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Stop Bashing Banks, Please

Authored by Steve H. Hanke of The Johns Hopkins University.

Since the Great Recession, politicians have obsessed over bashing banks and bankers. According to Pols of all stripes, bankers caused the 2008-09 crash and ensuing slump. To make the world safe from banks, the “all-knowing” have given us Basel III, Dodd-Frank, and a plethora of banking regulations. This has, among other things, provided Bernie Sanders and his ilk with an open field.

Analyzing the effects of bank bashing requires a model of national income determination. A monetary approach is what counts. The link between growth in the money supply, broadly determined, and nominal GDP is unambiguous and overwhelming. The accompanying chart for the G20 countries makes this clear. 

So, why has the post-crisis recovery floundered? Because the growth in broad money has remained well below its trend rate. Indeed, Divisia M4, which is reported by the Center for Financial Stability in New York, is only growing at a 4.0% year-over-year rate. Since the crisis, the policies affecting bank regulation and supervision have been massively restrictive. By failing to appreciate the monetary consequences of tighter, pro-cyclical bank regulations, the political chattering classes and their advisers have blindly declared war on bank balance sheets. In consequence, bank money, which accounts for 80% of broad money in the U.S., has contracted since the crisis (see the accompanying chart). Since bank money is the elephant in the room, even the Fed’s quantitative easing and the ensuing surge in the growth of state money has been unable to fully offset the tightness that has enveloped banks and bank money growth.

Looking at the U.S., there is a ray of hope: credit to the private sector has finally started to grow above its trend rate, and the 4.0% Divisia growth rate is higher than it was in 2014 and the first half of 2015. The accompanying chart shows where we are. The growth rate for nominal final sales to domestic purchasers, which is a good proxy for nominal aggregate demand, and the growth rate for broad money are depicted. It is clear that the U.S. remains in a growth recession. The economy is growing, but at less than its post-1987 average rate.

Since early 2013, however, the growth rate of broad money has accelerated. If this continues, nominal aggregate demand growth rates should remain roughly where they are at present. The biggest risk we face is that the relentless attacks on banks continues and intensifies.


via Zero Hedge http://ift.tt/1R0cPnO Steve H. Hanke

Caught On Tape: 800 Angry Farmers Storm Greek Ministry, Beat Cops With Shepherd’s Sticks

On Friday, we got confirmation of what everyone already knew: the Greek economy is still mired in recession. GDP contracted 0.6% in Q4 after shrinking 1.4% in Q3.

We also found out that Greek farmers have most assuredly not calmed down since they parked their tractors in the middle of the street blocking traffic late last month.

Why are the farmers mad, you ask? Well, they’re not particularly enamored with the idea of having their social security contributions tripled and their income tax doubled as part of PM Alexis Tsipras’ push to satisfy creditors in Brussels who, six months after the country’s third bailout program was agreed, aren’t satisfied with the pace of fiscal consolidation.

So what do you do when you’re an angry farmer from Crete hell bent on demonstrating just how frustrated you are with a government which just a little over a year ago, swept to power with promises to roll back austerity? You grab your shepherd’s crook and some tomatoes and you storm the Agriculture Ministry in Athens.

Below, find the dramatic footage of farmers gone wild.

Hell hath no fury like a farmer taxed.


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How the D.C. Government Is Targeting Its Homeless Population

Street Sense EventThe struggles faced by the homeless don’t get much attention in D.C. on a daily basis, but they remain persistent and grossly mishandled by those we’ve entrusted with power. At advocacy group Street Sense’s “Over-Criminalization of Homelessness” event Thursday night at The Church of the Epiphany, I heard stories of police abuse, encampment eviction, and other examples of urban policy that make things harder on the city’s most vulnerable.

“Criminalization efforts in D.C. are less overt [than in other cities] but becoming more insidious,” began Ann Marie Staudenmaier, an attorney at the Washington Legal Clinic for the Homeless. Regulations here prohibit panhandling at public transit stations, she explained, while “temporary abode laws” give public officials a high degree of discretion to evict the homeless from public encampments.

