talkpolitics | Entries tagged with finance

"The validity of the public debt of the United States...shall not be questioned." --Fourteenth Amendment

The obvious question here is why didn't they do this the last two years when they had control of congress and the White House? Dems just passed a spending bill a few weeks ago without increasing the debt ceiling to allow debt to pay for it. Normally you could just spend the revenue coming in to pay for it, but Dems passed a couple trillion in new spending this FY, so they already spent the record revenue coming in. They also knew about the debt ceiling for even longer than that since they voted to suspend it last year, and were around when it was raised a decade ago. What did they do last year besides increase the debt to 10 trillion over the previous ceiling?

This would of course be disastrous. The US is already paying 500bn a year just to service the existing debt. Removing the limit altogether would remove one ability to limit excessive spending, which would further increase the debt leading to further wasted interest payment and more fiscal crises, and slow the economy. Thoughts?

Democrats push to eliminate the debt ceiling, allow unlimited government borrowing

abomvubuso

For more than a decade, the central banks have funnelled trillions of dollars/euro/lira/yen etc almost without control into economies just to keep them afloat. The process began with the global financial crisis from the beginning of the first decade of the century and then continued and then only deepened due to the Covid pandemic. The Fed, the European Central Bank, the Bank of England, the Central Bank of Japan, the Swiss Central Bank, and dozens of smaller institutions generously bought bonds and shares and issued loans to commercial banks at zero or even negative interest rates. Sound familiar?

Some analysts warned that this process could not continue indefinitely and if not stopped in time, too many imbalances would accumulate in the global economy and a crisis would follow, making the Great Depression pale in comparison. Others, including representatives of the same banking institutions, never stopped playing this down, saying the situation was under control and the economy would be gradually guided to a soft landing mode. But as it happened, wishful thinking is one thing, and reality is quite another.

( Read more... )

fridi

Hey everyone debt and deficits matter again to the GOP.

Celebrate goood times c'mon!

Democrats push to eliminate the debt ceiling, allow unlimited government borrowing

That said, the obvious question here is why didn't they do this the last two years when they had control of Congress and the White House? Dems just passed a spending bill a few weeks ago without increasing the debt ceiling to allow debt to pay for it. Normally you could just spend the revenue coming in to pay for it, but Dems passed a couple trillion in new spending this FY, so they already spent the record revenue coming in. They also knew about the debt ceiling for even longer than that since they voted to suspend it last year, and were around when it was raised a decade ago. What did they do last year besides increase the debt to 10 trillion over the previous ceiling?

This would of course be disastrous. The US is already paying 500bn a year just to service the existing debt. Removing the limit altogether would remove one ability to limit excessive spending, which would further increase the debt, leading to further wasted interest payment and more fiscal crisies, and slow the economy.

fridi

Looks like we are going to see how stiff McCarthy's and the house republicans collective spines are sooner than anticipated.

In the article the WH says flatly that they will not negotiate, that this should just be done no questions asked.

Let us hope McCarthy does not agree.

https://edition.cnn.com/2023/01/13/politics/debt-limit-janet-yellen-letter-to-kevin-mccarthy/index.html

They are dishonest and anti-American enough to blow up the economy just to say they've "owned the libs". This, after decades of tax cuts that blow up the deficit followed by blaming the Democrats.

While we're at it... Why did the Treasury wait until the 11th hour to say something?

abomvubuso

Rishi Sunak has already assumed office as the UK Prime Minister. But that doesn't mean the financial and economic problems are solved. A hole of tens of billions of pounds is gaping in Britain's financial plan, to start with.

Britain's finance minister, Jeremy Hunt, actually wanted to present the new government's financial plans as early as last week. But the stock markets have calmed down a bit since then, giving the cabinet the opportunity to publish those plans a little later - possibly on November 17th. Then the current forecasts for economic development will be available, and this will strengthen the foundations of all the financial planning, at least that's what the Ministry of Finance is hoping.

( Read more... )

abomvubuso

Analysts describe 2022 as "the worst year in the history of the euro". However, the European currency has been in decline for the past two decades. Its share in the global official reserves reached 20.6% at the end of 2021, down from around 25% in 2003.

The euro has lost 16% of its value against the dollar in the past year and is trading at its lowest level since December 2002. The EU currency is currently 20% cheaper than its average since 1999.

