Category Archive: 6b.) Bawerk

South China Sea: Storm in an Indian Ocean Teacup

With global attention focused on BREXIT calamity, potentially more important questions are being overlooked, and especially in the South China Sea where storms are currently brewing between China and a range of littoral states for strategic control of territorial waters.

Read More »

China the lender of last resort for many oil producers

Bawerk explains how China will be the lender of last resort of many oil producers. China might let collapse a smaller producer and become much smarter at covering its political bases across producer states to protect longer term sunk costs.

Read More »

Dumbest monetary experimental end game in history (including Havenstein and Gono’s)

The Greatest Keynesian monetary experiment is not sustainable. It will not continue ad infinitum. Our money masters are just postponing the inevitable bust that will eventually correct these imbalances through worldwide capital re-allocation. Bawerk shows 3 graphs how investment growth gets slower and slower since the End of Bretton, how debt is increasing and how cheap dollar fuel debt-driven growth.

Read More »

Saudi-Arabia: Peg or Banking Crisis?

During the reign of the mighty petro-dollar standard, it was necessary for major oil exporters to recycle their dollar holdings back into the dollar-based financial system to maintain their self-imposed exchange rate pegs. US government bonds are the...

Read More »

OPEC’s Game within a Game

The fact OPEC just agreed to agree on nothing in Vienna. What next? Lots of noise about collective output vs. country allocations.

Read More »

Notes from ECB Press Conference

ECB press conference June 2 2016 Q; Risk to inflation balanced? April meeting, no conclusive evidence of second round effects, are they now? A; Additional stimulus beyond CSPP and TLTRO2 not necessary as we expect higher inflation. We do not see evid...

Read More »

Academic Skulduggery – How Ivory Tower Hubris Wrecks your Life

In the 1970s economists started to incorporate rational expectations into their models and not long after the seminal Kydand & Prescott (1977) article named Rules Rather than Discretion: The Inconsistency of Optimal Plan was published. Their work has...

Read More »

Fed Suppression, Long Term Economic Repression

The Federal Reserve really wants to raise rates, but they do not dare as the consequence of interrupting an unprecedented level of capital misallocation is too grave to face head on. So our money masters continue their low interest rate policy; pulli...

Read More »

OPEC Politics: Russian King, Iranian Crown Prince?

Another month, another OPEC meeting beckons for 2nd June. But unlike typical meetings on the Danube (let alone dust filled haze of Doha), the producer group might just have a new King in town.

Read More »

The ‘Strange’ Death of Mr. Abadi

As expected, PM Abadi was always going to come off worse in his last ditch attempt to try and regain some kind of political initiative by appointing a new look ‘technocratic’ government in Baghdad. But the ailing Prime Minister has managed to back hi...

Read More »

Hillary Will be the Least of Your Worries – America has Economic Diarrhea

According to the National Bureau of Economic Research (NBER), the official recession arbiter, the US economy is currently at its fourth longest expansion in history. By the sheer nature of a capitalistic society with its inherent cyclicality it is a ...

Read More »

Chinese Dragon: Breathing Credit Fumes

Economic forecasting, no matter how complex the underlying model may be, is essentially about extrapolating historical trends. We showed last week how economic models completely fail to pick up on structural shifts using Japan as an example. On the other hand, if an economy doesn’t really change much, as in the case of Australia over the last thirty years, model “forecast” are generally quite accurate.

Read More »

Circulus in probando

In the latest semi-annual Keynesian incantation spewed out by the world’s best pseudo-scientists, we learn that growth has been too slow for too long and that in itself is the cause of slow growth. First, they promote debt-funded consumption because ...

Read More »

OPEC’s Doha Dilemma: 3mb/d US lock in?

Bawerk shows that more than 3 mb/d of American oil production was helped by US$55.5bn in credit facilities, by excessive debt. This production is now at risk and the debt may not be repaid. The big OPEC players are playing against US shale oil and some smaller OPEC members that have higher costs.

Read More »

Latin America – Seven Ugly Sisters in Deep Political Trouble

Get beyond endless Latin American headlines burning column inches and you come to far broader strategic conclusion: The seven ‘ugly Latino sisters’, namely Brazil, Venezuela, Ecuador, Bolivia, Colombia, Mexico and Argentina are all deep political trouble from collapsed benchmark prices.

Read More »

Greenspan, the Sheepherder

It is common knowledge by now that Federal Reserve Chairman Alan Greenspan oversaw, enabled and approved of, a major transition in the US economy. His infamous “Greenspan-put” in which his actions at the central bank would be driven, if not dictated,...

Read More »

Revolutionary Guards: The Way of the Iranian Future

Iranian elections have supposedly put a very nice ‘moderate’ spin on Iranian politics in parliamentary ranks, and more importantly, Assembly of Experts composition. While it would be churlish to deny, it represents a significant step forward for Pres...

Read More »

Increasing Price Inflation is Not a Sign of Healthy Recovery, but the Last Stage Before Recession

In a recent article by Kessler Companies (hat tip Zerohedge) they correctly point out that inflation, as measured by the consumer price index, have a tendency to accelerate as the US economy moves into a recession. Contrary to popular belief, the beg...

Read More »

Can Maduro Mayhem Last to 2017

Things are turning increasingly ugly in Venezuela between President Maduro and the opposition MUD. The core political problem after December 2015 elections is the PSUV are now using the courts to neuter any opposition voices that formally hold a legi...

Read More »

How Italy will fail and drag down the European Project

Italy is big enough to matter (it is the eight largest economy on the planet), but so uneventful that most does not pay any attention to what is going on there. We contend that Italy will, during the next year or two, be on everyone’s radar screen as it has the potential to derail the European project for real.

Read More »