Although panhandling is clearly a First Amendment issue, for libertarians with a high degree of respect for property rights, the campsite evictions may, to some degree, seem philosophically justifiable. But D.C. officials have drawn scrutiny as of late for going against their own protocol and clearing out encampments during hypothermia season, which runs from November to March. City protocol says to wait until winter is over so as to mitigate homeless deaths during these months. Nonetheless, earlier this winter, the city went ahead with destroying a Rock Creek Park encampment.

D.C. government protocol also states that if a public encampment is to be cleared, officials must give 15 days of notice and must not confiscate items of value. Such items include IDs, medicine, and tents. But mystifyingly, city officials seized and destroyed all that property and more from the Rock Creek site, leaving residents without even their few possessions.

EventAttendees of the Street Sense event who have themselves experienced homelessness added that shelters are often hotbeds of theft and violence, and that many impose unnecessarily restrictive policies—like requiring people to stay within the shelter from sundown until sunrise, thus limiting their ability to do meaningful things with their time. Some audience members noted this had prevented them from attaining jobs, thus trapping them in dependence.

Add in open container laws, which disproportionately hurt those without a dwelling place to retreat to, and the degree to which even a minor criminal record can restrict an individual’s employment and housing eligibility, and you have an unsettling portrait of government overreach that leads to near-constant persecution of the already down-and-out.

Homelessness issues are rarely talked about in libertarian circles, which is not just a shame but a missed opportunity. In fact, the burden of government overreach and the criminalization of relatively harmless acts fall hardest on those in society with the least resources available to them.

But libertarians can take heart: Street Sense and other like-minded groups (including Samaritan Inns and Friendship Place) have become impressive examples of private actors making strides toward ending homelessness and addressing the needs of the indigent. Organizations like these are proof that committed citizens are frequently better able to solve intransigent social problems, even as government itself too often makes life harder for the least among us.

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Mexicans for Trump? “It’s a New Mundo.”

Can Donald Trump, who kicked off his campaign for president last June by calling Mexicans rapists and drug dealers, win over Latinos—especially Mexicans?

Sure, why not, writes Ruben Navarette, Jr. at The Daily Beast:

The relationship between U.S.-born Latinos and Latino immigrants, and even between foreign-born Latinos who have been naturalized and Latino immigrants, is complicated to say the least. There is an ambivalence there.

As a Mexican-American, I can tell you that many Mexican-Americans think that Mexican immigrants who come to the United States illegally are taking advantage—of a porous border, of the social-services safety net, of loopholes in immigration law, and of an insatiable appetite among U.S. employers for cheap and dependable labor. And they’re not wrong about that.

Navarette says you’ll find Latinos, especially Mexicans, for Trump in “red states like Texas and Arizona, and the battleground state of Colorado. There’s a lot they like about Trump, including his independence, plainspokenness, success in business, and disdain for political correctness. They see him as strong and resolute, and not having to cater to moneyed interests since he is self-funding his campaign. And either they don’t buy the idea that he is anti-Mexican, or they don’t care.”

More here.

Navarette points to a poll in January that found 

Donald Trump is the favorite among Latino Republicans, according to new polling results revealed to The Post.

Thirty eight percent favor Trump, followed by Cuban American Ted Cruz (15 percent), Jeb Bush (14 percent) and Cuban American Marco Rubio (8 percent), according to the national poll conducted by the Beck Research for the American Federation for Children.

Of course, it’s true that there aren’t all that many “Latino Republicans” in the country. Running candidates such as Mitt Romney, who pushed for self-deportation by illegal Mexicans during the 2012 election, will do that to a party. So will constantly talking about building walls on the U.S. border with Mexico, tripling the Border Patrol, stepping up immigration laws, and the like.

But it’s also true that as any broadly or even narrowly defined ethnic group gets exponentially larger (as Latinos are), they will spread out over the political and ideological spectrum. And at some point, the GOP will acknowledge demographic shifts that will force them to at least reach out to Hispanics even if the party doesn’t change any of its positions. The GOP risks going down the tubes nationally if it relies solely on the white vote, which is shrinking as a percentage of the overall total. As Karl Rove has noted, this is not impossible. Greg Abbott won 50 percent of the Latino vote while running for governor of Texas and George W. Bush and Rick Perry cracked the 40 percent margin in various of their state-wide elections. 

