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US President elect set the tone for the day in a morning TV appearance on Fox.
He suggested that former President Barack Obama was organizing some of the opposition he faces, blamed his own generals for the death of a U.S. commando in Yemen and said “I think I’ve done great things”, and gave his presidency a grade of A so far…

The President’s speech to Congress was based on what his top advisers, Stephen Miller, senior policy adviser, and Stephen K. Bannon (Breitbart (ex?)owner), his chief ” strategist, have prepared, these being the same men who have been the architects of President elect Inauguration speech (sic) “dark themes”.

This president elect has all the makings of a totally irresolute manager who is learning his office “on the job”.

He now asks for bi partisan support in Congress (sic), after having changed in less than two months his “opinions” on following major subjects, the list is longer…

° Immigration ban – Does not know what to do now, says he will “secure Americans” (?), no plan exists, just “intentions”, but is withdrawing  from his first abominable, inhuman and stupid bans.

° Obama’s health care that president elect has said he would repeal and change, has become a far more complex task than what he  first thought (he always finds out things after…), he now will give priority to other issues since this one takes too much time (sic)…

° Israel,first was for more settlements inPalestina by Israel, now is moderate, wants Israel and Palestina to” choose” between two states and only one state…

° Iran, doesnot know what to do?

° Mexico wall ???

 Please read for details NYT‘s article of 02/28/17:, for “details”

This continued legal confrontation about the abominable anti-immigration decree signed over one week ago by US president elect (*) is once more taking an  unexpected turn, unless it is “subtle” political manouvering(?)

(*) Whose behavior  towards the judiciary is as out of line as most of his comments about the whole US government system since he has appeared on TV signing his “decrees” who are mostly a demonstration of a dictatorial manner of wanting to “run” a country like the US, still worldleader (not long with this type of call it “government”- sic ) probably in  the same way he has been directing his own – private –  corporations (who have “indulged” in bankruptcies repeatedly because the “system allows for it”, as he cynically said).

As included in my yesterday’s 02/08/17 post: “Anti-Immigration decree probably Applied In Fine due to Eventual Justice Stalemate -See why?”,  it seemed that this matter would land as an appeal by the US Court of Justice vs Judge Robart’s decision to ban the anti-immigration decree since it seemed/seems that the three judges on the United States Court of Appeals for the Ninth Circuit who are to express an opinion will not allow the decree to pass because they expressed openly (on TV…) skepticism about the arguments of a Justice Department lawyer defending president elect’s order.

Before the decision to accept the nomination of the 9th judge to the Supreme Court a stalemate could have happened with a 4-4 tie in court which would have allowed this decree to apply again, maybe softened?

Yesterday, the US president elect’s  nominee for this 9th post, Judge Gorsuch – privately – expressed (NYT quote) ” dismay on Wednesday over Mr. Trump’s increasingly aggressive attacks on the judiciary, calling the president’s criticism of independent judges “demoralizing” and “disheartening.”calls”

This seems strange but may well be political manouvering to show the “public” (since all this seems more and more as being a reality show) that president elect wants to “play by the rules”…?

The situation is so bad because what is at stake is the fight againts rapidy increasing Terrorism worldwide, both “inside” frontiers for any civilized country or on the battle grounds, US president elect’s type of safeguard “policies” are as bad as the “angelical” positions taken by the “good thinkers”of this world.

What is called for is true and effective international cooperation to define realistic action plans to fight all existing and mushrooming terrorist organizations under a common umbrella which unfortunately the UN is not capable any more of assuming because of the “general disorder”and the “executive silence” in the EU which has gained (unfortunately) experience in these matters.

Anti-immigration bans of a totalitarian chareacter as that of the US’s president elect are definitely no solution, they are dangerous because they will (already have) feed the same type of reactions elsewhere.

I propose you read NYT‘s 02/08/2017 article: “Supreme Court Nominee Calls Trump’s Attacks on Judiciary ‘Demoralizing’” to obtain more detailed information – next under “MORE”

A federal appeals court early Sunday rejected a request by the Justice Department to immediately restore US president elect’s  anti-immigration decree targeting travel ban and accordingly  stressing even more a legal showdown over his authority to tighten the nation’s borders in the name of “protecting Americans from terrorism”.

This proves, as shown in my last posts this now past calendar week that “American people” can find ways of opposing abominable decrees such as this one when party politicians do not react.

The US President elect’s appeal to Seattle judge’s Robart’s rejection of anti-immigrant decree has been rejected with US Govenment needing to appeal this new judgement by tomorrow Monday 02/06/17

This does not mean that to allow free entry to all immigrants is valid, what is inadmissible is the form and part of the content, unworthy of the president of the leading country worldwide.

You can read the NYT 02/05/17 article:“Appeals Court Rejects Request to Immediately Restore Travel Ban” entirely under “MORE”, next

Read the rest of this entry »

This is the third post in a row on US President elect’s unprepared and obnoxious anti-immigation decree.

