2011 December | timiacono.com - Part 10

Monday Morning Links

Euro zone pact fails to restore confidence – Reuters
A sub-optimal solution to the Euromess – FT Alphaville
Euro zone may need another shock: S&P – Reuters
Bundesbank rejects Europe’s IMF funding ruse – Telegraph
Moody’s Warns of Downgrade for Some Euro Zone Economies – NY Times
Europe’s Fiscal Pact May Solve Next Crisis, Not This One – Bloomberg
QE might not work, BIS tells Bank of England – Telegraph
A Romance With Risk That Brought On a Panic – DealBook
No One Says Who Took $586B in Fed Swaps – Bloomberg
Public retirement ages come under greater scrutiny – AP
Q3 2011 “Flow of Funds” – Noland, Prudent Bear
Hard-Negative – Hussman Funds

Oil prices slide on fresh eurozone worries – AFP
Gold at 3-week low as crisis boosts dollar – Reuters
The Bakken Boom – A Modern Day Gold Rush – The Oil Drum
China Stocks’ Drop to 3-Year Low Is Buy Signal – Bloomberg
Fed, BoE bond buys moved markets, study finds – MarketWatch
Jim Rogers: It’s going to get worse and worse – BIME
Is gold selling and leasing by banks on the rise? – Mineweb
You Can’t Print More Gold – U.S. Global Investors
Gold Model Forecasts $4380 Gold Price – Profitimes
Gold Loses Its Shine – WSJ

Depression and Democracy – Krugman, NY Times
Online spending stays strong in early December – Reuters
Mises on Growth, Denial, and Truth in Europe – Daily Capitalist
New Measure of Global Pain from Euro-Zone Woes – WSJ
China Marks Decade in WTO Amid EU, U.S. Criticism – Bloomberg
Insight: The day Europe lost patience with Britain – Reuters
Euro lacks a government banker, not lender of last resort – FT
India’s industrial output slumps, pressures central – Reuters
No. The Bundesbank has not reached its limit – voxeu
Cities With Dangerously Falling Home Prices – Forbes
What the FOMC will (merely) discuss tomorrow – FT Alphaville
More on those secret Federal Reserve loans to banks – EconBrowser


The Best of the Bozeman Police Reports

Culled from the Police Reports page of the Bozeman Daily Chronicle come the best of the Bozeman police reports from the last week along with some items from the Sheriff’s Office. Note that a new book featuring the very best of these police reports is now available from the Chronicle for only $10 – just click on the banner below to find out how to order.

Well, last week’s disappointing collection of police reports may not have been a one-off event as the new batch doesn’t seem any better. This must be a slow time of the year for law enforcement, what with the bears tucked in for the winter, the cold weather keeping some people at home, and students at Montana State University either studying for mid-terms or focusing on the football team’s visit to Texas for the quarterfinals of the Football Championship Series (the last I checked, they were down 7 – 3 in the first quarter).

  • An officer advised two people to go home after one man did not want his friend to buy alcohol around 2 a.m. “They both agreed this was the best idea.”
  • An injured elk calf was seen off U.S. Highway 287 near mile marker 13.
  • A man dressed as a law enforcement officer pulled a woman over on Interstate 90 in late November, asked for her number and “stated he just wanted to meet her.” Deputies are investigating the incident.
  • A person on South Rouse Avenue told dispatch the captain at the Salvation Army was “rude and vulgar and not being nice to people.”
  • A disoriented bald man in his 50s kept taking off his clothes in a North Seventh Avenue casino.


Unusual Developments in Consumer Credit

From this item at Jake’s EconomPicData blog the other day comes the graphic below depicting dramatic changes in consumer credit trends over the years. Racking up revolving credit (e.g., credit cards) is not nearly as popular as it was for decades, what I’ve long called “the real Reagan Revolution” as individuals dramatically increased their use of credit cards to fuel consumption (i.e., buying things you don’t need with money you don’t have).

Taking up the slack for falling credit card balances are higher student loan balances that, already, are further separating the nation into have and have-nots (a.k.a. debt serfs) while making the whole idea of higher education less appealing when this is one the the things the country needs most to remain competitive with emerging economies in Asia.

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A Dangerous Kick of the Can in Europe?

Anyone reading the details of the agreement forged this morning at the European Union summit shouldn’t be surprised that financial markets are offering only a lukewarm response.

In addition to a “fracture” in the union as the U.K. refused to be bound by possible financial industry regulations (e.g., a transaction tax that could hurt profits at its big banks), the agreement does nothing to shore up credit markets over the near term, most analysts now pointing to the European Central Bank to fill that role despite the clear message yesterday by ECB President Mario Draghi that it had no intention of doing so.

It’s clear that the time bombs below (from this item last week) have not been defused.

The hope exists that new involvement by the International Monetary Fund might result in providing more support to wobbly credit markets where Italian and Spanish bonds continue to be  under pressure, but, Asia is still reluctant to partner with anyone in an effort to save the euro and, at this juncture, who could argue with them?

The latest headline at the Wall Street Journal reads EU Fiscal Pact Leaves ECB in Focus($) and it seems clear that markets now expect the ECB to take bolder action, despite what Draghi said yesterday. Absent that bolder action, this deal appears to be a dangerous kick of the can down the road in Europe.

Are We There Yet?

Once again, the morning news is chock full of developments in the European sovereign debt crisis that requires a little catching up on my part. So far, it looks like the French and Germans have succeeded in accomplishing a tighter fiscal union that leaves the British on the outside looking in and this interactive graphic at the BBC shows the many different paths that these latest steps might lead to.

At the BBC, you can click on the various buttons along with that question mark in the middle for details. My early take on this is that eurozone members think they’re headed to the upper right of the chart while the British may have other ideas.

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