( cut )

asthfghl

Greetings, my fellow ~~greedy bastards~~ sensible folk who care so much about ~~their own pocket~~ the world's well-being! From $25,000 last year to a fantastic $48,000 as of now! This is what the price curve of the world's largest cryptocurrency, the bitcoin, has looked like in recent days.

The crazy world of global finance has entered yet another debt spiral, probably the biggest one in decades, and investors are trying to hedge their options. Turned out all those early enthusiasts, who for years had predicted that the bitcoin would become a safe haven for the stumbling ship of the financial world, have actually come out right. The problems as they were 3 or 7 years ago are still here of course, but today's picture is rather different for us to just keep ignoring the new big player at the global financial scene.

We live in world where the 3,000-year history of gold as a bulwark against inflation and the often economically inexplicable actions of governments is being challenged, to put it mildly. Financial security seems to have a new name. Or does it!?

( So how did we get here? )

tcpip

Macroeconomics is both a study in exploration and of action of the economy as a whole. It is exploratory, insofar as different explanations are provided for macroeconomic effects, such as economic growth, unemployment, inflation, money supply, changes in investment and consumption, and the economic behaviour between different economies. With this information, macroeconomists can make recommendations to government concerning how to best use the economic tools to utilise to ensure growth with stability, and issue predictions on what effects alternative policies will generate. Whilst the following provides a critical summary of mainstream macroeconomic thought, it is also motivated towards those policies which promote sustainable growth, provide full employment, and control inflation. In doing so it reviews short and long-run macroeconomics, especially accounting for technology, the effects of an open economy, investment and consumption, and the use of monetary and fiscal policies.

Modern Monetary Theory (MMT) is an unorthodox macroeconomic theory. The fact that it is a macroeconomic theory at all is beneficial, as there is still far too much attention paid to treating an economy as a large-scale version of microeconomic endeavours. Of course, there is an intuition in thinking of economics this way because it individual perception operates at this scale. It is, however, quite incorrect. Even taking mainstream macroeconomic theory into consideration, however, MMT raises a couple of interesting challenges.

( The Dismal Science )

Thus, at this stage of its theoretical development, one can only offer "two cheers" for MMT, and one set of reservations. Insofar they have put investment-orientated macroeconomic policy and the objective of full employment back into public consideration, the advocates of MMT certainly deserve accolades. Likewise, their interpretation that legal-tender money is a public good that can be expanded and contracted as required is certainly a realistic appraisal of fiat-currency a matter, as the advocates observe, is not fully understood by orthodox economics. Nevertheless, a real challenge is faced with the association of currency value with real value, the ability to allocate resources in an optimal manner, and the reaction of financial markets to such a policy. These are of course a challenge to any macroeconomic policy. But they become increasingly difficult with MMT because it represents such a change from mainstream macroeconomics. Whilst the mainstream does have many (and sometimes quite similar) flaws as MMT, bold conjectures require strong evidence. At this point in time, MMT provides most of the evidence required for some advocacy, but not total advocacy. Nevertheless, watch this space. If it succeeds, it will a major revolution in the science of macroeconomics.

abomvubuso

Not so long ago, I came across a headline saying the IMF was warning against cutting public spending and loans. The report was kind of striking, in that it seemed to be a marker of a major shift of paradigm. I mean, after half a century of advocating for fiscal prudence and austerity, IMF was now telling regulators in the developed countries they shouldn't be too worried about accruing large public debt at a time of Covid-19 woes. Seems like Keynes is rearing his moustache from behind the corner of Obscurity Avenue again, eh?

But surely, there must be much more to IMF's prescription than meets the eye. Essentially, they're advising the developed economies to give priority to recovery growth after the pandemic-induced deflation shock. In such a situation, it does make sense to support economic recovery, yes. The likes of Britain may've learned this lesson the hard way, after years spent in the austerity wilderness that Cameron had brought them into after the 2008 downturn. In fact, let me particularly use the UK as an example here.

( Read more... )

asthfghl

The Corona-crisis has faced the EU with dramatic choices. Until now, whenever a crisis struck the Europeans had a rather lengthy time frame to come up with solutions, things are different now. Right from day one of the pandemic, all eyes were fixed on Brussels. Sure, Brussels has rather limited prerogatives and financial resources for such situations. But still, compared to previous crises, the institutional response from the European Commission and European Central Bank had to be swift - and they sure were. Albeit a bit insufficient, at least in the initial stages of the Corona-induced economic downturn.