Anticipated personal conclusion:

My personal feeling is that, the US  being a very resilient country, “salvation” will gradually come from the “other silent majority” who did not vote sufficiently for the Democrat presidential candidate because of lack of charisma and modernity, in spite of having enormous experience.

Taking a step back, what has the President elect been doing during the last 11 days?

Signing, publicly in front of the media on TV, like the CEO  of a corporation in private, “memos”, i.e. decrees on all the enormities he has been saying for nearly one year and on which he has been elected US President with a considerable majority following the US ‘s electoral sytem.

Everybody knew what he intended to do and in spite of this he was elected (bis repetita).

Now he is doing it and many world leaders are stupefied and oppose these measures, starting by the UK PM who very  rapidly went to Washington to try starting to make a trade deal with the US, Brexit obliges, and “forgot” to oppose grotesque anti-imgration measures, and did so one day later due to many UK’s citizens’ indignation, no choice left…

This is how “the cookie crumbles” nowadays, protest after protest and what does the Republican Party do?

When a President is elected in the US, before being sworn into office, the election needs to be certified. In the House, a joint session of Congress meets and confirms the electoral votes for the candidates are authentic, and they are officially recorded.There is a procedure allowing members to protest the certification results and Democrats wanted to do that. The problem is, the signature of a Senator is required for any protest to be considered valid. Democrats did not get that signature.

Paul Ryan seemingly was smiling at Democrat’s failure to find the vote. Paul Ryan, 46 years old, Speaker of the US’s House of Representatives and a member of the GOP (Republican Party) is the Republican”star” politician, is he still smiling?

Unless the recent my elected US president starts backing off and reviews all the impossible decrees he has been signing, the GOP will be in due course of time “dead in the water” and since bi-partisanship has been notoriously inexistent for at least a decade in the US, the whole country will suffer from this “unreal show”.

Yesterday I wrote about Sylicon Valley top corporations and their executives’ protests, this might help, but let’s not forget that these huge corporations are great tax evaders too, and for sure they protest, they employ a lot of foreigners, and have a “voice”, their share of US GDP is considerable.

It would be great if one of these immensely successful executives enters politics as the newly elected US president did, we might have seen a different show with one of them.

Repetita: My personal feeling is that, the US  being a very resilient country, “salvation” will gradually come from the “other silent majority” who did not vote sufficiently for the Democrat presidential candidate because of lack of charisma and modernity, in spite of having enormous experience.


Re my today’s post:“US “Governance” by decree is showing immoral unacceptable facets”, Silicon  Valley opposes the US President elect on his anti-immigration decree, this opposition obviouly not being only dictated by humanitarian reasons, but also by their own corporations’ interests as following texts clearly show…

This is a confirmation that in a country like the US internal resiliency of corporations and individuals can be counted upon when faced with intempestive and irrational Governmental measures.

European Governments have shown their opposition to this decree with various degrees of “determination”, but once more no clear positions are taken by the European Union or the European Commission.

The press worldwide confirms this,what follows are excerpts published in the syndicated press.


“The new technology industry, which recruits more foreign workers than the US average, is mobilizing against the decision of the new president of the United States.

Usually, Silicon Valley has a horror of political talk, but Donald Trump might well force it out of this reserve. This weekend, many CEOs or figures known in the new technology sector – Google, Apple, Facebook, just to name a “few”, have openly criticized the anti-immigration decree of the new President of the United States.

The latter temporarily prohibits the entry into the United States of nationals of seven countries to the majority Muslim population: Syria, Iran, Sudan, Libya, Somalia, Yemen and Iraq. The decision, taken Friday night, provoked numerous demonstrations around the major airports of the country. Several people from Silicon Valley attended. Among them, Sergey Brin, co-founder of Google and who himself immigrated to the United States after fleeing the Soviet Union when he was 6 years old. “I’m here because I’m a refugee,” he said at a demonstration at the San Francisco airport.

“Silicon Valley, far more than other industries, employs many immigrants. Foreigners accounted for 37% of the population of San Francisco and its surroundings, compared with 13.3% for the US average, according to a joint Venture Silicon Valley organization. This new decree is a direct and concrete threat to companies in the sector. The CEOs of Silicon Valley did not go so far as Sergey Brin. Most of them spoke through internal memos to their worried employees, via very calibrated press releases or by answering questions from journalists. All have held more or less the same discourse, affirming their attachment to immigration and the will to protect their employees.”

“Protecting employees
“I am sad to see how this decree affects our colleagues,” said Sundar Pichai, CEO of Google, who immigrated from India to 22 years. According to him, at least 187 employees of the company are affected by the decree. “We have always been very clear in our views on immigration policy, and we will continue to be so,” he added. Same speech for Tim Cook, CEO of Apple. “Apple believes deeply in the importance of immigration, both for our company and the future of this country,” he said in a memo to employees of the company. Twitter, the social network widely used by Donald Trump, expressed support for “immigrants of all religions”.

