U.S. Ambassador to Japan Thomas Schieffer speaks at a press conference in Tokyo Tuesday, in which he called on Japan to shoulder a bigger portion of its defense bill, citing the growing cost of maintaining security in the region. Nikkei News
May 20, 2008
Elaine Meinel Supkis
I harp all the time about Japan for a good reason: they are an alternative model for running a country. One that others are using to one degree or another. This emphatically includes the US. Various countries follow one or another of Japan's policies. But not all at the same time to the same degree. No other nation dares to have 0.5% interest rates, for example. The Bank of Japan just released more reports, statistics and has declared open war on the rest of the banking system today. For they are clinging to the ZIRP [Zero Interest Rate Program] despite raging inflation within Japan as well as across the planet. Note also the story above: the US is begging, yes, BEGGING imperial Japan to please pay us more money for protecting them from China. This is madness. We lost WWII.
BOJ Shirakawa: For Now Still Watching Downside Risks To Econ
TOKYO (Dow Jones)-- Bank of Japan Gov. Masaaki Shirakawa said Tuesday the central bank is watching both internal and external risks to Japan's economy given increasing uncertainties in the global economy, and rising energy and materials prices.
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Idemitsu Expands Overseas To Offset Slumping Domestic BusinessTOKYO (Nikkei)--Idemitsu Kosan Co. (5019) is scrambling to expand overseas as domestic demand for petroleum products shrinks rapidly due to record crude oil prices and Japan's declining population.
****************************************************Movie Rentals, Downloads Boom While Theaters Suffer
TOKYO (Nikkei)--People are staying away from movie theaters in greater numbers, and while a dearth of attractive films is cited as one reason, shrinking family budgets are also hurting box office sales, shows a survey conducted by The Nikkei.
I also saw in the news somewhere that Toyota has decided to not sell so many SUVs in America but have Americans build these SUVs and then ship them to the Arab nations! So we will work for Japanese masters who will be doing business with Arabs...who are getting extremely rich off of oil sales to us. I see our future pretty clearly here. Our use of Japanese cars to drive around America has driven us into peonage with the car makers and the oil producers! Thus ends the American romance with the automobile.
Our pitiful, haggard ambassador should read a book about 'face'. Why one should never, ever lose 'face' in Japan. My godmother's father was an early US envoy to Japan when it first opened up. He had to be very patient and very wary. He had to understand when he was being insulted or pushed around. He had to call Japan's bluffs. The US should NEVER beg for money from Japan! Never. All the Ambassador has to do is send a lower level official to the Japanese government with a warning that we are arranging to move our troops out of Japan and withdraw all our naval bases and equipment to Hawaii. If this is OK with Japan, we leave. Saves us lots and lots of money. So what if our imperial overreach is gone? It is gone, anyway, if we go bankrupt.
Of course, our navy wants to be in Japan because our military/industrialists make lots of money fooling the US public into supporting US naval protection of our bitter rivals and overlords in Japan.
Today, we see in the Nikkei News how Japan is faring under its ZIRP regime. Domestic use of oil is shrinking rapidly in Japan due to the fact, no Japanese people outside of the Economic Samurai are making any money. Long ago, inflation sopped up the last of discretionary spending there. The Japanese have cut back ruthlessly their energy consumption in a desperate effort to keep alive since food is also inflating rapidly. Now the news comes in, they can't afford to go to movie theaters anymore. Eventually, they will be unable to afford much of anything. This is due to the simple fact, Japanese industrialists are removing global inflation via pay cuts just as we see in the US. This leaves workers at the mercy of global inflation doubly so.
So long as ONLY Japan was doing this, all was well. Japan's exports took off. As we see in today's Nikkei News and this week's Bank of Japan report. Japan is now filled with fear: the US can't buy Japanese very much anymore due to inflation hammering worker's wages here as well as in Japan. And China's earthquake means China is turning inwards quite unexpectedly. The problems with 30 million displaced people is gigantic. Absolutely gigantic. The surge in national pride due to the heroism of the Chinese military and civilian forces working together to save people will be replaced by demands the Chinese government cease buying US bonds that allow the US to overspend at home. The money must be spent within China. This represents a huge change in the flow of money. Absolutely huge. So Japan is hunkering down, shedding workers and driving their own people into deeper poverty to protect Fortress Japan in the obvious oncoming global trade contraction.
