunges

Escape Velocity

Central bankers have gone totally mad. The stunning news of toady is a new pledge by Japan to double its monetary base in two years as the Bank of Japan Unveils Aggressive Easing.

The Bank of Japan will aim to double the monetary base over two years through the aggressive purchase of long-term bonds, in a dramatic shift aimed at ridding Japan of the deflation that has dogged the country for almost two decades.
Haruhiko Kuroda on Thursday announced his arrival as central bank governor with a “new phase of monetary easing”, a move that comes after Prime Minister Shinzo Abe told the bank to target a 2 per cent rate of inflation.

“We can’t escape deflation with the incremental approach that’s been taken until now,” Mr Kuroda said after the announcement. “We need to use every means available.”

“I am confident that all the policies we need to achieve 2 per cent inflation in around two years are now in place,” he said.

Yen Plunges

As one might expect on such a surprise announcement, the Yen had a spectacular plunge.

Draghi Signals More Easing

Bloomberg reports German Yields Fall to 8-Month Low as Draghi Signals More Easing

German government bonds rose, pushing 10-year yields to the lowest since August, after European Central Bank President Mario Draghi signaled further stimulus is possible should economic conditions deteriorate.
French and Austrian 10-year yields fell to records as Draghi said monetary policy will “remain accommodative for as long as needed” to boost growth. Spanish and Italian bonds pared gains as the ECB president said the central bank won’t immediately implement measures to ease funding strains for smaller companies.

Fed Uncertainty Principle

This is all in accordance with the Fed Uncertainty Principle corollary three.

Corollary Number Three:

Don’t expect the Fed [central banks in general] to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem.

Japan is eventually going to achieve “escape velocity” on deflation, and I assure you Japanese citizens will not like the results when it happens.

When the Japanese bond market finally reacts to this inane policy, there is going to be a global currency crisis.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mish’s Global Economic Trend Analysis

Competitive Easing Madness; Japan to Double Monetary Base; Draghi Signals More Easing; Yen Plunges

Tuesday, April 2, 2013

March Madness and the big business of college sports

This Saturday, college basketball fans will have their eyes on Wichita State, Louisville, Michigan and Syracuse as the teams face off in the Final Four. But March Madness is just a slice of the big business of college sports. And though the teams for the Final Four are set, the conferences those teams play in during the regular season are far from static.

“One of the ironies in college athletics right now is that the Big 12 has 10 and the Big 10 is soon going to have 14,” says Bob Bowlsby, commissioner of the Big 12 conference.

So why do college coaches get paid so much? Bowlsby explains.

Bowlsby says there’s no question it’s the lure of TV contracts that’s creating a sort of musical chairs among conferences as schools try to squeeze as much revenue as possible from their brands. “There are some very bad decisions that are being made by certain institutions based only on the money and not on traditions of rivalries and what may be best for the institution in other ways.” He points to departures from the Big 12 of Missouri and Texas A&M, moves that destroyed century-old rivalries. Meanwhile, adding Rutgers and Maryland to the Big 10 makes little sense from a competitive standpoint but it will bring two huge markets full of cable subscribers to the Big 10: New York and Washington, D.C.

“The popularity of football is really what’s driving it,” Bowlsby says. He points to the reorganization of the Atlantic Coast Conference: “The majority of the value, even for a league that has the most storied tradition in men’s basketball — is driven by the sport of football.” Schools risk losing other sports as they dash to monetize their pigskin team.

And this, says Bowlsby, can set a dangerous precedent for the future. “What we’ve done is commoditize institutions of higher education and I don’t think that’s a path down which we really want to go.”

Bowlsby says the future of conferences still isn’t clear. “And you wonder at some point, are there going to be those four super conferences or one or two very large organizations that close everyone else out.”

So who will he be watching this weekend now that the Kansas Jayhawks didn’t make it through? “You know I think there are some great storylines with this Final Four.” But Bowlsby diplomatically declined a chance to pick a winner.

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