Bill Gates recently spent some time in Spain. He asked some relevant questions…From El Pais;
On the country’s current economic problems and high unemployment rate, the businessman and philanthropist was less kind. “It’s strange in that wages have not fallen. If you have a factory that produces coal and no one is buying your coal, then it’s obvious that the price of that coal is too high and you have to bring it down. You have all that labor available, but there is something stopping that equilibrating and other countries moving in when you have all these people willing to work. That level of unemployment tells us that there are some rigidities operating in the labor market.”
(Full interview here).
The Greek crisis is being used to find out how far finance can drive down wages and privatize the public sector.
We should be learning what the European bankers are learning, which is that a great experiment is being conducted. For the last five years in Latvia, the neoliberals have lowered wages by about thirty percent. The basic premise of today’s model builders is: you don’t know how far you can lower wages and pensions until people begin to press back. Well, in Latvia they still haven’t begun to press back when they’ve lowered by thirty percent. Now they’re moving towards Greece on the way to Spain and Portugal and Italy, and they’re trying to figure out how much can wages be lowered, how much can an economy be drained until there is unrelenting pressure from the afflicted population.
Video with Michael Hudson below.
In Tokyo 1994, Makishi Satou paid a whopping 217 Japanese Yen for a delicious McDonalds hamburger. A very long 18 years later, Mr. Satou is still enjoying hamburgers, yet he is only paying 216 Japanese Yen for this very same delicacy.
Neflix, one of the truly “what goes up, must come down” stories of Wall Street, has made people both wealthy and broke.
Must read story on Netflix and Reed Hastings. By Vanity Fair.
Still bloodied by one of the worst self-inflicted corporate disasters in recent memory—last year’s $12 billion wipeout—Netflix C.E.O. Reed Hastings remains adamant about his goal: moving from red envelopes to streaming video. With Hollywood hailing his vision and needing his business, Netflix has started to rebound. But not everyone is sold.
We have to admit, all the Greek news are exhausting us. While reading all the flashes, sometimes one tends to forget what is actually at stake. That brings us to CDS issue. The 32 trillion Credit Default Swaps market is a beast. From Common Dreams;
In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:
Financial market cynics have assumed all along that Dodd-Frank did not end “too big to fail” but instead created a charmed circle of protected banks labeled “systemically important” that will not be allowed to fail, no matter how badly they behave.
Many European indices have reached important resistance levels. The SPX is also at resistance levels, and managed putting on a very similar formation to last time it topped out. VIX is making a higher bottom. Time for these new smart bulls to feel the heat.
Let’s see how this trades 3-5% lower….Full Chartology below.