Japan's economic growth is slowing, mainly due to the effects of high energy and materials prices.Exports have continued to increase. Corporate profits have been leveling off, albeit at a high level, and the pace of increase in business fixed investment has become slower. Private consumption has been firm in a situation where household income has continued rising moderately. On the other hand, public investment has been sluggish. Meanwhile, housing investment has been recovering moderately. With these developments in demand both at home and abroad, production has been more or less flat.
Japan's economy is expected to grow at a slower pace for the time being and follow a moderate growth path thereafter.
Exports are expected to continue rising, as overseas economies are likely to expand although at a slower pace. Business fixed investment and private consumption are likely to remain firm against the background of generally high, but slightly reduced, corporate profits and the moderate rise in household income. Housing investment is expected to be on a recovery trend, although the pace of recovery is likely to be modest. In light of these developments in demand both at home and abroad, production is expected to increase, after being more or less flat in the short run. Public investment, meanwhile, is projected to be on a downtrend. Due attention should continue to be paid to factors such as uncertainties regarding future developments in overseas economies and global financial markets, as well as the effects of high energy and materials prices.
On the price front, the three-month rate of change in domestic corporate goods prices has been positive, mainly due to the rise in international commodity prices. The year-on-year rate of increase in consumer prices (excluding fresh food) has been rising since around the end of last year, due to the increase in prices of petroleum products and food products, and it has been around 1 percent lately.
Domestic corporate goods prices are likely to continue increasing for the time being, primarily reflecting the rise in international commodity prices. The year-on-year rate of change in consumer prices is projected to continue to be positive due to the rise in prices of petroleum products and food products in a situation where overall supply and demand in the economy are more or less balanced.
At least the Bank of Japan admits there is inflation in Japan. The ZIRP can't exist unless the 'inflation rate' of Japan was below zero. It hasn't been for a while. Since the workers can't buy say, movie theater tickets anymore, the price of tickets will drop. The Bank of Japan, like the Federal Reserve, will then crow, 'There is no inflation' even as REAL inflation hammers the lower classes. This is why I propose a 'Real Inflation Program Of Funny Finances'. RIPOFF will track the true cost of Funny Money™ and how it affects the bottom 60% of the population of Japan and the US.
RIPOFF inflation is around 17% and rising. Not 1% or 2.5%. When we can't afford to buy TVs or movie tickets, we just don't buy them. When we can't buy food or fuel, we DIE. Since the bottom line is DEATH, we have to give food and fuel as well as medicine, a much higher inflation rating value than TVs or cars or even houses. I lived in a tent for ten years. I didn't starve. Living in a mansion and starving to death due to lack of food: this happens during wars and revolutions! People must eat. And they must have some heat in winter in the colder climates. Or you die.
This being the fundamental basis for living means we can't minimize food and fuel but the exact opposite. The statistics for inflation are the exact opposite of RIPOFF's statistics. They are designed to keep INTEREST RATES FAKE SO BANKS CAN LEND TO BUSINESSES CHEAP. And the second use: to cheat people who are on fixed incomes!
Few people know that savings we put in banks are listed as LIABILITIES and loans banks hand out are listed as ASSETS. We would think it would be the opposite. But it is not. This is why the governments of the world have to force banks to hold 'reserves'. This is why we have bank runs. The savers panic when they realize their savings are being frittered away by the bankers who refuse to protect these savings. For savings are really LOANS given to the BANKS! The banks then promise a good return as the RE-LEND it to others and they collect 90% of the profits from this secondary loan. So if you give a banker $100 they pay interest set artificially by the Central Bankers at say, 0.5% in Japan or 1.25% in the US and then LEND it out at 5.5% in Japan [today's rate for mortgages in Japan] and 6.5% in the US for mortgages, the bankers get the 500 point differential! Whoohoo. When the rates offered by the banks are below the RIPOFF rate of inflation, savings collapse and vanish. Which is what is happening today.
This is why all the banks in the G7 nations have to go to the magic windows to the Outer Darkness run by the Central Banks to get some 'savings' since they can't get this from the workers anymore. THE ENTIRE RESERVES OF THE WESTERN BANKS IS MOSTLY NOW ONLY FAKE MONEY FROM THE CENTRAL BANKS! When I show the charts that track reserves in the US, we see clearly, for the first time since the Great Depression, the reserves are now from the central bank, not from the economic base of the American savers.