In the first weeks, South Europe made it clear that a repetition of the approach to the Eurozone crisis would be unacceptable. Confidence in the EU basically went through the floor there within days. France joined the warnings, clearly outlining the changed political dynamic. Germany took a waiting stance, but the deeper the crisis went, the more they realized urgent and resolute actions were needed. Merkel might be all things, but she does have the nose for the right politics, so she decided the whole structure wouldn't hold politically.

In fact, the EU is in a situation of a severe need for a new political agreement. The last decade has been dominated by crisis management, and the globalized world is going into a period of deep turmoil and major shifts. The EU would hardly survive in these circumstances if it keeps the old ways. Thus, the political clash around the new anti-crisis EU budget turned out to be a battle for the future. Europe's future.

( Read more... )

luzribeiro

Richard Branson warns Virgin Atlantic will collapse without J500m taxpayer-funded bailout - but offers own $100m private Caribbean island Necker as collateral

Crazy guy. He's making millions from Virgin media, and it's absolutely crazy for a company like that not to have money in the bank for eventualities like this.

He can use his own money, either put his space program on hold or indeed sell his Island. Strange with these billionaires and bankers, etc. When times are good, they are great. However, in a downturn such as now, they want a bailout from us, the taxpayer. I was taught to put money away for a rainy day, as it were. Don't corporations, etc do the same, instead of giving it all to the shareholders and handing out huge bonuses to their CEOs?

( Read more... )

kiaa

Germany lines up $600 billion virus aid as EU backs stimulus

They do it because they can. And some are unhappy because they can't afford to do it themselves. Oh, and because EU state aid rules suddenly seem not to apply for Germany.* You know, because it's... well, GERMANY.

If anything, this vindicates Germany’s policy of balanced budgets. If it had run permanent Italian-style deficits in the vain hope of a trickle-down effect (something which has been discredited elsewhere in economics) to the Mediterranean, it would not be able to raise the sorts of funds it now needs without sending alarm signals through bond and currency markets.

Strong tax surpluses for years as well. Not like the deficit fueled Tory nonsense over here.

* Actually I'm just trolling you. EU state aid rules explicitly allow state aid for countering serious disturbances to the economy, Article 107, paragraph 3 of the Treaty on the Functioning of the EU. What it doesn't allow is to throw taxpayer money at the failing businesses of buddies of the government, which is why the UK for example refuses to abide by them anymore.

nairiporter

In 1971 Claus Schwab, a Swiss guy of German origin who had 5 PhDs in engineering and economics, hosted a conference at the small Swiss resort of Davos. The event aimed to make the European businesses think about the added value they were creating as a whole, not just about the bottom-line, the shareholders' profit. The event became annual and was renamed to The World Economic Forum, becoming one of the most important events in the global political and business circles. Nowadays, these summits attract more than 3000 politicians, businesspeople, people of art and intellectuals, who present their vision of the world's development, and numerous important subjects of the day are on the agenda, like the risks of globalisation, the Fourth industrial revolution, as well as innovation and technologies that could transform business.

The WEF has established itself as something of a platform for public and private discourse and cooperation throughout the years. A number of global initiatives have been started at this forum, among them the Global Alliance of Vaccines and Imunisation, and the foundations of what later became the Paris climate accords was set up there.

( Read more... )

abomvubuso

The world economic forum advertises carpets made from used fish nets, wall paint made of seaweed, and 90% seasonal food. The world's largest summit of the political and business elites never looked greener and more sustainable. Right?

Instead of heavy laptop cases, the top managers and moguls arriving for the forum are now carrying light backpacks, paper notepads, pencils, and some Swiss chocolate. But not too much chocolate. Especially compared to the 6-digit participation fees for the summit.