“Mark Zuckerberg, co-founder and CEO of Facebook, also issued a message Friday night on his page, saying he was “worried about the impact” of the decree. “We must ensure the security of our country, but we must do so by focusing on those who pose a real threat,” he wrote. He also recalled statements by Donald Trump in December, where he promised to “find a trick” to help illegal immigrants who arrived as children in the United States, some of whom have specific legal protections.”

“Statements, from several companies have also announced measures to help the persons subject to this decree. Google announced the creation of a $ 4 million fund for four immigrant rights organizations. Airbnb provides free accommodation for people unable to return to the United States. Lyft, a transportation application, said it would contribute $ 1 million over the next four years to the Civil Liberties Association (ACLU).”

“Most new technology companies are in favor of immigration and have been calling for years to reform the rules governing the arrival of foreigners on American soil. Mark Zuckerberg launched the Foundation in 2013 to facilitate the arrival of migrant workers in the United States. This initiative is supported by Bill Gates, founder of Microsoft, Marissa Mayer, CEO of Yahoo !, or Drew Houston, CEO of Dropbox. At the end of 2015, Mark Zuckerberg and Sundar Pichai, CEO of Google, had criticized the anti-Muslim statements of Donald Trump, in defense of immigrants.”

“Some CEOs feel unfairly criticized”
Other companies have been more discreet on the subject, or even have been accused of complacency with Donald Trump. Uber was criticized for delaying canceling the automatic price increase of its application after the announcement of a New York taxi strike to protest Donald Trump’s decree. Travis Kalanick, CEO of Uber, expressed on Saturday his “worry”

I have not issued posts anymore since July 11th, 2016: “Brazil and Argentina reaching bottom will Recover, Europe Sleeping since Decades…” and June 27th, 2016:“Eurozone Governance Radical Change Needed to get to a “2 Speed” Area Organization Eurozone Governance Radical Change Needed to get to a “2 Speed” Area Organization” , (the latter being a “hundredth” repeat of prior posts) because of useless repetitions of comments and concrete proposals on the decay of Goverance in the Occidental world and failure to implement social economic macro reforms, in over 2000 posts from April 2011 to October 2015  plus some isolated ones like this one when matters become inacceptable.

Below “More” at the end of this post I am fully quoting NYT‘s 01/29/2017 article: “European Leaders Reject Trump’s Refugee Ban as Violating Principles”

My Comments

I will issue this one post in protest against the newly elected US President who every day signs a new decree, where I believe (maybe optimistically) most of the content will be withdrawn shortly.

Only, that there are subjects which should be sacred even in this social media dominated era and this one refers to human beings persecution with No Discrimination and this is one is one where the (still) educated world needs to call a halt!

I have traveled to countries where religious “signs” were imposed on, my wife had to put on muslim clothing to visit beautiful religious monuments in the Middle East and complied with it because she was a “visitor”, but on the other hand it is totally unacceptable that “visitors” impose their way of dressing, behaving and even worse acting to our Occidental countries.

Laws have been issued to no avail, and, obviously, this includes all forms of imported terrorism.

The US  newly elected President who won the election by appealing to the  isolationist mentality which a majority of US citizens have always had considering their country as “the best”, not wanting interference from the rest of the world while trying to impose peacefully whenever possible their own way of living.

The newly elected US President thinks (?) that by signing these decrees he shows the world his own style of Governance determination in front of the manifest laxity of practically all European (non) governance.

Why can he do it?

Because he was lawfully elected by a very call it “conservative” section of the US population.

These are still call them “democratic” countries where the popular vote prevails versus dictatorship.

A President who has been elected since only weeks practiced a “hold up” on the constituency of his country, so its is up to this same (partisan and by partisan) constituency to reject whatever is morally (in the full sense of the word) reprehensive, the US has done so with Mc Carthy (only a senator – sic) in the past, the resilience of this great nation can do it again if so required.

So, allow a period of grace and if there are no real reversals of some of these abject policis as the one described after “More” by the NYT, initiate a legal process of dismantling this type of governance, bearing in mind that it was not originally imposed but freely voted.

Accordingly this is no criticism on the US as a country but on its Governance, and it is not the only one I feel has great shortcomings in the “Western” world, the “non governance and not existing guidance of the European Union is another great target if one relates to total lack of competence

I am badly placed to criticize the President of a country who has given me education, I passed an MBA in Oregon and worked succesfully with two highly reputed US corporations, one of  them being the most ethical one I have ever known.

Going to the “origin of evil” to dramatize, it’s all this “non governance” in the “West” which makes tiese call them “reactions” (for the time being) possible.