Here is an old editorial by Paul Krugman in 2000:
O.K., I admit that it doesn't look important, especially to Americans. So what if last Friday the Bank of Japan finally ended its "zero interest rate policy" (yes, ZIRP)? After all, it's only a quarter-point rise, in a faraway country that doesn't interest most Americans now that it no longer seems a dangerous competitor. And yet I would not be surprised if future economic historians look back at Friday's move as the beginning of the end for an era, and not just in Japan.For one thing, this move by the Bank of Japan is a much bigger deal than you might think, because of its potential impact on expectations. By raising interest rates, even slightly, when the economy is still depressed, the B.O.J. in effect signals anyone in Japan who might be feeling stirrings of exuberance that it is likely to step on the brakes in earnest if the economy actually shows any signs of booming, or if consumer prices start to rise even slightly.
Consider the contrast: in this country the markets expect the Fed to hold off for a while on interest rate increases even though inflation is running at more than 3 percent. Meanwhile the B.O.J. has just raised interest rates in an economy where consumer prices are actually falling, G.D.P. is lower than it was three years ago, and unemployment is at a postwar high. This says something about what kind of policy Japan can expect from its central bank in the future -- and it's not the sort of thing that would encourage people to go out and spend.
My personal guess is that in the near future, whatever optimism people are now feeling about Japan's economy will evaporate, and the nation's malaise will be deeper than ever -- thanks in large part to Friday's action. And while others are more sanguine, both the International Monetary Fund and Japan's own Ministry of Finance pleaded with the Bank of Japan not to raise rates.
Krugman, like so many other 'economists' in the US has been fooled by Japanese propaganda. If he bothered to read all the stuff at the wonderful Bank of Japan webpage, he could read lots of papers written by the Japanese concerning their bizarre and I think, nasty ZIRP business. As usual, he mixes up the consumer index with the conditions of internal finance. Any nation can have zero inflation. All they have to do is reduce wages to the same degree that prices rise! Japan did this for over 10 years! They are still doing this! Last winter, I reported that finally, some workers were offered pay raises. It was pathetic: an increase of less than 2¢ per hour? Wow. Now that real inflation, the RIPOFF statistics show honest to god inflation there, the anxiety of the Japanese upper classes to preserve ZIRP is obvious. They are trying to bring prices down even if it means opening up Fortress Japan to a flood of Chinese imports. Something they tried to prevent for years and years.
May 1, 2008 MARCUS GEEThe head of the Tokyo Stock Exchange doesn't hold back when a Canadian visitor comes by his office expecting a simple rundown on the Japanese markets. Japan, he says, is walking toward the edge of a cliff. Unless it changes direction, the world's second-biggest economy faces financial ruin.
In an hour-long interview, Mr. Saito painted a grim picture of a country with a crushing national debt, a diminished stock market, a shrinking, aging work force and a ruling class too blinkered to learn from its mistakes.
Mr. Saito worked on Wall Street in the 1970s and remembers when New York faced bankruptcy. "We are in the same situation," he said. "We are the City of New York."
The difference is that New York had the U.S. government, which, after first refusing, helped rescue it from bankruptcy. "We don't have any Washington," he said. So unless something changes, "we will have to sell our country to someone else."
Mr. Saito's comments come at a time when Japan's economy has been enjoying a modest rebound after years of trouble, growing by about 2 per cent a year for four years. But in its twice-yearly forecast yesterday, the Bank of Japan lowered its growth forecast to 1.5 per cent for the year ending next March.
Mr. Saito said Japan's long-term problems are severe. The markets he presides over as president of the Tokyo exchange mirror the fall in Japan's fortunes, he said.
At the peak of Japan's boom years in the 1980s, he recalled, the combined worth of the stocks on the Tokyo exchange was $6-trillion (U.S.). The figure for the New York exchange was 30 per cent lower.
Some Japanese upperclass salarymen are worried. One or two, that is. They see the population collapsing as the lower classes give up even having children. And children in school flock to more and more useless professions, going for the gold rather than for manufacturing or production. The dire future of Japan is obvious: it will be colonized by the mainland Asians. They will take it over. The island nations conquered by the Rising Sun in WWII will flood into Japan and change the language and culture and the Japanese ethnic group will be subsumed. The natives hope to stop this by simply locking the doors. But it won't work. Either they open the purses of the bottom 60% of the population or they are doomed to be taken over by a second wave of 'black ships.'