Here’s relevant data from Pew Research on the topic:

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Trump Threatens Suit Against Cruz, but Don’t Have Sympathy for the Senator

Donald Trump, portrait of toughness and courage:

The above is the latest in a series of tweets complaining about people being mean to him by campaigning against him. He asks why Cruz can call himself an evangelical Christian when “he lies so much and is dishonest?”

He is being a bit whiny, but it turns out he does have a point. This Twitter attack is in response to an attack from Cruz in South Carolina claiming that Trump and Sen. Marco Rubio have the same position as President Barack Obama on gay marriage.

According to Politico, the basis for this claim is that Trump and Rubio have both acknowledged that the Supreme Court ruling is the “law of the land,” a thing which is, you know, factually accurate. It is not an indication that Rubio and Trump support same-sex marriage recognition. They do not. Both of them have indicated they want to appoint Supreme Court justices that would overturn last year’s decision that mandated states recognize gay marriages.

So it’s one of those situations where Trump is being a typical classless jerk, but he’s not wrong. Cruz’s attack is fundamentally dishonest. When politicians pull nonsense like this, it makes it harder to paint Trump as lying or exaggerating or saying whatever gets support, doesn’t it?

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Stephen King’s Latest Television Adaptation Thrills, Despite Its Dumb Politics: New at Reason

"11.22.63"11/22/63, Stephen King’s novel, in which a time traveler stalks Lee Harvey Oswald through history in an attempt to prevent the Kennedy assassination, is a wonderful and maddening read. It is King’s storytelling at its bravura best, a detective tale in which the hero must not only penetrate a complex mystery but do so while tip-toeing through the paradoxes of time travel.

But it is also the most dramatic exposure of his inchoate politics and infantile Baby Boomer obsessions. The belief that Kennedy’s assassination precluded an early end to the Vietnam war, the idée fixe of his time-traveling vigilante, is Camelot mythology at its silliest: Kennedy was a Cold War liberal who pledged at his inaugural to “pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.” Less than three weeks before his own assassination, Kennedy fulfilled his promise by okaying a military coup that ended in the death of South Vietnamese President Ngo Dinh Diem, who in Kennedy’s eyes was not prosecuting the war with sufficient vigor.

Like the book, critic Glenn Garvin explains, 11.22.63 is extraordinary entertainment if you’re able to shrug off the political idiocies that broadly shape it and simply immerse yourself in the story.

View this article.

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Bloomberg Vs. Trump?

Submitted by Patrick Buchanan via Buchanan.org,

The morning of the New Hampshire primary, Donald Trump, being interviewed on “Morning Joe,” said that he would welcome his “friend” Michael Bloomberg into the presidential race.

Which is probably the understatement of 2016.

The three-term mayor of New York and media mogul whose fortune is estimated at $39 billion, making him one of the richest men on earth, told the Financial Times on Monday he is considering a run.

Bloomberg had earlier confided he was worried about Hillary Clinton’s ability to turn back the challenge of Bernie Sanders, regards Trump’s rise with trepidation, and is appalled by the pedestrian character of the campaign rhetoric.

“I find the level of discourse and discussion distressingly banal and an insult to the voters,” said Bloomberg; the public deserves “a lot better.”

This haughty disdain calls to mind the late Adlai Stevenson. Yet, if Bloomberg runs, his electoral vote tally would likely make Adlai, by comparison, look like Richard Nixon on his 49-state romp in 1972.

Republicans should give Mayor Mike every encouragement to enter the race. For though he threatens to spend a billion dollars of his own money to buy the presidency, his name on the ballot as a third-party candidate could send the Democratic nominee straight down to Davy Jones’s locker.

With Bloomberg siphoning off millions of liberal votes, Democrats would not only lose red states they customarily write off, winning solid blue states would require a far steeper climb.

Third Party candidates have played crucial roles in presidential politics. Ex-President Theodore Roosevelt killed the re-election hopes of his successor President William Howard Taft in 1912, by running as the Bull Moose candidate and delivering the nation to Woodrow Wilson.

Strom Thurmond carried four Deep South states in 1948 and George Wallace carried five Deep South states in 1968. Both sought to throw the election into the U.S. House. Neither succeeded.

