The Con-Science of a Keynesian: 2011

Gaddafi calls cease fire, Cameron calls BS

Shortly after 2011's Nobel Peace Price winner Moammar Gaddafi announced a 'cease fire', U.K. Prime Minister David Cameron announced an 'open fire'. From BBC:

Giving his reaction to the news, Mr Cameron told BBC News: "We will judge him by his actions not his words.

“Start Quote

I believe that we cannot stand back and let a dictator whose people have rejected him kill his people indiscriminately”

David Cameron

"What is absolutely clear is the UN Security Council resolution said he must stop what he is doing, brutalising his people. If not, all necessary measures can follow to make him stop.

"That is what we agreed last night, that is what we are preparing for and we'll judge him by what he does."

Mr Cameron earlier told MPs there was a "clear and unequivocal" legal basis for action in Libya.

While not giving specific details of military preparations, Mr Cameron said the UK would "play its part" in enforcing the will of the international community.

"The defence secretary and I have now instructed the chief of the defence staff to work urgently with our allies to put in place the appropriate military measures to enforce the resolution - including a no-fly zone," he said.

"Preparations to deploy these aircraft have already started and in the coming hours they will move to airbases from where they can start to take the necessary action."

Apparently P.M. Cameron realizes that anyone sporting a full-blown porno mustache is willing to bluff.

Eco-Summary for March 18, 2011

Aside from a very small ($1-2 Billion) TIPS POMO, today's list of manipulated statistics from our bureaucratic friends is blank. So, unless one wishes to fight the G7, Federal Reserve, and OPM extraordinaire Bob Doll, our official recommendation is to turn off the Bloomberg, TradeStation, or preferred prime broker's dysfunctional trading platform and dust off the sticks. Just remember, no mulligans on the first tee. And, oh yeah, when you make the turn at lunch, be sure to enjoy an ice cold beer and an iPad.

America's Apple Pie is Getting More Expensive

As the second leg of the housing downturn gets underway, our white picket suburban fences are definitely getting cheaper (assuming one can get a loan from our still insolvent financial institutions - good luck, you're only competing with the Federal Reserve for their attention). But that 40% of our spending basket which Bernanke conveniently excludes from the CPI, food and energy, are definitely rising. As readers know, the U.N.'s approval of bombing Libya last night will all but guarantee that filling up your SUV will soon cost a second mortgage. But as Bill Dudley apparently doesn't know, food prices are on the rise.

To wit, an interesting observation from John Lohman (though we can't seem to verify his credentials) via Zero Hedge:

"It’s understandable that this morning’s spike in finished consumer food prices received little attention. What with a mini-crash in housing starts, spent fuel pools running dry, USDJPY breaking the BOJ’s strike price of 80, and busted underwater POMO trades, there was no shortage of distractions.

Nevertheless, anytime an ecostat comes in at the 4th highest reading in its 64 year history, it’s worth taking note. As shown in the chart below, the finished consumer foods component of the Producer Price Index jumped 3.9% in February alone. But not to worry. The core PPI only rose 0.2% in the month and ‘inflation expectations [among blue chip economists] remain subdued’. Paging Mr. Dudley…"

Our own regressions suggest this 3.9% rise in the PPI's food component correlates with a 3.0% monthly rise in the CPI's food component in the next one to three months. It's coming.

Fat Man and Little Boy, Meet Voldemort

As we pointed out earlier, the G7 has concluded that what's in the best interest of free markets is not free market pricing and decided to become the sole seller of Yen. The result: one of the largest 2 day moves in USDJPY in over 30 years. Though the current range is barely in the top 10, keep in mind that the day is far from over.

Meet the Sendai Accord

Forget the Plaza Accord, meet the Sendai Accord: the G7, in their infinite wisdom, has decided to (once again) muddy the waters of free market pricing. As readers are no doubt aware, the tragic events in Japan over the past week have placed tremendous upward pressure on the Yen. The carry trade, equity hedging, 'risk-off' maneuvering, and repatriation are all legitimate culprits. But since these market forces are all opposed to what the 7 most powerful unelected officials deem 'appropriate' for the global economy, they have decided to use their unconstrained balance sheets in a coordinated effort to devalue the Yen. We eagerly await the outcome of their ultimately unsuccessful endeavors.

A Decade of Nobel Peace Prize Winners

Since this is our first post, we just want to be perfectly clear: if you admire anyone on this list:

We recommend you:

Immediately return to your homepage, or
Double your blood pressure medication

Fair warning.

Friday, March 18, 2011