By the way, Japan's growth rate this year was 3.3%. And since 2000, has grown by a total of 15%. The US grew at around 6% during this time! Now, who is 'depressed'?
"And we have to do this with an aging society and a shrinking work force," he said. "How can we really redeem this debt - unless we raise productivity and economic growth."To do that, he said, Japan's conservative-minded business and political leaders will have to open the country to the world as never before, taking down many of the barriers to competition and investment that have made it what he called the "Galapagos of the world" - an isolated economic ecosystem.
*sniip*
He said he is dismayed that many Japanese leaders still talk as if Japan was No. 1, as it seemed to be back in the 1980s.
The upper class of Japan is #1. Or rather, were #1 until this last year when Germany became #1. China is closing in on the #1 position. Even with this massive earthquake. The US pretends we are #1 but we are that only in all the red ink categories. I went to the Bank of Japan's web site to read some older reports concerning the ZIRP regime and how it affected global banking and trade via the Japanese carry trade:
Zero Bound on Nominal Interest Rates and Ex Ante Positive Inflation: A Cost Analysis*
November 2003 Bank of Japan:A zero interest rate commitment based solely on the inflation rate does not necessarily show good policy performance in promoting economic stability when recognized as a permanent policy rule. Rather, there is a risk that economic stability may be impaired because, when the commitment is in effect, the conditions of the GDP gap are not reflected in monetary policy.
A nonlinear optimal simple rule, whereby a conventional linear Taylor-type rule is optimally “curved” as the nominal interest rate approaches zero, performs well as a permanent monetary policy rule that takes the zero interest rate constraint into account. This policy rule has the effect of diminishing the “cost” of the zero lower bound via preemptive monetary easing. The desirable shape of the curve can be determined depending on structural parameters such as the target inflation rate and the long-term natural rate of interest. The nonlinear optimal simple rule provides hints regarding how high the interest rate indicated by a normal Taylor-type rule should rise before the transition from zero to positive interest rates, and the speed at which a normal Taylor-type rule should be reinstated once interest rates have turned positive.
A zero interest rate commitment can be effective when it is interpreted as a “time-restricted” monetary policy rule that will be terminated after the prevailing deflation is overcome. The content of the zero interest rate commitment – that is, the threshold rate of inflation adopted as a prerequisite for exiting the zero interest rate policy – can be optimally selected based on the economic conditions, such as the size and persistence of the demand and supply shocks, when the commitment is introduced.
We can assume a zero interest rate commitment based on a price level measure, instead of the inflation rate, but in most cases the policy effect from such a commitment is less than that from a commitment based on the inflation rate that is set optimally.
Here are two charts from the report:
Japan had a 400+ point difference above the funding costs of FX swaps until 1995 when it suddenly collapsed and became totally merged which is where it has sat now for 12 long years! This is UNPRECEDENTED. And amazing. In an economy that has grown nearly all this time.
The US chart shows a 350-650 point difference above the funding costs of the FX swaps.
This 2003 report is very important. The central bankers in Japan read it and said, 'Aso! This 0% interest rate can be made stable! We can do this for a long time, too! Wow!' The warning that this ZIRP has to be limited in time has been tossed out the door. When Japan began to grow in 2003, they found that inflation rates in the world was still low so if they dropped worker's wages, no one complained since prices dropped with the dropping wages. But the stupid Japanese carry trade began to cause world money markets to flood with new Funny Money™ and this began global inflation which first, was soaked up by the US and European property markets. That is now dead and gone. All the Japanese carry trade new Funny Money™ now is flowing like crazy into commodity markets and this hammers prices at home. So prices in Japan are rising rapidly but not wages. And wages can't drop since the Japanese [and American] workers can't get cheaper stuff to make up for wage drops. Blood will now be squeezed from stones. As I looked at dozens of Japanese reports, I could see many of them were about the ZIRP and most tried to explain how it could be either manipulated or enforced rather than alarm about its bad side effects.
The worse part is, the Bank of Japan has now come out and openly said, they will not only cling to ZIRP, they will make it WORSE. Since even they admit that inflation is double the official interest rate, they should be moving towards ending this. Instead, they frantically talk about dropping it back to the '0%' rate which would then be well below the rate of inflation. And it is far below the cost of lending within Japan! This is Super Funny Money™.
