patrick.net

HARM,
I agree with you on this. There are many forces aligned against a BB inflation fighting/strong dollar stance. However, I'd be extremely interested in knowing how, if at all, the NAR/Corporate America and the like would be able to directly influence BB. Basically, I'm asking how truly independent is the Fed chairman? On the one hand, he can be fired relatively easily, it seems. And look at the (mostly Republican, ironically) pro-loose money types in the Senate banking committee, who have a large impact on who gets to be on the Fed board. On the other hand, BB has his own legacy to protect, and if he has any cajones, he wouldn't want to be remembered as the guy who let the inflation cat out of the bag under his watch. All very fascinating, imo.

Skibum,

I‘m not suggesting the ARM crowd is driving it. I'm suggesting that they're screwed.

I hope it's a coordinated effort by the world CBs to restrain the global housing bubble, but that's probably crazy-think.

FRIFY,
The world CB's may not be be targeting housing bubble per se, but it seems very plausible that they are coordinating an effort to terminate the credit bubble.

New thread: "Authorities Cannot Shut Down ‘Fake Appraiser Operations’ in Chicago"

HARM,

I hear ya' with my BAD ear! The interest groups with a stake in this are mind boggling. What I should have said was BB seems to be finding some form of "inner guidance" and the conviction to follow it (to the degree that he can).

JH,

The Economist is very bullish on Germany's potential and strength, but very critical of its structural deficiencies and unwillingness to deal with them.

They just had an article about Merkel giving in on tax increases, and how Germany is going to raise taxes at just the point when consumer confidence was starting to show some recovery.

"Real" unemployment in the US is probably about as understated as it is in Germany because they use a very similar methodology. If anything, most Western European nations understate unemployment even more because of work-week limitations that apply to a much larger public sector employee base.

Germany is linked intrinsically to the US because we are the primary consumers of their export trade. This is whey further EUR/USD appreciation poses a very serious threat to stability.

Unemployment is probably the ONLY thing that matters from a practical, political reality viewpoint. People will generally endure a lot of crap up to the point where they have nothing to do with their days. At that point they find something else to do with their days, like working hard to change the government that cost them their job.

ITS A TRAP!

FRIFY hunts desperately for CB/Death Star analogy joke and finds nothing but used kleenix and costume jewerly...

No, BB won't be Volcker, and that's what I am betting on (god helps my portfolio if he turns out to be a Volcker).

The market is now fully priced in for the June 25-50bps raise. If the raise is 25 bps, the market will already be in a rejoice mode. Gold has held up quite well, still up from the beginning of the year under such distressing news (for gold), and significantly up from last year. Oil holding up nicely and we still have two critical points to pass, the hurricane season, and the winter (if it turns out to be normal rather than warmer than usual like last year, if it turns out to be colder, pay day for energy investors). US needs to raise to at least 8% at this point to break gold and oil. But US economy will already be in shambles if we go near 6%.

IMF already came out to say that Japan should rethink about stopping its ZIRP so fast, ECB is coming out to say they don't like Euro going above 1.3 (competitive currency devaluation anyone?), and BB will have no choice but to pause beyond June.

If things continue to get ugly, I predict no rate raise in June. Then gold and oil will be happily back on the rise again.

JH,

The government costs jobs because of what is called structural unemployment. Purely speaking, every single labor law and every single government job creates a degree of structural unemployment.

Much of this is good and necessary. We need to employ people to run the government. We need labor laws to keep from returning to the early Industrial era.

But it comes at the cost of labor flexibility. There is a balance; a trade-off. Most Western European countries, especially Germany, have traded a lot more "free market" caused unemployment for structural unemployment. This keeps people happier for a long time, but causes exaggerated economic strife during times of painful restructuring. So they suffer a lot of pain every few decades, we suffer constant pain but at a lower level.

The US has much less real unemployment than Germany. Their counter would be that the US has more underemployment, and that this is not any better. I don't have an opinion other than pointing to the US' dramatically more flexible labor, business, and market environment. It is this which will probably save us from the coming demographic crunch (by save us I mean the US won't fundamentally be changed politically by it), whereas Germany et. al. will likely be barely recognizable after they swallow the demographic pill -- probably a function of poorly planned, unwanted but necessary immigration. This is already ripping parts of France apart.

As to my politics: I am "into" politics the same way Teddy Roosevelt was.

This is already ripping parts of France apart.

France is always being ripped apart, it's what they do best. They love it.

DS

The French are a paradox unto themselves.