But, I will not repeat myself anymore, I have given it my best based on the “in situ” international experience I have acquired througout my international life wy writing respectfully but directly  and proposing concrete alternatives to this “Non Governance” in my  books

I have written on all this – 2014 / 2015 – in self-edition – Amazon – in two books whose titles are self-explanatory: Why Obsolete Macro Governance Is Killing the World Economy” and “Growth through Structural Reforms” (With Leadership and Competence Great Opportunities Exist).

Stock prices around the world continued to plunge on Friday – 08/21/2015 – probably ending one of the longest bull market runs in the history of the US stock exchanges.


A searing six-year rally in US stocks had advanced into the summer months, shrugging off challenges like the dispute over Greece’s debt that nearly led to the country crashing out of the eurozone,which macro speaking is utterly unimportant and only madeso by the blatant incapacity and continuous “politicking” of EU / EC and multinational institutions as IMF and ECB.

But in the last two weeks, world markets really tumbled, because a slowdown in China is very macro important (not as Greece), investors growing increasingly concerned about economic conditions in China, which unexpectedly devalued its currency last week, and the outlook for the economies of other large developing countries.

As the selling in reference markets accelerated Friday afternoon, some benchmark indexes were at or near 10 percent below their recent peak, which should mean that a real “correction” is taking place stopping this bull market.

This market decline is coming not only as China struggles, but also as the FED might (not is) -be finally – winding down its huge so called liqiuidity flooding “stimulus” efforts and start increasing interest rates – not sure since the FED , primarily works to Boost markets).

The FED will also have to weigh the seriousness of the turbulence in the markets as they decide whether to raise interest rates for the first time in nine years. Raising rates as early as next month, as some investors have expected will happen, could further unnerve investors, damp economic activity and speed the flow of dollars out of developing countries. As a result, the FED may decide to wait until later in the year, or longer.

The FED will try to estimate the impact of a falling stock market on the wealth and spending habits of US households. The six-year bull run, which began as the last bear market ended in 2009, has helped drive up households’ holdings of stocks and mutual funds by over 10 trillion USD.

About 5 Trillion dollars of cheap (close to zero interest rate)  money from the FED has tried to fuel economic growth, which will probably be around 2 -2.5% in 2015, not enough to significantly reduce total real (including under employment) of close to 11% of working population in July 2015.

Such concerns on Friday helped push stocks far below the peaks they reached just weeks ago when investors were ebullient. The Dow Jones industrial average is more than 10 percent below the high it reached in May. At Friday’s close, the index was down 530.94 points, to 16,459.75, a loss of 3.1 percent on the day.Over the entire week, the S & P lost 5.8%, its biggest weekly decline since September 2011. The Dow also fell 5.8% and the Nasdaq  fell 6.8%.

The slide on Wall Street this week suggests that investors believe that the shares are worth too much in a context of moderate earnings growth and lower energy prices.

We must add the prospect of a future increase in the cost of credit, even though bets remain open that the FED will choose to raise interest rates (?).

Fears inspires the Chinese slowdown and inflation in the US as too low lead some investors to bet against an eventual (???) rise in interest rates by the FED next month.

On the foreign exchange market, the news from China and the decline in the probability of aFED rise in mid-September 2015  rates hurt the US dollar

On the bond front, Treasuries have played their role of safe value against the actions of turbulence, the paper 10-year yield falling to 2.06% against 2.08% on Thursday and 2.20% one week ago .

Low Oil Prices Impact

The price of Oil, as measured by the benchmark US crude contract in New York, briefly fell below $40 a barrel, nearly 25% below its price at the start of 2015.

The US crude oil-suffers its longest decline since 1986.

The decline in the Price of Oil and Other Commodities indicates that there is less demand for commodities because economies are slowing world wide. The fall in oil prices reduces, pariailly (not taking intoaccount currencies’ variations) energy bills for consumers and companies, but it also impacts very negatively the profitability of the many oil and gas companies that have invested heavily during the recent shale boom.


The slowdown of the Chinese economy might be a hard landing were it not for government intervention.

In the summer of 2015, Chian remains at the heart of concerns. Fears of a hard landing of the second world economy, the fall in Chinese shares, the low oil prices and the fear that this will spread to the whole of Asia and even the world economy, have “polluted” the market atmosphere.

Output in China’s manufacturing industry contracted in the first three weeks of August 2015 at the fastest pace since the beginning of the huge financial crisis in 2008, according to a preliminary reading of the Caixin purchasing managers’ index. It came in at 47.1 points for August, compared with 47.8 points in July. The August 2015 figure was its lowest reading since March 2009 on a scale in which any figure below 50 indicates contraction.

Markets are extremely volatile since China made a surprise move last week to devalue its currency, the renminbi, by the biggest amount since 1994.

Since the devaluation, China has moved to keep the renminbi from depreciating further by selling dollars. This effectively takes money out of the financial system, so China’s central bank has been busy this week trying to add liquidity. On Wednesday, it announced 110 billion renminbi (17 billion USD) in new six-month loans to 14 unnamed financial institutions. These measures have not been enough, as China’s overnight money market rates have continued toincrease, analysts think the central bank must respond more aggressively.

