Meanwhile, back at the casino, five year US Treasuries are down to a record(?) low of .77% as I type this.
Didn’t Mr. Market get the Michael Kinsley’s memo about hyperinflation?
Or listen to Mitch Daniel’s stem-winder on the financial endtimes that approach?

Edit. Ah-hah, an explanation:

The rush is coming from banks that can borrow at even cheaper rates, like 0.05%, and buy a U.S. Treasury note for 0.70%, said Michael Cheah, senior fixed-income portfolio manager at SunAmerica Asset Management.”Wouldn’t you want to buy it and lock in the difference?”

I can pleez haz .05% muny?

yeah, that 0.05% money would help me pay off my credit card debt, which i incurred at 7.99% only to have it jacked up to 24.99% even though i never missed a payment. thanks, obama and congress–i really needed that.

There is only one word to describe the economic policy makers of the developed world:

Obtuse

Why is growth the unquestioned assumption, the indispensable factor, the must-have article of faith? Why is the necessity for growth never challenged? The reality is that we live in a finite world but have constructed economic, social, political and religious systems that require constant growth. Like any other species will we, without consideration for balance or sustainability, run or system into the ground? Will we consume our environment until we founder? We live in a finite world, have constructed systems that assume infinite growth and resources, and have a concomitant religious delusion that somehow these two things are compatible.

I think step 2 must be wave magical austerity bonanza wand.

Yeah, I’ll never forget my “we’re-dramatically-jacking-up our-interest-rate-cause-we-can” letter. That’s the last time I held a credit card.

Of course, the European economic crisis is purely a product of human greed, in the sense that the ongoing problems are apparently largely due to the reluctance of the wealthiest to pay to clean up their own mess. Sadly, the richest members of society no longer have any skin in the game, be it the US or West Europe – as a result, there is a crisis as cash-strapped governments and people who actually have to work to support themselves are expected to endure the hangover from the partying of the Paris Hilton class.

(Really I dont know why the combined plutocracies of the US and Europe haven’t combined behind her candidacy – she’s their poster child.)

No successful industrial economy grew without having a significant automobile manufacturing base. Not one. They eventually over-competed, making very durable automobiles, and finally very very durable ones. The financial markets have made far fewer automobile loans. Unintended consequences from too much success. Now (or since), it seems currency has become the substitute for the automobile.

People, this isn’t rocket science.
Growth is important because the world has more people every year.
Growth means new wealth (goods and services) is being created faster than it’s used up.
Growth will occur when the opportunity for new profit appears. Govt isn’t necessary. For example, in North Dakota’s gas field, one can get a job at MacDonalds at $15.00/hr, with signing bonus, and full medical.

Threatening people with new taxes and regulations all the time, doesn’t lead to growth. It leads people to move their manufacturing overseas, making them grow instead of us.

.

Why is growth required simply because there are more people on the planet every year, if the definition of growth is new wealth being created faster than it is used up? Indeed, wouldn’t an ever increasing population mean that the possibility of generating new wealth becomes harder and harder, especially if part of growth is new profit, which is the extraction of something extra from the transaction?

How does your example prove the importance of growth as a function of an increasing population or indicate that wealth is being created faster than it is being used up? If one can make $15/hr working at McDonalds, isn’t the wealth generated from exploiting an untapped (but finite) resource in keeping with the rate that it is used up?

Europe has no growth problem, for fucks sake.

No more n the USA does . .

We have an empire problem, run by the 1% global, who serve themselves and not the masses.

This is simple shit . . . I hate to see it played for any reasons, Mr. Dayen.

The entire planet is plagued by 1% corporate fascism . . . .

N it’s doomed, by the same plague.

Can we get some news and inspiration that challenges the 1%?

Thanks.

Amen.

“We haven’t overcome the crisis yet. Of course, there’s Greece, a special case where, despite all the efforts that have been made, neither the Greeks themselves nor the international community have yet managed to stabilise the situation.”

So the above means “everybody, including Angela Merkel, admits that they will not be able to avoid default”???

Well the Guardian headline “Angela Merkel casts doubt on saving Greece from financial meltdown” does imply that idea – but what she said is quite a bit short of what is being asserted as what she said – just reading the quote again makes one wonder where the headline came from.

Germany wants to outlaw Keynes – as a way to growth. Now have recent events proved that idea to be the right path to growth. You are spot on DDAY – Germany has dumped on the Greeks – and the rest of the Eurozone – because they refuse to do the New York State to Mississippi tax transfers that allowed poorer states to survive in the US.

Greed is not pretty – as all countries except the US have been moved by the 1% into single country only tax system that makes it easy for the rich to never be taxed. Only in the US do we tax worldwide income, giving credit for taxes paid on that income in other countries, and indeed deferring, if you are a corporation, tax on income earned overseas until it is send to a US based financial account, thereby getting a few dollars more from our rich.

Of course the proposed GOP PLAN, the proposed “Simpson/Bowles Plan”, and the Obama GRAND BARGAIN all would drop worldwide taxation for EU, etc., style single country taxation so the US rich are not taxed more than the rich in other countries.

I have heard that the expressed goal of the Eurozone was to to bankrupt the social welfare systems of various countries AND it is working!!!!

Ok, question for the smarter econ people.
If Greece would have defaulted from the start, would they have pulled everyone else down (Italy, Spain, etc.) as is happening now?

I’d say that it would all depend on execution

Right you are! Is there any serious economic study of a non-growth economy? Do we have to have “grow or crash” as the only economic model?

Define the start. If you hadn’t let them use faulty accounting to drive up the economies of the rest of the eurozone on their credit, a lot of this in theory wouldn’t have happened. Much like the housing issue in the US, it was in the interests of all involved to look the other way and keep the money flowing so they could perpetuate.

If they had have defaulted say two years ago, you’re looking at hundred’s of billions saved from various sources that could have been applied to shoring up other countries banks. However, its probably still not enough. The interconnections between the Greek banking system, who holds Greek debt, and the issuers of the Greek CDS. (they keep pointing out in the media how small this number is, but they don’t know if its concentrated on a small number of stressed banks)

They are having the their come-to-jesus moment since last Friday. It’s pretty laughable they were able to get a headline reported earlier this AM about how the talks had progressed, by quoting an interest coupon rate that had been rejected prior. Nobody is reporting this honestly, and it’s probably impossible to know unless you’re a fly on the wall over there.

I don’t know if there is a sound, widely known study describing how a sustainable economy might be built. I certainly never hear about anything like this from the usual “serious” public economists or US citizens (don’t we all spend in direct proportion to our income, even when it goes up?). In light of the history of the US as a colony and its westward expansion along with an economic system that requires ever-increasing profits, the idea that bigger is always better is an article of faith. We in the US might not have the language, ideas or mythology to keep from consuming ourselves to death by adopting another strategy. In the US, growth is a religious precept. Can we turn our backs on our gods we believe have served us so well?

Likewise, I don’t know of any other empire–from the Dutch to the Mayans–that has avoided “grow or crash.” Humans, like any other species, periodically hit upon some survival technique, some advantage for their group, which works wonderfully initially but from which they can’t deviate even when the originally advantageous startegy turns ruinous. Every group seems to ride their particular torpedo out to the very bitter, crash-and-burn end.