Negative Interest Rates under
the Quantitative Monetary
Easing Policy in Japan: 2004
The Mechanism of Negative Yen Funding Costs
in the FX Swap MarketOur main findings are summarized as follows. First, if the no-arbitrage conditions for both domestic and foreign banksí foreign currency funding costs between the foreign currency market and the FX swap market hold, the yen funding costs for foreign banks in the FX swap market can be written as the sum of (i) the yen risk-free interest rate, (ii) the credit risk premium for foreign banks, and (iii) the difference in the credit-risk premium for domestic banks between the yen and the U.S. dollar markets.
Second, the recent negative yen funding costs for foreign banks result from the fact that the credit-risk premium for domestic banks is lower in the yen market than in the U.S. dollar market.
Third, the difference in the credit-risk premium between the yen and the U.S. dollar markets has existed at least since the beginning of the 1990s. As the yen risk-free interest rate has declined under the quantitative monetary easing policy adopted in March 2001, however, the difference in credit-risk premium has become marked, yielding the negative funding costs.
Finally, the yen funding costs are expected to return to zero percent if foreign banks could invest in the risk-free BOJís current accounts without limits. In reality, however, the yen funding costs have remained below zero percent since foreign banks face credit lines, which limit the holdings of the BOJís current account balances.
This report tries to turn the negative interest rates of Japan into some sort of formula. Indeed, all of the Japanese reports are filled with mathematical models and formulas. But they never ever mention 'Funny Money™' much less, 'Super Funny Money™' or even the Japanese carry trade except for one paper that did mention it. I remember how that term sprang into being. Traders whispered it to each other and then some of us outsiders noticed and tried to figure out what the hell the pirates were discussing. Then, once this was uncovered, we could backtrack and see how the Japanese realized they were creating this monster... and didn't care!
For it fed their Export Industries and made them some of the strongest on earth! It made the rich Japanese overlords much richer. A rule of thumb: if any system, no matter how decrepit or evil, makes the ruling elites richer, they will strengthen and protect it. They will follow it with severe devotion and love and will fight tooth and nail, anyone who dares to meddle with it. So it is here: up until 1995, Japan had a fairly normal 'Westernized' banking system. Then they launched their own system which is utterly different. The giant FOREX reserves, the negative interest rates, the enforcing of savings from the workers and then the enslavement of these workers by making it impossible to save at all: these things were strengthened to the point, is is causing tremendous damage to Japan's future and even might utterly destroy not only the nation of Japan but the entire TRIBE of the Japanese people! Isn't that horrible?
Will they go the way of polar bears and Tasmanian devils? Will they vanish from history and become a legend? Japanese animators ask these questions with despair. But the rulers feel, they will continue onwards and will latch onto another society to live and thrive. Like, say, America. Only our own rulers are imitating them. So maybe both of these groups hope to hold onto China? History has seen this before. And the Chinese have a passion for history.
Any comments on the negative gold leading rates?
Seems to be a big thing.
Posted by: andrei | May 20, 2008 at 01:49 PM
Elaine,
There's a real good article by David Evans over at Bloomberg today about The Derivatives Beast (specifically, Credit Default Swaps - CDS - but the madness revealed applies to all credit derivatives). Very informative and clear without opinionating. When I want analysis and interpretation with my information I come to your blog. I strongly recommend this article for anyone who wants to know more about this giant asteroid heading for our planet. I also find it very ironic that the most "constructive" solution anyone has put forth so far to the Sixty Two Trillion Dollar CDS disaster is to create a regulated trading market for these monsters (in essence a stock market for CDS) rather than just outlawing them.
Posted by: Michael | May 20, 2008 at 06:17 PM
Making this thing vanish is nearly impossible. This is why WWIII is the 'default' option. All banking gets taken over by governments who don't care if they go bankrupt, they are being destroyed anyway.
This is why I say, Wealth comes from the Cave of Death.
Posted by: Elaine Meinel Supkis | May 20, 2008 at 07:52 PM
The day trader are seeing ugly signs.. (fannie mae, citi, LEH, goldman
http://www.financialsense.com/Market/wrapup.htm
In our view, when we survey the financial world, we still see a dismal road ahead with a lot more problems in front of us rather than behind us. In fact, instead of the “worst being already over,” we lean heavily toward the idea that the ‘worst is still ahead.’ The price action in stocks like Fannie Mae, Lehman Brothers, and Citicorp is enough to cause us bad indigestion following lunch, if you know what I mean. None of these has any hint that the worst is over, not fundamentally, and certainly not from the positively wretched price action seen on the charts. In each case, huge degrees of financial leverage are in play, and in each case the ‘light at the end of the tunnel’ is most likely a 100-car freight train on a head on collision rolling down the tracks at 100mph. 'Run, don’t walk for the exits' would be our best advice.
