Flailing Central Banks & Failing Economies, Rabo Exposes The Sinners & The Sinned

Authored by Michael Every via Rabobank,

Chutzpah

Many readers will be familiar with the word chutzpah but some may not. Those who think it is pronounced with a “ch” like ‘chair’ rather than a “ch” like ‘loch’ are perhaps not as well-versed as they think. It is a word perhaps best defined by anecdote rather than a dictionary.

The apocryphal classic offered by Leo Rosten is “that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.” In more contemporary terms, it has been compared to “calling up tech support to report a bug on pirated software.”

There are countless others. Indeed, we are drowning in chutzpans.

Not just the obvious figure of Donald Trump: many other world leaders are out there boldly saying one thing and doing the complete opposite and knowing nobody in the media can bother joining the dots to notice. (Because markets.)

Rather, we see Elon Musk, who has achieved everything he has –including stratospheric wealth regardless of his Twitter habits– due to the opportunities offered him by the US, including tax-payer support and US government contracts, is now suing the US government –and even USTR Lighthizer directly– in a US Court to get tariffs on China over-turned. (Which takes us to an oft-repeated broader point: ‘Workers of the world, unite!’ became ‘Workers of the world, untie!’ decades ago: capitalists –even ones needing public bailouts– happily work across all international borders, and always will. Because markets.)

In the UK, Chancellor Sunak –working under the guidance of a PM who told everyone to go to work and to the pub, to eat junk food, and to lose weight,…and then to junk going to the pub and to work from home– is cancelling his budget and thinking how to support the millions of jobs everyone always knew were going to be shed as soon as furlough schemes end next month. He is apparently going to adopt the German model of supporting firms who allow workers back part time. Bloomberg also reports the UK may carry out studies that would deliberately expose healthy people to the virus in a bid to speed up development of a vaccine. Many would say that they already were. Perhaps it’s not chutzpah that springs to mind there though: more schlemiel.

Canada’s Justin Trudeau, who is the living, breathing definition of chutzpah –except that he has not a modicum of the required twinkle in his eye that says “I can’t quite believe I am getting away with this, can you?”– is also pushing forward a massively expansionary Covid economic scheme.

In Europe, where cultural affinity with chutzpah varies from the ‘we do it and call it something else and had it before you, obviously’ of France, to the ‘but the self-serving rules we wrote say this’ of others, government spending is also going to soar further as lockdowns return tranche by tranche. The ECB will today meanwhile be carrying out another round of TLTRO’s, where it lends to banks at rates as low as -1% to try to encourage them to lend to households about to be locked down again and firms about to see the economy close again. EUR1.3 trillion was the take-up last time three months ago, but it is likely to be less this time round. This is what central banking now looks like today.

The US is probably also on the verge of another huge fiscal stimulus package; and not making many mainstream headlines yet, the Fed’s Mester was yesterday muttering about the potential for Fed ‘digital dollars’ and depositing them directly into household accounts in the face of a downturn – so crypto helicopter money. That is what central banking also now looks like.

It’s not that these steps aren’t perhaps unavoidable, or even possibly beneficial, if done right – which they never are, of course. It’s that our central banks still have the chutzpah to pretend that this bloated, creaky, groaning, blatantly self-serving edifice is called ‘capitalism’, rather than say ‘crony capitalism’ or ‘central planning without a plan’ (but, boy, do some get rich while all this lack of planning is happening!). And that we have to comment on it as if it is capitalism.

On which note –and, not wishing to be a chutzpan myself, drawing from the depths of the internet rather than any inner-tsaddik— the word chutzpah is of Hebrew, not Yiddish, origin and actually has deep religious roots. In fact, it is contended that there is an extreme version of it in the Old Testament. Specifically, Moses found it unacceptable that God should visit the sins of the father onto the children of the third and fourth generation (Numbers 14:18) and actually dares (as Schulweis puts it) to argue with God, in the name of God, and to engage God with fierce moral logic:

“Sovereign of the Universe, consider the righteousness of Abraham and the idol worship of his father Terach. Does it make moral sense to punish the child for the transgressions of the father? Sovereign of the Universe, consider the righteous deeds of King Hezekiah, who sprang from the loins of his evil father King Achaz. Does Hezekiah deserve Achaz’s punishment? Consider the nobility of King Josiah, whose father Amnon was wicked. Should Josiah inherit the punishment of Amnon?”

Incredibly, God’s divine response to Moses is to accede to and that the sins of the father shall not be visited onto their sons.

If we can talk truth to power to THAT extent and get positive results, why can’t someone show some the chutzpah to hold up a mirror to our flailing central banks and failing political-economy, and ask where the sins are and who they are being visited unto? Rather than, say, that X went up 0.01% and Y went down 0.02%?