Death Star Economics



Gold standard, question mark?

The Republican Party is in the process of setting up a “gold commission” to monitor the Fed’s monetary policy decisions and revive the link between the dollar and gold. Excuse me, says you. Indeed, says I. It looks a lot like areturn to the gold standard. Thanks, Ron Paul. And it’s getting better:

The proposal is reminiscent of the Gold Commission created by former president Ronal Reagan in 1981, 10 years after Richard Nixon broke the link between gold and the dollar during the 1971 oil crisis.

And of course nobody has thought about this:

Inflation has remained under control in recent years, despite claims that expansion of the Fed’s balance sheet would lead to runaway price rises, while gold has been highly volatileThe price of the metal is up by more than 500 per cent in dollar terms over the past decade. 

Somebody add an economic history book ( to that order of biology books that is being sent to Florida. read article

Glenn Maud, formerly of the real estate investment firm Propinvest, which entered into administration in November 2011, now has his expenses watched by the Royal Court of Guernsey. Indeed, the poor man who owns windows and door frames of Canary Wharf’s Citi Tower and Santander’s Madrid headquarters, is now required to keep his living expenses under £500 a week. As a journalist, I sympathize. Plus, hookers are expensive. There’s nothing worse then running out of £100 notes on a fucking Tuesday morning.

Propinvest’s Gemini portfolio, which holds 35 commercial real estate assets, is currently worth £437.5m with almost £1bn of loans attached to them. read article

The Greek Prime Minister Antonis Samaras is on the road in Western Europe: he is meeting Merkel today, Hollande tomorrow, and the day after that the queen’s child comes in. Both Merkel and Hollande, who previously had next to nothing in common, agree that Greece has to stay committed to the bailout terms and conditions. That’s really not too crazy a thing to ask. read article

Or as ZeroHedge put it:

Merkel Says Greek Acts Must Follow Promises. Is she insane? This. Is. EUROPE!

Weekend reading:

– just a chart: the price of a polar bear

– following the unforgettable fight of the century: Keynes vs Hayek, Alphaville brings us Hayek vs Randread article

– Elisabeth Murdoch’s criticism of News Corp, preparations for an awkward Thanksgiving, read article

– “Don’t be fooled by short-selling bans” by MC Gillian Tett, read article

Have a good one and don’t forget that Monday is a bank holiday.


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A reminder that the UK would rather be the US

All European cat-fighting got a lot more serious, or should I say a matter of life and death, when Angela Merkel said there would be no Eurobonds for as long as she lives. Needless to say, her disgruntled communications squad made her amend the statement immediately. That puts her against the proposal of the joint EU presidents from yesterday. Meanwhile, Mario Monti made the opposite move, saying he would resign (boring!) if eurobonds don’t happen quickly.

In other continental news, the Bank of Spain said the country’s recession deepened in Q2, while Evangelos Venizelos (Remember him? He’s one of the 725,000 former Greek Ministers of Finance) said Greece needed an urgent liquidity fix and the recession is worsening by the minute. Italy is getting a taste of Spain’s banking problem, with UniCredit’s shareholder Pamplona Capital increasing their stake by 3%. UniCredit is the country’s largest bank and pan-European banking group and was the worst performing stock across Europe at certain times this month. Over the last 12 months, it lost almost 73% in value on the Milan stock exchange. Ouch.

But most importantly, we got a new acronym!!! Indeed. And it is unrelated to Greece, although its draws from it for inspiration. Take is away, Alphaville

Just when you had had enough of Grexits, Greuros and Drachmageddons, here’s another irritating term to add to the eurozone crisis lexicon: Brixit. Yes, the genius fusion of the words Britain and exit to describe another gloomy scenario.

How realistic a Brixit is remains up for discussion. Despite all the whining and finger-pointing, I’m pretty sure the UK wouldn’t be the first to jump off the sinking ship.

Mervyin King of the Bank of England, however, provides ammunition by saying that the UK is not even half way through crisis brought to us live from across the Channel. read article

Meanwhile in the US, the American housing market is sort of alive and kicks a bit as well, with the largest number of new home sales in the last two years recorded this week and prices rising. But not so fast, says MarketBeat

“But before we bust out the pom-poms,” says MarketBeat, “let’s remember housing has exhibited many head fakes throughout its fitful recovery.”

Think of how long this is taking. Think of the US economy. And now think of how that’s going to look in Spain. Summer house, anyone? read article

The potential demerger of Newscorp into two separate divisions is likely to be decided on over the course of the day. Holding 40% in each division, the Murdoch family would remain in control of both. In the meantime, Dealbook dives into the numbers. read article

And finally a short read for the how-to-be-a-banker book (chapter 7: don’ts): enter Sheldon Maschler. read article

So long.

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Would Murdoch want to be new Greek finmin?

So about Greece… I’m sorry, but it’s one of those days. Finance minister Rapanos resigned yesterday due to health issues and prime minister Samaras announced that he will not be able to fly for two months due to his eye problem. What the… Rapanos may be replaced by Yiannis Stournaras, professor of economics at the University of Athens and one of those who hasn’t fled the country yet. Both the details and results of his health check are yet to be disclosed.

Newscorp is looking into splitting the company into separate entertainment and publishing divisions. What does this mean? Well, the legitimacy of the WSJ’s report on the story is up for discussion, as the journal is of course part of Newscorp. But Murdoch could stay in control of both parts, only mitigating the storm around the British newspaper units that were involved in the phone-hacking scandals, and not actually solving the problem that a demerger should presumably address (namely Murdoch owning everything). More importantly, a split would make it harder for the publishing division to find investors, despite its prime newspaper assets, because its growing at a much slower pace than the entertainment branch. Not really surprising, you’re comparing the WSJ and the Times to 20th Century Fox here… come on.

A new proposition from Brussels authored by the presidents of the Commission, Central Bank, Eurogroup and Council (mostly to set the stage for the summit later this week): In Dan Davies words [blatantly stolen from Twitter, yay for 140 characters]:

1. Pan-European single banking regulator – ie completely irrelevant to crisis, pure and simple power grab.

2. European deposit insurance & resolution schemes, backed by ESM – ie repurposing of existing fund, not in treaty. Nothing from ECB

3. “pooling of decision making on budgets” ie power grab

4. “issuance of common debt could be explored” – ie, jumping someone else’s train of ERF and Eurobills. No original work

5. “A full fiscal union” and what’s the most urgent issue about that? yup “it would need a central budget“.

6. “Towards an integrated economic policy framework” – equal parts sameold “stability and convergence” guff and power grab.

7. “Oh yeah, democratic legitimacy”. Insultingly brief 2 paragraph section, which just points you at Protocol 1 of TFEU.

(or read article)

In other European news, Cyprus has officially requested a bailout, the terms of which have not been finalized, but it’s like to be €8-10bn, and France is set to raise the minimum wage by 2% come July 1.

The woman in the news today is not Angela Merkel for a change, but Facebook’s Sheryl Sandberg, who is now director of the company’s board, which so far had only been comprised of men. Well done Sheryl, girl power and all that.

At last, a chart and a reason why we shouldn’t be looking forward to September: according to a study by Luc Laeven and Fabian Valencia of the IMF, which relies on 147 cases over 41 years, September is the month of banking crisesread article

So long.

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