Ross Perot got 19 percent of the popular vote in 1992 and 8 percent in 1996. Though he did not carry a single state either time, as a candidate of the populist center-right, Perot peeled off a third of the votes George H. W. Bush had won in 1988 — to sink Bush in 1992.

Why would Bloomberg, who has great wealth and is willing to part with it, not be able to beat Trump, or another Republican nominee, if he plunged a billion dollars into his campaign?

Though he may be a pioneer in modern media and a man with a golden touch, Bloomberg is 74 years old this week, uncharismatic, and does not fill up a room the way the Donald does.

He lacks a common touch and is a social liberal, pro-abortion and pro-same-sex marriage.

Moreover, he is a compulsive nanny-stater who outlawed smoking in New York bars, restaurants and public places, prohibited the sale of cigarettes to anyone under 21, forbade trans-fats in restaurants, sodas larger than 16 ounces, chain restaurant menus without calorie counts, cellphones in school, non-fuel-efficient cabs, greenhouse gas emissions, and non-hurricane-proof buildings in coastal areas.

While not well-known nationally, Bloomberg is a zealot about tougher gun control laws and his candidacy would produce a deluge of contributions to the National Rifle Association. This obsession, along with his social views, would sink him in Red State America.

Nor is Bloomberg, despite three straight victories running for mayor, a great political athlete.

In his last race, as the Republican and Independent candidate, Bloomberg spent $102 million to defeat an underfunded Democrat comptroller, but managed to win only 51 percent of the vote.

If Clinton, or even Sanders, were at the top of the Democratic ticket in New York State, either would crush Bloomberg in his home town, especially with the GOP nominee, say Trump, siphoning off all of the Republican-conservative votes Bloomberg received to become mayor.

Now only would Bloomberg lose the Big Apple, his statewide vote would come mostly from the Democratic nominee, giving Republicans the best opportunity to carry the Empire State since Ronald Reagan coasted to re-election in 1984.

By spending a billion dollars, Bloomberg could blanket the nation with ads. But once Republican oppo research groups defined him for Middle America, perhaps 4 in 5 of his votes would come out of the basket upon which Democrats rely.

For example, as a Jewish-American, Bloomberg might do well in the Dade-Broward-Palm Beach County corridor, taking votes that Clinton or Sanders would need to carry Florida. Yet, where would Bloomberg get the rest of his votes to win the Sunshine State?

Clearly, Bloomberg is envious of the success of the Donald, since he descended on that escalator at Trump Towers on June 16.

The problem for Bloomberg is that, while this is the year of the outsider, with populist revolts breaking out in both parties, Sanders and Trump caught the lightning early, while he was restructuring his media empire. And, to be candid, Michael Bloomberg is no barn burner.

So all together now: “Run, Mike, Run!”


via Zero Hedge http://ift.tt/1R0a2uV Tyler Durden

Jose Canseco Says “Everyone Should Be In Gold”, Predicts $1,500 By Memorial Day

In the aftermath of the BOJ’s stunning NIRP announcement in late January, virtually everyone had an opinion on what this move of sheer desperation means.

Actually scratch the “virtually” part: as we reported one week ago, none other than famous baseball slugger Jose Canseco opined when he tweeted that “Negative interest rates in Japan is blowing my mind”, rhetorically asking “Who is advising Japan? Forcing banks to lend all ¥ will not get 2% inflation. It creates loanees market with even lower rates. Dumb move” and slamming the BOJ: “Bank of Japan should call them willie wonka bonds “YOU GET NOTHING. yOU LOSE!””

A few short days later, Jose took a firm stance on JPM’s forecast that NIRP could go as low as -4.5% in Europe (as well as -3.45% in Japan and -1.3% in the US).

Today, this latest and perhaps most popular entrant to financial twitter took on a topic that is even more sensitive, and divisive, to the financial arena: gold.

This is what he tweeted moments ago:

Mock him? Sure go ahead, but with an opinion validated by such commentary…

… it is clear that the famous baseball slugger has done far more homework than 90% of the anti-gold crowd.

