The French government is saddled with enough problems; in theory, it no longer needs to create new ones. But now it wrote another excellent chapter in its tome on how to interfere with private-sector businesses, hamper entrepreneurs, and encourage them to start up their operations elsewhere instead of creating jobs in France.
Contributed by Maudlin Economics: Excellent essay by John Maudlin on the heated debate over the correlation between debt and GDP growth, and the fundamental conclusion by Ken Rogoff and Carmen Reinhart that debt is not a problem until it becomes one – the “Bang! moment.” Followed by the Rogoff and Reinhart paper itself!
Anecdotal evidence has been piling up. Lamborghini sales hit the highest level in 14 years. Ferrari sales jumped 40%. Luxury retailers forecast fat profits. They ascribed it to Abenomics. “The sudden improvement in the stock market led to a big rise in sales at our department stores for luxury brands,” one of them said. But there is a price to pay.
Contributed by Chriss Street: The Eagles got it right with Hotel California: “You can check out any time you like, but you can never leave!” The San Jose City Council, facing huge budget deficits, tried to terminate life-time pension benefits for Council members. Turns out, ending wildly expensive benefits may be wildly more expensive than staying in the plan.
On paper, Apple has no reason to borrow. Last time it issued bonds was in 1996 when it flirted with bankruptcy and absolutely had to get its hands on some moolah. After Steve Jobs returned in 1997, Apple wisely stayed away from Wall Street and did its own thing. But that era is over. And a new era is dawning upon the icon: Wall-Street engineering.
Contributed by Daniel Graeber of Oilprice.com: New US Interior Department Secretary Sally Jewell went green when she announced her department would get hybrid vehicles to advance a federal low-carbon footprint. The next day, she announced plans for a lease sale in the Gulf of Mexico – in line with President Obama's "all-of-the-above" energy policy.
Contributed by Don Quijones: It is as if the youngest democracy in Western Europe has lost its youthful innocence. After the betrayal of so many hopes and promises, reality is dawning on the people that neither democracy nor EU membership quite are the panacea they were cracked up to be.
Luxembourg, with a population of just over half a million, smaller even than the other speck in the Eurozone, Cyprus, ranks in the top three worldwide in per-capita GDP. In a Eurozone wealth survey, it had the highest average household wealth. Only Cyprus, a former off-shore banking center in the Eurozone, came close. Yet Luxembourg is threatened with ruin.
Austerity succeeded in trimming the bloated government sector. But instead of picking up the slack, the private sector destroyed jobs almost four times faster! The hope is that this fiasco will finally reverse course, that something will click and start a virtuous cycle before the unspeakable happens. But so far, it has relentlessly gotten worse.
“Those wanting to prevent change are willing to do anything,” firebrand Beppe Grillo griped. “They are desperate. Four people, Napolitano, Bersani, Berlusconi, and Monti, met in a living room and decided....” They’d ganged up on him and restarted the corrupt political machinery he’d brought to a stop. The one that is strangling Italy's economic core.
Those close to the epicenter of power, those near Chancellor Merkel, have to toe the line on the euro – it’s far more than just a currency, it’s a sacred concept worth saving no matter what the costs. While the possibility of a small country's exit from the euro has been accepted, the euro itself has been inviolable in those circles. Until now. An insider offered a "Plan B"; and the euro’s life is limited to five years!
Contributed by Jen Alic of Oilprice.com. In Kiobel vs. Royal Dutch Petroleum, the US Supreme Court has ruled that Nigerian nationals do not have the right to sue the oil company for alleged rights abuses overseas, dashing the hopes of Esther Kiobel, who filed her lawsuit against Shell in 2002 shortly before she became a US citizen.
Some of the crown jewels of corporate America have reported declining revenues and earnings, and have lowered their forecasts, and in doing so, have unleashed a flood of obfuscation and excuses – from Easter falling on the wrong date to lazy sales reps. So when Caterpillar reported on Monday, it was almost refreshing in its unvarnished ugliness.
Contributed by Chriss Street: The FBI and Justice Department put-on a media dog and pony show to trumpet how the combined forces of law enforcement captured the Boston Marathon Bombers. Nothing could be farther from the truth. The investigative heroes were millions of members of the social-media site Reddit, who virally leveraged their diverse skills.
Contributed by Don Quijones: “We make or break human life every day of every year as probably no other force on earth has ever done in the past or will ever do again” — Davison Budhoo, former IMF economist who in 1988 broke ranks and published a scathing 150-page resignation letter. In it he accused the IMF of corruption, self-interest, and deceit.
Where German industrial companies plan to invest: a slew of losers out there, including Germany. But one country stands out ... and the reasons why!
Contributed by Chriss Street: Italians are electing their 63rd government in 68 years. Normally, Europeans chuckle about this. But Italian political trouble just became EU economic trouble as its debt was downgraded to BBB+ and a bank run seems to have begun. The realization that it's too big to bail out is heating up the Eurozone debt crisis.
Bubbles are a funny thing. Participants don’t see them. Outsiders shake their heads, then get sucked in themselves. Central banks create them but deny their existence. Money piles in on top of money. Risks no longer exist. Result: mayhem, capital destruction, devastation of the industry.... and a new beginning for the lucky ones. Take natural gas.
Quiet … EMPTY … If you want to make a deal opening a shop of some sort, you can pick and choose amongst prime locations. The time is now, if that is your inclination, and if you have the financial staying power, or a concept for selling things people can’t do without, something cheap! Every second shop, ah OK, maybe every third or fourth, is closing down.
Secretary-General María Dolores de Cospedal, number two of the governing party in Spain, said that she knew she'd get criticized, “but this is pure Nazism.” The next day, she repeated it and added that going to someone’s house to “harass” him was “comparable to what occurred in the 30s in a European country.” A reference to Nazis marking the homes of Jews. But these “Nazis” are folks who are standing up to the banks and draconian mortgage laws that the government is hell-bent on protecting.