The Mess That Greenspan Made - Part 415

Papandreou Out, Papademos in

Things are happening fast over in Europe as the G20 Meeting gets underway, Greek Prime Minister George Papandreou resigning just a short time ago, likely to be replaced by former ECB vice president and Bank of Greece Governor Lucas Papademos.

Here’s one of the key factors that drove that decision – some stern words from French President Nicolas Sarkozy and German Chancellor Angela Merkel about withholding future bailout money until the Greeks decide what they want to do.

The Telegraph has live coverage of the latest developments and you can even leave a comment, that is, if you don’t think it might get lost amongst the 4000+ other comments.

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Thursday Morning Links

Euro Crisis Shifts Mood for G-20 – NY Times
Euro’s Leaders Question Greek Membership – Bloomberg
Merkel and Sarkozy Halt Payments to Athens – Spiegel
Greek government on brink of collapse – Guardian
Bernanke Gives Impetus to New Stimulus – Bloomberg
A Few Bright Spots Amid U.S. Supercommittee’s Superdivide – Bloomberg
House Republicans make pitch to debt ‘supercommittee’ – Washington Post
Nonpartisan group offers US political alternative – Reuters
O.W.S. stages walk-out of Harvard econ class – CNN/Money
Bernanke to Occupy Wall Street: ‘I get it’ – LA Times
Average student loan debt tops $25,000 – CNN/Money
Bad Moon Rising – The Burning Platform

Oil near $91 amid fears Greece could leave euro – AP
Gold Higher On More Safe-Haven Demand, Weak Dollar – Kitco
Citigroup: “Bear Market Rally Is Behind Us” – Zero Hedge
Comparison of DJIA, 2007/08 vs. Present – Peter Brandt
The questions resource investors should be asking – Mineweb
October Surprise: Can Gold Be The Panama Canal Treaty Of 2012? – Forbes
Gold, silver, copper, and oil price technical outlook – StockHouse
Memo to David Einhorn re: Gold Miner Suckitude – Reformed Broker
The Politics of Gold Investment – Lew Rockwell
Gold Stocks – aucontrarian

Fed sees high unemployment for years – Washington Post
Nearly Half Of Oldest Unemployed Jobless For Over A Year – HuffPost
Could Japan’s economic malaise strike here in U.S.? – USA Today
China refuses to commit to EFSF amid Greek concerns – BBC
Greek Exit From Euro Zone Just a ‘Matter of Time’ – Spiegel
A Gravity Test for the Euro – Rogoff, Project Syndicate
The Man Who Saw Through the Euro – Cassidy, New Yorker
Bloomberg and Koch Deeply Split Over Blame on Fiscal Ills – NY Times
36% of O.C. listings are distressed homes – O.C. Register
That New Renter? Probably a Single Mom – WSJ
Ron Paul: Fed’s Still in QE – CNBC
Fed to Savers: No Help Coming – WSJ


Magic Sauce, Magic Sketching

What is it about fast sketching that makes it impossible to look away? The mesmerizing speed? Not wanting to miss something? Here’s one from the Kauffman Foundation about business start ups and how they are a key element of a growing economy.

I wonder how long it takes to make one of these. Obviously, things are sped up, but it probably helps if you can draw really fast to begin with…

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Ben Bernanke’s Advice to Savers

With the possible exception of a dissenting vote by Chicago Fed President Charles Evans in today’s decision by the policy making committee of the central bank to do nothing (Evans apparently wanted more money printing sooner rather than later), there were no real surprises from  the Federal Reserve today – freakishly low interest rates through at least mid-2013 are still on tap, Operation Twist is ongoing, recent economic data showed modest improvement but forecasts were revised downward, and all policy tools remain at the ready.

The press conference following the policy meeting was similarly uneventful as a number of journalists asked about the next round of money printing to buy mortgage backed securities, currently believed to be the preferred option for QE3 after a recent round of speeches by the board.

When asked directly, Chairman Ben Bernanke noted with a little twinkle in his eye that the Fed’s printing presses could indeed be summoned to action if the need arises.

Aside from saying about six or eight times how good a job the central bank is doing in keeping inflation at just two percent (despite the official government data putting it at a three-year high of 3.9 percent just last month), about the only surprise came when the Fed chief  was asked what advice he would offer to savers looking for a decent return on their fixed income investments who are being punished by his freakishly low rates.

Bernanke commented:

We are quite aware that very low interest rates, particularly for a protracted period, do have costs for a lot of people. They have costs for savers … The response is there is a greater good here which is the health and recovery of the U.S. economy and for that purpose we’ve been keeping monetary policy accommodative … After all, savers are not going to get very good returns in an economy which is in a deep recession. Ultimately, if you want to earn money on your investments, you have to invest in an economy that is growing.

Tell that to some 75-year old with $50,000 in the bank who, up until Bernanke became Fed Chairman, could at least count on this tidy little sum to generate a few thousand dollars a year in risk-free returns to help pay the bills.

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