His conclusion is one we, and incidentally JPM’s head quant Marko Kolanovic, wholeheartedly with:

Will Jose be right? And can this sport celebrity stir up “animal spirits” among the population and force a rush into physical gold ahead of NIRP’s arrival in the US?

We’ll find out, but for now, this is what Jose being right would look like.


via Zero Hedge http://ift.tt/1Qc6BOA Tyler Durden

What The BOJ’s Final “Yentervention” Option Would Look Like

Japanese stock markets have crashed 15% (the "most since Lehman") and USDJPY plunging (most since 1998) since Kuroda unleashed NIRP and are down 11% since QQE2 was unveiled to save the world from an absent Fed. So with NIRP and QE (and jawboning) now 'useless' for Japanese monetary policy, there is only one option left – Yentervention.

Suddenly it all stopped working..

 

As Central Banker faith falters…

 

Overnight saw some hints at this beginning to happen, as Bloomberg reports,

The BOJ made “rate-check” calls to some banks with implicit questions on whether they planned to buy more yen, Sassan Ghahramani, head of SGH Macro Advisors, wrote in a note Thursday. Checking rates is sometimes intended to send a signal to markets that intervention may be on the way.

Aso declined to comment Friday on whether authorities have already intervened.

 

Japan hadn’t bought or sold currency to sway the yen’s price since a record intervention in 2011 helped stop its advance after reaching a post-World War II record.

Japan has spent the equivalent of between $8b and $117b in the past four episodes to check undue strength in the yen. The currency gained between 2% and 9% in the three months before interventions; the yen has strengthened 9.1% in the past 90 days. The BOJ has typically come into the market around 9-11am Tokyo time.

Oct. 31-Nov. 4, 2011
Yen strengthened to an all-time high of 75.35 on the first day of intervention
Then Finance Minister Jun Azumi said on Oct. 31 he ordered intervention at 10:25am Tokyo time, saying “speculative moves” of the currency failed to reflect Japan’s fundamentals
MOF sold 9.09t yen to buy $116.3b
Yen had risen 4.5% in the three months through Sept. 30; it weakened 3.1% through the intervention and gained 0.8% through the remainder of November

 

Aug. 4, 2011
MOF sold 4.51t yen to buy $57.2b
Yen rose to 76.30 per dollar on Aug. 1, the strongest since a previous record
Three days later, Japan intervened; then Finance Minister Yoshihiko Noda confirmed intervention at around 10am Tokyo time, saying decisive action was needed against speculative and disorderly currency moves
Yen had climbed 5.8% in the three months through end of July; it fell 2.3% on Aug. 4 and strengthened 2.9% in the remainder of August

 

March 18, 2011
MOF sold 692.5b yen to buy $8.6b
Yen soared to 76.25 per dollar on March 17, what was then a record, in the aftermath of a magnitude 9 earthquake that struck Japan six days earlier
Noda confirmed that intervention was conducted at 9am Tokyo time
Other G-7 members also sold yen in joint intervention, saying the step was in response to recent movements in yen associated with tragic events in Japan, and at the request of Japanese authorities

The current surge in Yen is the largest since 1998 and suggests intervention may be overdue…

“The yen is all about risk-uncertainty, which could encourage Japanese investors to pull out of overseas assets and retreat to the safety of home,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce. “Of late, it’s been a case of capital preservation rather than return. The authorities have been making plenty of noises about this unwanted strength and I see 110 as a potential line in the sand for intervention.”

The only problem is – the last 3 mini Yenterventions failed miserably to spike USDJPY…

 

And traders doubt The BoJ's ability… 

“The stronger rhetoric and speculation about intervention or further monetary policy easing will likely create some volatility in the near term, but there’s going to be a lot of interest in selling the dollar if it goes back up against the yen,” Barclays’s Shinichiro Kadota, a foreign-exchange strategist in Tokyo, said by phone. “The market’s questioning the impact of and scope for further easing.”

Which is very clear from the size of bets on a stronger Yen…

 

“For intervention to turn around dollar-yen permanently, the BOJ would also need to ease domestic monetary policy further and — more importantly — the Fed to raise rates,” Mohi-uddin said. “Until the Fed is able or willing to raise rates further this year, dollar-yen is likely to trend lower, punctuated by any intervention Tokyo undertakes.”


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