On the other hand, China is the second largest consumer of crude oil and will benefit from the low oil prices, its lowering currency taking away some of the positive impact.

The main Shanghai index fell 4.3%, while the Shenzhen index closed 5.4% lower. Hong Kong’s Hang Seng index declined 1.5% after having given up all its gains for the year this week.


The Nikkei 225 in Tokyo closed down 3%


European shares were also trading lower on Friday. Indexes in London, Frankfurt, Paris and Milan were all down about 3%, ending a week of over 6% declines.

A monthly survey of business sentiment by Markit, signaled a modest pickup in Eurozone growth. But the survey also pointed to nearly stagnant growth in France, Eurozone’s second-largest economy after Germany.

By Friday – 08/21/2015 –  the markets’ indexes set a new record which makes this month – so far – the worst trading month since August 2011.,which was when markets questioned the soundness of the European banking sector and feared the prospect of a slowdown in China and the US.

The euro rose by more than 1% against the US Dollar before easing slightly.





Central Banking “policies” (sic) Impeded Structural Reforms.

Central Banking Works to Boost Markets / Stock Exchanges
The new trend : writing that QEs did not bring growth.
In my blog, and being no “titled” economist, I have been predicating this for over four years!
It is obvious that Central Banks put the cart before the horses, assuming that massive liquidity injections at close to zero and even negative (ECB) interest rates would be used by the private banking sector to lend to corporations in need of financing for growth purposes.
They went wrong, since if there i s no confidence, corporations who have not built their own treasury (like the GOOGLES, APPLES, MICROSOFTS, AMAZONS, FACEBOOKS, etc…) would not borrow extensively or not at all.
Worse, these huge liquidity injections at zero interest rates made “obsolete” governements” avoid making real and complete social-economic structural reforms, which were the measures that, gradually,would have decreased far too high real unemployment (including under employment) and would have made all these countries become internationally competitive,and therefore have durable targeted growth.
I am referring to Business Standards‘ 08/18/2015 article by V K Sharma: “Anaemic global recovery: What has not been right with public policy”.

This very long and interesting article can be seen and read after “more” at the end of this post. I will comment this article.



Business Standards‘ 08/18/2015 article by V K Sharma: “Anaemic global recovery: What has not been right with public policy”.

A Keynesian approach would have been more effective in raising incomes in the real sector after the 2008

It is both common and easy to pontificate on what has been wrong, and not right, with public policy after the fact with the benefit of hindsight. But moral legitimacy imperatives demand that foresight be demonstrated at the time of rollout of public policy and not several years later by which time actual outcomes, as opposed to intended policy outcomes, become widely known. At least the author and Prof Lawrence Summers, former US Treasury Secretary, can claim such legitimacy for while this author in a speech at Chandigarh in likened the public policy response to the 2007 crisis ‘Financial Meltdown1.0’ to “treating bacterial infection with paracetamol rather than with antibiotics”, Summers, a week later in Canada, likened it “to treating viral infection with antibiotics”! 

The world is into eighth year since the last apocalyptic and cataclysmic global financial meltdown and the resulting Great Recession. The recovery in the US, and Japan, which between them account for 46 % of the current world GDP, continues to remain severely anaemic as measured on any parameters and metrics.

This is despite an unprecedented global deluge of the so-called high powered primary/ base money, what with combined balance sheets of their central banks almost tripling and with that of the US Federal Reserve quintupling. Specifically, in the past eight years, the US Fed’s balance sheet expanded from $900 billion to $4.5 trillion (400%) and US money supply expanded from $7 trillion to only $12 trillion (71% ); the ECB balance sheet went from $2 trillion to $3 trillion (50%) and money supply from $8 trillion to only $11 trillion (26%); and the Bank of balance sheet from $1 trillion to $3 trillion (200%) and money supply from $ 7 trillion to only $ 9 trillion (29% ). 

The sole public policy purpose of this unprecedented, and aggressively steroidal monetary stimulus, alongside near-zero nominal policy interest rates, was its much hoped for efficient and effective transmission to the ‘real sector’ in terms of so much more borrowing by households and businesses for more consumption and investment, in turn, for so much higher output and employment. 

But against these much hoped for outcomes, what has been the actual ground reality? 

The reality on the ground has, if anything, been a far cry from these intended public policy outcomes. Perversely ,there has indeed been an efficient and effective transmission of monetary policy , not to the ‘real sector’ but, disturbingly, almost entirely, to the ‘financial sector’, what with asset bubbles in stock and bond markets having already inflated  much more than in the pre-meltdown period. 

