What if things were so easy, lower interest rates, fix the unemployment, and voilá, the Economy is fixed. Some thoughts for those who still think that lower interest rates will lead to lower unemployment. By World Complex.
Observing the change is easy (if we disregard Keynesian axioms). Deducing the nature of the change is more difficult.
One observation that leaps out at me is this. Real interest rates fell to an extreme low in August 2005, followed by an extreme high in October 2006. They fill to an extreme low in June 2008, and rose to an extreme high in November 2008. In the first case, there were no dire effects on unemployment. But the second time around, we got a bifurcation.
Is the answer here?
Pythagorean theorem: 24 words
Lord’s prayer: 66 words
Ten Commandments: 179 words
US Declaration of Independence : 1,300 words
EU regulations on the sale of cabbage: 26,911 words
We clearly see what kind of problems EU is facing. Who is in charge, who is to blame, and most important, does anybody know the answers to the above questions? The Economist reports on The Euro Crisis.
For the very bored, or interested, Sunday reader, here is the third and the fourth video of the great Meltdown series by Al Jazeera. After having watched the entire series we can’t but think of Einstein’s saying. “There are only two things indefinite, the universe, and the stupidity of mankind”. Interesting times ahead, but be sure to manage the risk accordingly. (Photo AFP)
The third episode of Meltdown looks at how the victims of the 2008 financial crash fight back. A protesting singer in Iceland brings down the government; in France a union leader oversees the kidnapping of his bosses; and thousands of families are made homeless in California. Must see videos, continue.
Quick recap of the Q3 performance. As we see it was a very bad quarter with much damage done to all indices. Let’s see what Index will be the first to revisit those March 09 lows, China, Nikkei or why not the CAC? By DShort;
The 3rd quarter saw wretched performances in all of the world markets in this series. The best quarterly performer, the Nikkei 225, lost 10.3% of its value, followed by the SENSEX, which was down 11%. At the other extreme the DAX, CAC 40 and Hang Seng all lost about 25% of their value. The middle ground was occupied by the Shanghai, FTSE and S&P 500, which lost 14%, 14.4% and 15.9% respectively. Let’s hope next month sees some improvement. Certainly a bounce is due. But the ongoing stresses in Euro land, the nasty bear market in China, and ECRI recession call in the U.S. suggest a cautious outlook.
We presented The Men Who Crashed the World last Sunday. The Meltdown series continues with more must see videos from Al Jazeera. After Paulson sold his shares at the Top, he saved the World with the taxpayer’s money.
Lehman’s failure had repercussions around the world. Millions of people lost their life savings. Pension plans were decimated. Christine Lagarde, the French finance minister at the time and a close friend of Paulson’s, publicly described Paulson’s decision on Lehman “horrendous”. Markets from London and Paris to Shanghai fell. An epidemic of fear caused the world’s major banks to stop lending, ending the year in protests and industrial action. Below is another Sunday video, ”A Global Financial Tsunami”.
Updates of some significant Economic vs Markets Charts. All in all, the credit markets are pricing in a somewhat more “realistic” picture of the Economy, where credit spreads etc all imply a significantly lower equities prices. While many of the European and Asian (check Hang Seng) indices have collapsed during the last months, the US markets have held up “stubbornly high”. The SPX index has been forming a rather big formation suggesting a significant sell off, if we are to break down, check here. It almost looks like somebody has been supporting the SPX chart, but this one is running out of bullets…All charts by Macro Story.
Copper vs SPX. Last time Copper traded here, SPX was close 1000. See our post earlier this week, Dr Copper and SPX.
For all charts continue below.