<![CDATA[Hedgehogs.net: '' related content (page 2)]]> http://www.hedgehogs.net/tag/bank?offset=10 http://www.hedgehogs.net/pg/blog/Nisha/read/11402450/commodities-briefing-international-demand-for-gold-continues-surging Thu, 23 Oct 2014 09:28:34 +0100 http://www.hedgehogs.net/pg/blog/Nisha/read/11402450/commodities-briefing-international-demand-for-gold-continues-surging <![CDATA[Commodities Briefing :- International demand for gold continues surging]]> Article Link]]> 11402450 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402391/the-market-ticker--oh-look-at-the-admission Thu, 23 Oct 2014 08:09:20 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402391/the-market-ticker--oh-look-at-the-admission <![CDATA[The Market Ticker - Oh Look At The Admission!]]> Hoh hoh hoh hoh hoh hoh hoh....


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402348/mohamed-elerian-is-the-lead-investor-in-a-company-called-payoff Thu, 23 Oct 2014 04:09:06 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402348/mohamed-elerian-is-the-lead-investor-in-a-company-called-payoff <![CDATA[Mohamed El-Erian Is The Lead Investor In A Company Called Payoff]]> Mohamed El-Erian


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402341/jpmorgan-is-planning-to-build-massive-new-65-billion-headquarters-in-nyc Thu, 23 Oct 2014 04:08:52 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402341/jpmorgan-is-planning-to-build-massive-new-65-billion-headquarters-in-nyc <![CDATA[JPMorgan Is Planning To Build Massive New $6.5 Billion Headquarters In NYC]]> Jamie DimonJPMorgan Chase plans to build two towers in Hudson Yards that will cost the bank $6.5 billion.


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402339/morgan-stanley-smashes-expectations-and-shares-are-surging-ms Thu, 23 Oct 2014 04:08:48 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402339/morgan-stanley-smashes-expectations-and-shares-are-surging-ms <![CDATA[Morgan Stanley Smashes Expectations And Shares Are Surging (MS)]]> Morgan Stanley


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402338/citi-is-bowing-out-of-11-markets-around-the-world Thu, 23 Oct 2014 04:08:42 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402338/citi-is-bowing-out-of-11-markets-around-the-world <![CDATA[Citi Is Bowing Out Of 11 Markets Around The World]]> tokyo japan at night


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402337/citi-beats-earnings-c Thu, 23 Oct 2014 04:08:39 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402337/citi-beats-earnings-c <![CDATA[Citi Beats Earnings (C)]]> citibank


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402291/challenge-to-keynesians-prove-rising-prices-provide-an-overall-economic-benefit Thu, 23 Oct 2014 03:39:57 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402291/challenge-to-keynesians-prove-rising-prices-provide-an-overall-economic-benefit <![CDATA[Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"]]>
When the euro declined vs. the US dollar, the ECB was happy that inflation would inch back up. The fear now is that falling oil prices will take away the alleged gain of a falling euro.

With that backdrop, credit the Financial Times for the absurd headline of the week: Eurozone Fails to Benefit from Weak Currency as Oil Price Slides.
Pity the policy makers given the job of rescuing the eurozone from deflation.

The unorthodox steps the European Central Bank has taken since June – including a programme of private-sector asset purchases – have caused a steep fall in the euro. The single currency is down 8.4 per cent against the dollar and 4.75 per cent on a trade-weighted basis from its peaks this year.

The weaker exchange rate will ease pressure on the ECB in its fight to raise inflation back to its target of just below 2 per cent. Mario Draghi, the central bank’s president, has said the currency’s earlier strength explains 0.4 percentage points of the fall in inflation since 2012. In that year, prices were growing 2.7 per cent a year.

But just as this depreciation is starting to fuel inflation, the ECB must contend with a fall in oil prices that all but wipes out the effect of a sliding currency. A weaker euro should swiftly raise the cost of imported energy. Instead, Brent crude has fallen 9 per cent in euro terms this month alone. This is the main reason why eurozone inflation fell again in September to 0.3 per cent, a five-year low – a figure confirmed by data on Thursday.

“The drop in oil prices is a problem for the ECB,” says Marco Valli, an economist at UniCredit, adding, however, that the situation would have been far worse without the single currency’s fall.

“The impact on inflation is already visible and significant – if you still had the euro at 1.40 to the dollar, eurozone inflation would probably be zero.”
Pity the Keynesian Fools

Financial Times writers Delphine Strauss and Claire Jones say "pity the policy makers." I say pity the fools who believe the thesis of their article.

There is absolutely no benefit to rising consumer prices. Things are even worse if prices rise but wages don't.

The very essence of rising standard of living is more goods at lower prices thanks to innovation and rising productivity. And there is no reason to believe wages will rise (or keep up with prices) if prices do rise.

Challenge to Keynesians
I challenge Strauss and Jones (or anyone else but especially Keynesians and Monetarists) to prove rising prices provide an overall economic benefit.

Sure, those with first access to money benefit (the banks, the already wealthy, and government bodies via taxation). But that is at the expense of everyone else.

The absurd underlying notion behind the battle cry for inflation is that if prices fall people will stop buying things and the economy will collapse.