Ominously, the US stock market is currently trading at a multiple of 130% to the country’s current nominal GDP compared to pre Meltdown 1.0 of 110% and post Meltdown 1.0 of 62%. Worse , as a direct consequence of three-phase Quantitative Easing, US Treasuries are currently trading at almost twice their pre Meltdown 1.0 valuation with spillover only into stock markets and nothing at all into the as intended and hoped for. 

If only to  have a chilling and numbing sense of the  current overvaluation, another name for  Asset Bubble 2.0 , suffice it to say that the Dow Jones, to  be ‘fairly’ valued relative to the way too overvalued treasuries, needs to be at 40,000 levels instead of the current 17,500 (This is obtained by dividing stock index earnings of 5% – backed out as the inverse of current PE multiple of 20 –  by 10 year US treasury note yield of 2.15 % and multiplying by the current reading of the Dow Jones of 17500 , that is , 5/2.15=2.32*17500 = 40000) . 

This post Financial Meltdown 1.0 combination of much larger stock and bond bubbles and anaemic real economy has all the portents of a much worse Financial Meltdown 2.0. 

Turning next to the real recovery story of the ‘real sector’, though much is made of the unemployment rate in the U.S. having dropped from 10% in the aftermath of the financial meltdown to 5.3 % now as evidence of significant improvement in labour market conditions, the reality turns out otherwise if one also considers the fact that labour market participation rate at 62.6% is at a 37-year-low. 

In other words, since 1978, skilled and working-age Americans actively looking for work are down to this 37-year-low, thanks largely to the itself which resulted in huge loss of skills relevant to any meaningful recovery. 

Similarly, the latest quarter US GDP rising an annualised 2.3% is no real growth story if one also considers the fact that in the past, during comparable recessionary episodes , growth in real output has been more than twice as large. Another instructive way to reach the same conclusion is to consider that in the last eight years, the US nominal GDP rose from $ 15 trillion to only $18 trillion. So the so-called US recovery, which is creating such hype about imminent exit from the current ultra-loose US monetary policy by way of increase in policy rates, is no real recovery story at all. Of course, it is another matter that the proposed exit sequencing itself, by way of first raising policy rates rather than first shrinking the Fed balance sheet by selling back assets and then only raising policy interest rates, is intellectually and logically flawed. 

As regards the recovery story in the euro zone and Japan, no one is even pretending there is any recovery in the first place, what with GDP in the Eurozone and Japan growing currently by an anaemic annualised 1.5% and 1%, respectively, and nominal GDP in the Eurozone declining from $14 trillion to $13.4 trillion and that in Japan stagnating at around $4.5 trillion seven years after the global financial meltdown and Great Recession. In fact, in Japan after the so-called ‘two lost decades’, it almost looks like the ‘third’ is already underway with the Eurozone very likely on course for their ‘first decade’. 

Equally, labour market conditions in the Eurozone and Japan are worse with current unemployment rates of 11% and 3.3% with labour force participation rates at 58% and 56 %, respectively. And if only to complete the severely anaemic global recovery story, one may also like to take note of the latest  annual inflation rates of only 0.1%, 0.2% and 0.1% in the US, Eurozone and Japan, respectively, as against the policy targets of 2%. So much for the worldview of ‘inflation being always and everywhere a monetary phenomenon’!

So the question to ask then is where has all this hugely aggressive steroidal deluge of ‘high powered base money’ gone? In other words, whatever became of the so-called efficient and effective monetary transmission to the real sector via the fabled Money Multiplier? The simple common sense, as well as the textbook, explanation is that the so-called fabled Money Multiplier progressively collapsed alongside unprecedented massive expansion in central bank balance sheets and “high powered base money”. In particular, since the financial apocalypse, the money multiplier collapsed from 8.5 to 3.5 in the US, from 10 to 5 in the Eurozone and from 8 to 6 in Japan , in an unmistakable, incontrovertible and conclusive evidence of a dysfunctional monetary transmission. 

This collapse in the money multiplier for the ‘real sector’ is graphically and dramatically  illustrated by excess reserves held by banks in the US centupling from a mere $27 billion in 2006 to $2.5 trillion currently, representing 3%, and  55%, respectively, of the Fed balance sheet. It is, thus, a no-brainer to see that the so called ” high powered base money ” became both ‘powerless’ and, if you will, ‘baseless’ in spite of near-zero policy rates. This was primarily because households and businesses, paradoxically and counterintuitively, chose to save rather than spend and invest, thus doing almost nothing towards raising aggregate demand in the real economy. This is precisely what also explains banks in the US accumulating, rather than lending to households and businesses, excess reserves with the Federal Reserve. 

Thus as noted above , only a net incremental amount of high powered central bank base money of about $1 trillion ( $ 4.5 trillion- $ 2.5 -$ 900 billion)  has been efficiently and effectively transmitted but  almost entirely to the comprising stocks and bonds , and almost nothing to the real sector. 

