ECB Learns About Moral Hazard; Germany Caves, Again; Manufacturing Renaissance Creating Few Jobs;

May 22, 2012


“All that money floating around still makes it hard to focus on things that take time. Rush. It’s a game of musical chairs.”  ~ tech entrepreneur Dave Winer


DoubleLine’s Gundlach: ‘We Don’t Like the Short End of the Curve at All’ ~ Advisor One 

The average person speaks for 11 minutes a day 

Body language accounts for 60-80% of the impact made around a negotiating table 

Impact of a message is 7% verbal, 38% vocal, and 55% nonverbal 

Dalio’s World ~ Barrons - alarmingly Keynesian perspective; diagnoses are good, but solutions lay the foundation for the next bust 

Emerging Market Boom Bust Cycle:

Phase I: “Phase one is growth. You get a lot of foreign investment.”

Phase II: “Foreign banks lend recklessly to local banks. [They] think local bonds won’t fail because of local government support.” 

Phase III. “Costs rise to levels that make the economics uncompetitive. They’re not cheap anymore. [The] capitalist caravan must move on.” 

End: “Then of course, kaput. It all collapses.” ~ HistorySquared 


33 years old. 30 children with 11 women. ~ Yahoo News

“Total $$ amount of welfare provided by taxpayers for each of 30 over 18 yrs?” ~ @historysquared

“over lifetime most likely, not just 18″ ~ @BarbarianCap

“Disaster declarations have become the new pork barrel politics” year ~ Heritage  President Obama approved 242 FEMA payouts last

Paul Tudor Jones Buys JPMorgan and Financials ETF as Top Holdings ~ Nasdaq 

Foreclosure Filings fell to a five year low last month ~ Realty Trac – mainstream media continues to lag on the ongoing housing boom 

Sports gamblers bet $2.9 billion last year legally in Nevada versus $380 billion wagered illegally 

Between 2001 and 2011, the wages of young college graduates dropped 5.4% ~ bloomberg – prices are higher, so the real wages fall is worse 

Bloomberg notes Industrial production is surging, but manufacturing jobs are not (automation?).

  • As industrial production increased 16.7% from 2009 – , manufacturing jobs increased 1.8% 
  • As industrial production increased 15.5% in 2001-2007, manufacturing jobs fell 13.2% 
  • As industrial production increased 29.4% in 1995-2000, manufacturing jobs fell 0.5% 

Note also that industrial production is weakening.


Money is flowing out of China ~ FT Alphaville  as expected ~ historysquared 

China January-April FDI inflow at $37.9 billion, outlook dark ~ Reuters   

Suppressing dissent: The emperor does know ~ The Economist 

local officials are graded on the basis of a series of internal targets that have little to do with the rule of law


The most significant development this week is the ECB finally realized that governments will not enact reforms so long as ECB prints. This suggest the ECB will tolerate much more turmoil in the financial markets than before 

“We fully agreed that we need both” fiscal discipline efforts for growth,” Merkel said ~ Expatica. Germany is caving on everything, including inflation

Europe’s depressing prospects, by Michael Pettis : ~ mpettis 

Israeli military to keep tabs on Facebook, Twitter ~ RT 

France has 26 of the 34 ministers, including the PM, standing for election.  Election Cycles Increase Probabilities of Market Crises $study ~ HistorySquared 

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