China’s trade surplus declined in the first quarter, and during March the country ran a deficit of $7.2 billion, its first monthly trade deficit since 2004. Contrary to some analyses, this is not proof that the economy has made significant progress toward rebalancing or a reason for the United States to back away from pushing China on yuan appreciation.
The short-run decline in the trade balance was driven by seasonal effects, a slowdown in China’s export markets, and a surge in raw materials imports - none of which indicate that China is making a transition to an economy driven by greater consumer demand.
....the increase in imports reflects an intensification of investment-driven growth and demand for commodities and materials, not a move to greater consumer demand.[1] Fixed asset investment grew 25.6% in the first quarter of 2010 compared to the first quarter of 2009. Partly as a result, China imported $27.6 billion more commodities and materials in March 2010 than in March 2009, an increase of 77.1% YOY......
Excessive bank lending since the beginning of 2009 incentivized stockpiling of commodities and materials and the development of spare capacity. A tightening cycle could force enterprises in China to reduce imports and rely on existing commodity stockpiles and excess capacity to increase exports, leading to a rise in the trade surplus.
LEH Redux? MacroMan
Greece - GIIPS - Eurozone - Big Problem. Rebecca Wilder.
The original bailout will likely be offered to satisfy Greece’s near-term obligations. However, in the meantime the probability that the liquidity crisis spreads across the GIIPS (Greece, Italy, Ireland, Portugal, and Spain) - especially Portugal with a 2009 current account deficit equal to 10.3% of GDP, making it shockingly susceptible to capital outflows - is rising.
We’re in crisis mode – the calm before the storm. I see the Eurozone disaster happening in three waves:
First, there is a liquidity crisis in Greece (already underway).
Second, it turns into a full-fledged financial crisis for the GIIPS. The capital account drops precipitously with investor confidence in GIIPS markets, leaving the very vulnerable countries, like Portugal and Spain with current accounts very much in the red, seriously short of cash.
What Germany wants out of Greece (and any bailout thereafter) is the equivalent of an economic anaconda. It will force Greece to meet the limits of the EMU Stability and Growth Pact (3% of GDP) by some period, let’s say 2012.
Of course that cannot happen without an epic surge in exports. Here’s the death spiral: sharp austerity measures translate into unemployment, economic contraction, deflation, and yes, higher deficits. There’s just no way out of it......So we get to the final stage, GIIPS go depressionary, and the economic contagion spreads across the Eurozone, hitting yes, Germany.
Facing the Threat from the Far Right, Noam Chomsky Says He 'Has Never Seen Anything Like This'. Chris Hedges, TruthDig.
as our nation’s most prescient critic of unregulated capitalism, globalization and the poison of empire, he enters his 81st year warning us that we have little time left to save our anemic democracy. “It is very similar to late Weimar Germany,” Chomsky told me when I called him at his office in Cambridge, Mass. “The parallels are striking. There was also tremendous disillusionment with the parliamentary system. The most striking fact about Weimar was not that the Nazis managed to destroy the Social Democrats and the Communists but that the traditional parties, the Conservative and Liberal parties, were hated and disappeared. It left a vacuum which the Nazis very cleverly and intelligently managed to take over.”.... "I don’t think all this is very far away. If the polls are accurate it is not the Republicans but the right-wing Republicans, the crazed Republicans, who will sweep the next election.”.....
He reminds us that genuine intellectual inquiry is always subversive. It challenges cultural and political assumptions. It critiques structures. It is relentlessly self-critical. It implodes the self-indulgent myths and stereotypes we use to elevate ourselves and ignore our complicity in acts of violence and oppression. And it makes the powerful, as well as their liberal apologists, deeply uncomfortable.
Chomsky reserves his fiercest venom for the liberal elite in the press, the universities and the political system who serve as a smoke screen for the cruelty of unchecked capitalism and imperial war. He exposes their moral and intellectual posturing as a fraud...“I try to encourage people to think for themselves, to question standard assumptions,” Chomsky said when asked about his goals. “Don’t take assumptions for granted. Begin by taking a skeptical attitude toward anything that is conventional wisdom. Make it justify itself. It usually can’t. Be willing to ask questions about what is taken for granted. Try to think things through for yourself. There is plenty of information. You have got to learn how to judge, evaluate and compare it with other things. You have to take some things on trust or you can’t survive. But if there is something significant and important don’t take it on trust."
I don't know who Alex Carey is, but he had this great quote:
The 20th century has been characterized by three developments of great political importance: The growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy.which I found in Jesse's column The Economic Policy Error Behind the Stock Market Rally and the Next Phase of the Financial Crisis
just a brief excerpt:
The lack of productive investment and genuine stimulus for the real economy seen so far in the enormous subsidies put forward is appalling. Bernanke and his colleagues Larry Summers and Tim Geithner would have us believe that they had no choice. But informed and experienced commentators such as William K. Black have told us how they have misrepresented their choices.
Their current policies seem to lead the US into a 'zombie economy' at best, in which the Banks are doing well, but almost everyone else suffers from stagflation, particularly the lower and middle classes who obtain their income from productive labor. At worst, the bubble bursts again, and there is another, more furious, leg down, with greater and more lasting damage done to the ordinary people.So what would have worked? The Fed and Treasury could have backstopped the public instead of the Wall Street banks.
onto something totally different:
Richard Dawkins answers the question: "Should the pope resign?"
No. As the College of Cardinals must have recognized when they elected him, he is perfectly - ideally - qualified to lead the Roman Catholic Church. A leering old villain in a frock, who spent decades conspiring behind closed doors for the position he now holds; a man who believes he is infallible and acts the part; a man whose preaching of scientific falsehood is responsible for the deaths of countless AIDS victims in Africa; a man whose first instinct when his priests are caught with their pants down is to cover up the scandal and damn the young victims to silence: in short, exactly the right man for the job. He should not resign, moreover, because he is perfectly positioned to accelerate the downfall of the evil, corrupt organization whose character he fits like a glove, and of which he is the absolute and historically appropriate monarch.
No, Pope Ratzinger should not resign. He should remain in charge of the whole rotten edifice - the whole profiteering, woman-fearing, guilt-gorging, truth-hating, child-raping institution - while it tumbles, amid a stench of incense and a rain of tourist-kitsch sacred hearts and preposterously crowned virgins, about his ears.
W.B. Yeats:
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
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