( Read more... )

abomvubuso

It looked as if the markets had already grown accustomed to those anti-Russia sanctions and they had started ignoring the whole exercise. Just because the punitive measures may've lost their sting somewhat, or could it be that the Russian economy has somehow taught itself to live with them for the last few years since the Crimean annexation? Well, come April 6, all this sense of untouchableness evaporated - after the umpteenth batch of sanctions, that is. This time the effect was as swift as it was painful:

( Read more... )

luzribeiro

Petro cryptocurrency BANNED in United States as Venezuela claims Trump is RUNNING SCARED

Just a day before March 20, when the new Venezuelan crypto-currency Petro started mass circulation (launched a month earlier with great interest from the foreign investors), US president Donald Trump announced a ban on petro transactions. Then he signed a bill banning US citizens from operating with any digital currencies or accounts related to the Venezuelan goernment. Trump also instructed secretary of the economy Mnuchin to prepare the mechanisms for carrying out the ban. Furthermore, the list of Venezuelan officials who are under US sanctions was expanded.

Doubtless, the US sanctions policy is an outright attempt to further suffocate the Venezuelan economy and pave the ground to a regime change in Caracas. Hugo Chavez started the Left Wave in Latin America and was a big thorn in America's ass ever since he launched the peaceful Bolivarist Revolution. The US efforts to reverse that course peaked in 2002 when they attempted to stage a coup against Chavez, and they haven't stopped ever since. The US methods are well-known: constantly isolating and undermining the Venezuelan economy, stirring discontent among the population, and looking for ways to cause a political change in Venezuela, a sovereign country. That's been much in line with the US pattern of removing "unfriendly" governments throughout Latin America and elsewhere, at times violently.

Keep that in mind when you're thinking about the Russian meddling in US politics.

( Read more... )

abomvubuso

How much good is too good? That's the question that was floating around Swiss resort Davos during this year's world economic forum. After all, the conditions for popping the champagne are all there: the concerns about the rise of populism have subsided, the financial markets are soaring, even Trump can't spoil the party. Right? As the UBS chairman Axel Weber concluded, things are looking "tood good to be true".

Sure, there are quite a few reasons for enthusiasm right now. The IMF reports that the world economy is enjoying its wider and most synchronised growth in 8 years. All major players, the US, Europe (sans sinking UK), China and India are powering through.

Now, there are also those pessimistic prophets who are all too eager to rain on the party, predicting that the seeds of the next tremor have already been sown.

( Read more... )

abomvubuso

First, I'mma just let this in here:

Venezuela to launch cryptocurrency to combat US 'blockade', Maduro says

The obsession for cryptocurrencies has long ceased being the domain of anarchistic conspiracy theorists alone - now it seems to have reached governments. Surprisingly or not, for now the leader in that respect is not some pioneer in electronic government like Estonia, but Russia.

It's not surprising that governments are interested in this. Cryptocurrencies, albeit unregulated, are becoming ever more wide-spread, and an adequate reaction is required. Some countries like the US still prefer to wait and watch. In turn, the EU reject cryptocurrencies as unsustainable and unimportant. As of now, a bitcoin is traded for USA 10K+, while it used to be just 2K at the same time last year. But the overall market capitalisation of all cryptocurrencies is well over 300 bn, which roughly equals the five-month output of the European central bank.

Russia, however, wants to capitalise on everyone else's hesitation. They've made their reasons very clear: the Russian minister of communications Nikolay Nikiforov recently stated that they're creating the crypto-rouble for a simple reason. If they don't do it first, in a couple of months their Eurasian neighbours would beat them to it.

( Read more... )

Credits & Style Info

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Post-Truth Politics Revisited

Dailyquote:

"The NATO charter clearly says that any attack on a NATO member shall be treated, by all members, as an attack against all. So that means that, if we attack Greenland, we'll be obligated to go to war against ... ourselves! Gee, that's scary. You really don't want to go to war with the United States. They're insane!"

(edelsont)

May 2026

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Talk politics.

A place to discuss politics without egomaniacal mods.

Entries tagged with finance

Debt ceiling again

The boomerang of cheap money is coming back

Not sure how this is a good idea

Not this debt ceiling shite again

Concerns for Britain's money

Is the Euro dying?

The Bitcoin mania: phase two

Two Cheers for Modern Monetary Theory

Keynes is back

Where to, Europe?

Another one that's too big to fail?

The German fiat bazooka

Is Davos any use any more?

A matter of priorities

The real way to hit Russia

Fear of the petro

Too good to last long

This sudden affection for cryptocurrencies

Credits & Style Info

Links

May 2026

Summary