Posted by: Anthony | May 20, 2008 at 08:10 PM
Elaine,
Professor Fakete once again delivers a unique macroeconomic view of the effect of long term dropping of interest rates in a fiat environment (aka as Japan and USA)...
http://www.professorfekete.com/articles%5CAEFIsOurAccountingSystemFlawed.pdf
Posted by: BigBen | May 20, 2008 at 09:45 PM
Fekete is a very wise man and I do listen to him. He just doesn't have my darker view.
I was born inside the CIA. I lived on secret bases. I watched my father interact with world leaders.
When I was only 16, I got to see the Future. And it was WWIII. Which is why I harp on this subject with no small amount of alarm. For if we look through the Gates of Death, if we follow the paths of the Watchers and get past the Guardians who bar these iron gates, we see WWIII like a black wall, a huge tsunami, in the distance.
I know that the people who will launch this disaster will do this because of greed and fear. The fear of not being able to live forever, the desire to steal that last Olive Tree in the Holy Land, the spot where the Angel of Death froze until released....thousands of years ago.
When the smallest thing triggers the mightiest event, when up is down and in is out, when all extremes merge in one vast hot cloud which is created out of nearly nothing, the ingredients for a nuclear bomb is vanishingly small!
This is infinity. And nothing at the same time. When two forces can't exist simultaneously they both blow up. And the crazy desire to end this mess in one big lunge for all the oil: OIL IS DEATH.
It is dead things! It is ONLY dead things! And much of it comes from extinction eras! Like the Permian extinction, the end of the dinosaurs or the Ice Ages....
And this is my main point, always. We cannot overlook this truth.
All wealth comes from the Caves of Death.
Posted by: Elaine Meinel Supkis | May 20, 2008 at 10:04 PM
Well, I'll hold off on investing in Japan (again) I suppose.
Speaking of oil: another piece of the "Hubris! Meet Nemesis" puzzle slips into place, courtesy of Yahoo/Reuters:
"WASHINGTON (Reuters) - The House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure.
The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.
The measure passed in a 324-84 vote, a big enough margin to override a presidential veto."
Another candidate for the School of Unintended Consequences, methinks.
Posted by: Bear of Little Brain | May 21, 2008 at 10:26 AM
Saudi Arabia and the others simply have to close off sales to us. Congress knows this. They know this is pure political theater. Only it now has irritated the Saudis perhaps fatally.
Posted by: Elaine Meinel Supkis | May 21, 2008 at 10:32 AM
About the "vote" in Congress to sue the Saudis: 'Ah yes. Throw the rabble a crimb; let the unwashed think we care'. Little wonder that Congress and "Dubaya" are neck and neck in low approval ratings. I guess suspending the gas taxes(temporarily) is out the window.
Posted by: Paul S | May 21, 2008 at 11:30 AM
We need to DOUBLE the taxes. Americans waste tremendous amounts of oil and do this while driving an amazing number of gas guzzlers.
Posted by: Elaine Meinel Supkis | May 21, 2008 at 03:32 PM
About the economy in Japan and dropping wages: two sayings come to mind (I'm not quoting verbatim). 1.Revolutions are fueled by hungry tummies and 2. You can't have a revolution without cracking a few "eggs" (heads). I think the ruling class are in for a shock one fine day. I note how "Dubaya" was shocked at the price per gallon of gas. Just what I like: a President who is in touch with his people. (I'm probably preaching to the choir here.)
Posted by: Paul S | May 22, 2008 at 12:00 PM
Apparently we are on a ZIRP as well now (at least on a real basis). I was listening to a presentation by governor Yellen to a CFA convention and she said explicitly that given inflation, the Fed was presently at ZIRP. Of course there was plenty of hand waving about inflation and how closely the Fed was watching it.
Of course with real economy inflation galloping along at a pretty good clip (5-15% depending who you believe) and a 2% Fed Funds rate it seems like ZIRP isn't an accurate label. Maybe it should be called a NIRP (Negative Interest rate policy).
Posted by: Don | May 31, 2008 at 02:21 AM
Love that, Don! NIRPed at the bud! Good catch.
Posted by: Elaine Meinel Supkis | May 31, 2008 at 12:46 PM
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