Reality Check Questions

  1. If price of food drops will people stop eating?
  2. If the price of gasoline drops will people stop driving?
  3. If price of airline tickets drop will people stop flying?
  4. If the handle on your frying pan falls off or your blow-dryer breaks, will you delay making another purchase because you can get it cheaper next month?
  5. If computers, printers, TVs, and other electronic devices will be cheaper next year, then cheaper again the following year, will people delay purchasing electronic devices as long as prices decline?
  6. If your coat is worn out, are you inclined to wait another year if there are discounts now, but you expect even bigger discounts a year from now?
  7. Will people delay medical procedures in expectation of falling prices?
  8. If deflation theory is accurate, why are there huge lines at stores when prices drop the most?

Bonus Question

If falling prices stop people from buying things, how are any computers, flat screen TVs, monitors, etc., ever sold, in light of the fact that quality improves and prices decline every year?

Deflationary Spiral Nonsense

I have discussed this many times before, most recently in Deflationary Spiral Nonsense; Keynesian Theory vs. Practice; Eurozone Policymakers Concerned About Falling Prices
The idea that falling prices are bad for the economy is ridiculous. Taking out insurance against falling prices is even more absurd.

Ask any consumer if he wants lower gas prices, lower food prices, lower hotel prices, lower computer prices, or lower prices on any consumer items and the answer will be yes.

Keynesian Theory vs. Practice

Keynesian theory says consumers will delay purchases if prices are falling. In practice, all things being equal, it's precisely the opposite.

If consumers think prices are too high, they will wait for bargains. It happens every year at Christmas and all year long on discretionary items not in immediate need.
Asset Deflation vs. Consumer Price Deflation

What central bankers should fear is falling asset prices, more specifically, loans made on assets in an asset bubble.

The irony is central banks create asset inflation by fighting something everyone on the planet should welcome.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com ]]>
http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402290/nonperforming-spanish-loans-near-alltime-high-as-overall-credit-shrinks Thu, 23 Oct 2014 03:39:53 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402290/nonperforming-spanish-loans-near-alltime-high-as-overall-credit-shrinks <![CDATA[Nonperforming Spanish Loans Near All-Time High as Overall Credit Shrinks]]> NPLs of banks rebounded to 16.59%. Seven points higher than in the 1994 crisis.

Spanish Bank Shrinking Credit

Nonperforming Loans

The "real" numbers are normalized to account for a change in methodology.  Today's number is just off the all-Time high of 16.73 percent in January of 2014. The "official" high was 13.62% in December of 2013.

Both sets of numbers are "far above the crisis in 1994, when nonperforming loans peaked at 9.15%."

The above charts provide further evidence the recovery in Spain is imaginary.

Mike "Mish" Shedlock
http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402287/irony-of-the-day-yellen-moans-about-income-inequality-seven-things-that-cause-inequality Thu, 23 Oct 2014 03:39:46 +0100 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11402287/irony-of-the-day-yellen-moans-about-income-inequality-seven-things-that-cause-inequality <![CDATA[Irony of the Day: Yellen Moans About Income Inequality; Seven Things That Cause Inequality]]> Janet Yellen Bemoans Rising US Inequality.
Janet Yellen decried rising inequality on Friday in an unusual speech that may lead to accusations of politicising the US Federal Reserve.

Speaking at a conference in Boston, the Fed chairwoman said she was “greatly concerned” by rising income and wealth inequality, and asked whether it is compatible with American values.

Her remarks will delight the Democrats who championed her as Fed chair, but risk a backlash from Republicans, who may feel she is using the platform of the central bank to promote the causes of their political rivals.

It marks a big step in defining Ms Yellen’s term at the Fed. She has tried to popularise the role, meeting with unemployed people, and now speaking out on issues beyond monetary policy. Despite recent turmoil in financial markets, Ms Yellen made no reference to economic conditions or Fed policy in her speech.

“The extent of and continuing increase in inequality in the United States greatly concern me,” said Ms Yellen. “The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression.”
Look Inward Janet!

Instead of bemoaning income inequality as "incompatible with American values", the Chair ought to look at the cause of it.

Seven Things That Cause Inequality

  1. Fed-sponsored bank bailouts
  2. Fed interest rate suppression that punishes savers and those on fixed income
  3. Fed QE to goose financial assets (primarily held by the wealthy)
  4. Fed-sponsored inflation that benefits those with first access to money: banks, the already wealthy, and government (via property and other taxes)
  5. Government deficit spending, war-mongering, and other inflationary policies
  6. Government interference in the free markets, especially housing, health care, and education

Is Inequality Always a Bad Thing?

Notice, I said seven but only listed 6. Here's the bonus 7th: Innovation.

Those who invent better ways of doing things (or simply do things better than anyone else) often succeed wildly.

But the 7th is the way it should be. It is the essence of free-market-capitalism. Looked at properly, income inequality is actually a necessity!

It's the way income inequality is achieved that makes it good or bad.

Of seven major things that cause income inequality, four are Fed-sponsored, two are government-sponsored, and one is as it should be.

Which one does Yellen bitch about? The 7th of course.

Mike "Mish" Shedlock