This savings syndrome is tellingly reflected in net private savings (the U.S. and Japanese non-bank corporates together sit on a cash pile of $4.5 trillion) as the difference between current account balance and fiscal budget balance in the US, Eurozone and Japan. Specifically, in the last eight years, net private savings increased by 5 % from -5 % of GDP to 0% currently, in the US, whereas in Japan and the Eurozone, they are quite high at 9.2 % and 4.6 % with that in the Eurozone masking way too high net private savings in Germany and the Netherlands of 7% and 11.5%, respectively. 

So where the fabled Money Multiplier failed, Keynesian Multiplier would have succeeded back then in double quick time and indeed so it will now as it indeed did in 1937 and in the post-World War II period. We have wasted and lost seven long years since the crisis outside of Japan which was caused by monetary policy in the first place. 

Economic history bears out that so far all major economic crises had their genesis in irresponsible and wayward fiscal policies but never before until 2007 was it caused by monetary policy and on such unprecedented and devastating scale. So the public policy response of choice should been Keynesian and, not monetarist, because while monetary stimulus can create ‘money’ out of nowhere, it cannot necessarily create ‘income’ and, therefore, demand for money. In contrast,   fiscal stimulus can effectively address a dysfunctional monetary transmission by directly creating income and demand for money through more public dis savings (fiscal deficits) in excess of net private savings. 

The loss of precious time of close to 8 years since the Financial Meltdown 1.0 , entailing  avoidable excruciating misery and social and economic pain, is inexcusable because as Keynes very aptly and succinctly put it: In the long term , we are all dead! 

If only the US government had cut taxes and borrowed and spent equivalent to  even a part of the current excess reserves of $ 2.5 trillion, it would have not only made such massive expansion of central bank balance sheet unnecessary in the first place,  but also made Keynesian Multiplier  efficiently and effectively  resurrect Money Multiplier to its full potential, resulting in a much quicker and robust economic recovery with monetary policy playing a supplementary role so calibrated that as Money Multiplier  resurrected, Keynesian Multiplier got  phased out ! 

In conclusion, the foregoing should not at all be seen as derogating and disparaging Monetarism and extolling the virtues of Keynesianism, but only as a lowdown on the contextual and circumstantial inappropriateness of Monetarism and appropriateness  of responsible and activist Keynesianism  which the author, in the opening paragraph,  alluded to as ‘treating bacterial infection (read the Great Recession) with paracetamol (read monetarist prescription) rather than with antibiotics (read Keynesian prescription)’ The entire public policy response so far is thus best described by paraphrasing Norman Vincent Peale: “We would rather be ruined by policy orthodoxy than be saved by policy heresy!”

Referring to my today’s  – 07/17/2015 – post: “Greece’s Recent “Deal” is Already Being Questioned – See Why”, which was written and issued before next one published article by Reuters / Les Echos (*): Greece: The European Council President does not rule out another summit”, which I translated and will quote entirely (colored lettering is mine), and precede with very short comments.

(*) 07.17.15 at 13:49 – Reuters 0 Comment (s)

My Comments

If you want to “understand” WHY this top bureaucrat (*) EU executive, Mr. Tusk, President of the European Council (EU), expresses such great doubts immediately after that this “absurd” (I call it like this) “Deal” was made and agreed upon, and is being massively voted for in all Eurozone capitals (including Germany’s  Parliament today), please refer to my 07/17/2015, today’s post: ” “Greece’s Recent “Deal” is Already Being Questioned – See Why”.

(*) Why “bureaucrat”? Because Mr. Tusk tries to”satisfy” and not” hurt” anybody, all these Brussels “top executives” (sic) are”really”Mediators” (like Mr. Juncker), not real “Executives”…

Quotes –  “Les Echos”

The European Council President Donald Tusk does not exclude the need to hold another summit in the euro area this summer if a blockage is found on the Greek case, which is according to him a very high risk for the EU’s stability.

In an interview published Friday by “Le Monde”, the former Polish Prime Minister talks about the negotiations he led last weekend and Monday which resulted in an agreement providing for snatching a third aid plan for Greece in exchange for new economic austerity measures.

“For now, it works,” said Donald Tusk in reference to Wednesday’s vote in the Greek Parliament.

“We have no guarantees on how it will work. There are “catches”. I cannot rule out that we might need another summit this summer, but I hope it will not be necessary, “he added.

It refers to potential developments in Greece and the vote of the agreement in certain countries, but also reluctant to negotiations on the redevelopment of the Greek debt to which the eurozone leaders were not accurate.

“Debt is a global problem. We must open a discussion, see it as a European continental challenge. But it is too early to discuss a debt conference,” said European Council President.

“And I do not think we should focus discussion on the reduction of the Greek debt. We must be careful because this debate is also risky in some European countries. I do not want to scare the subject countries that will duty again help Greece, “he added.

Donald Tusk believes that the option of a “Grexit” provisional defended by the German Minister of Finance Wolfgang Schäuble is “legitimate and not extravagant.”

“The role of Mr. Schäuble was useful to show Mr. Tsipras a dramatic option was also on the table.”

Greek Prime Minister Alexis Tsipras, he said, used a speech “a bit anti-German” while there is nothing humiliating to receive a further € 80 billion “at relatively reasonable conditions”.

Donald Tusk also warns against the current climate.

“I think the atmosphere today is very similar to 1968 in Europe. I feel a state of mind, perhaps not revolutionary but impatient,” he said. “But when the impatience becomes a collective sense, it can lead to a revolution. The massive youth unemployment may be the most clear and visible reason.”


Le Figaro Premium‘s 05/31/2015 short article: “Emmanuel Macron, French Minister of Economy,  gives his Vision of an Ideal Europe”, which I translated and will quote (colored lettering is mine), preceding it with my own comments.

My Comments

Mr. Macron’s comments should start with his own country, where he himself is experiencing  enormous problems in carrying out relatively minor reforms, but which could be  first steps leading to real structural reforms, only that his own party is partially against it.

Mr. Macron calls France as being in the “vanguard” of Europe, yes, it is still the third European economy, after Germany and the UK.

But its social-economic non performance, makes France one of the most backward countries in the Eurozone in this respect, with no real structural reforms having been made in four to five decades, and carrying very large “real” unemployment”, because counting underemployment France has some Six (6) millions unemployed, either fully or partially (and still growing, because all the cosmetic arragments made by expensive and not productive artificial and non durable subventions and subsidies have not worked for decades) which makes real unemployment in France exceed 20% of the working population, with a higher ratio of young unemployment.

I do not believe that Mr. Macron’s ideas are workable, to me they are practically as theoretical as what the so called European supranational so called techno bureaucratic, “inside politicking / lobbying” governance” has not achieved. It has privileged a Financial Union instead of having first a Social-Economic Union, and has only created problems through erroneous directives and even worse timing, see Greece, the worst example of indecision and execrable “management”.

What is required, this being my opinion, very repeatedly exposed over four years in this blog,  is a far more compact hands on, pro active, working “in the field” executive Counseling Eurozone Central Unit composed by a “mix” of top public servants with a  history of success and top international corporate executives, not operational any now, having think tanks and being  on the boards of top corporations –  And stressing and having major countries execute badly needed Structural Reforms starting with Labor.

As posts in blogs can only be repetitive (at nauseum…) I have made alternative concrete proposals in two books published by Amazon with self-explanatory titles: Why Macro Governance is Obsolete and Killing the World Economy” (448 pages – published September 2014) and “Growth through Structural Reforms” (258 pages – published April 2015).

Quotes – Le Figaro Premium‘s 05/31/2015 short article: “Emmanuel Macron, French Minister of Economy,  gives his Vision of an Ideal Europe”,

In an interview with JDD (Journal du Dimanche – French Sunday only newspaper), Mr. Macron, the French Minister of Economy, has spoken personally of a “two-speed Europe”. The Eurozone would thus have a budget and a common debt capacity.

Take off the masks! In an interview with the “Journal du Dimanche”, Emmanuel Macron Europe furthers a “two-speed” European Union, breaking with the doctrine of “all together” promoted by the European institutions.

“We must accept the idea that there is a united and differentiated union, said Minister of Economy. There is a history of 28 countries [the European Union as a whole] and a history of 19 countries [Eurozone)”.

He imagines on one side common development in digital and energy sectors and on the other side a more advanced economic integration for the countries of the Eurozone.

It launches the tracks to having France, which he calls “the vanguard of the Eurozone” (sic), to adapt to more federalism at European level. It calls for a “move towards greater solidarity and integration: a common budget, a common debt capacity and fiscal convergence”, as a harmonization of social systems and unemployment insurance.

He also expressed support for the creation of a Parliament of the Eurozone.
“We only talk about European fractures, taken hostage by the collective of one country.”

This position, he said, talking on personal basis and on behalf of the young generation (he is 37), echoes that of his German counterpart (Mr. Schaeuble), who spoke Friday in the press across the Rhine European cooperation “at different speeds.”

But it would not be incompatible with the inclinations of the United Kingdom to take distances with the European Union. Statements by Emmanuel Macron also sound like a warning to Greece, accused of “taking hostage the collective” and whose difficulties hinder the development of the “vanguard” sought by the French minister.

Emmanuel Macron believes, however, priority to “reconcile Europeans with Europe”, especially younger who hear mostly talk “of European fractures.” He advocates an “Erasmus for All”, which would oblige the students as apprentices to spend six months abroad. As for treaty changes that these reforms would make it necessary, the Minister scans of a sentence: “The important thing is the project. The Treaty change is a modality that follows; ready on time. ”

A Grexit or a Brexit could well accelerate the timing imagined by Emmanuel Macron.