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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for August 20th, 2008

The 8000lb bear in the room

Posted by Sada Mosler on 20th August 2008

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There’s nothing credit issues can do to GDP that fiscal policy can’t handle.

Congress has seemingly figured that out and probably the rest of the world as well as evidenced by the new proposed fiscal packages popping up around the world.

Yes, we can lose a bank or two, and lending standards tighten further, but GDP will continue to muddle through even if that means a series of fiscal measures.

And Congress was born to spend; so, they are all over this one.

The only thing that might slow them down is inflation, and so far they’ve seemed to support the Fed trying to step hard on the inflation pedal, rather than ‘tighten’ which presumably helps inflation.

And no one seems to notice the 8000lb bear in the room.

Our response to Russia reminds me of Monty Python’s coconut clapping Arthur trying to intimidate the French defenders of the fort with his credentials.

We threaten them with diplomatic isolation, trade sanctions, etc. as if they care.

They don’t care.

They do care about the new missiles going into Poland.

And we are committed to considering an attack on Poland or any other NATO member as an attack on US soil, as Rice reminded them and even maybe dared them to try something.

We can’t defend anyone against against Russia with our own troops without risking nuclear war.

And Russia will be a lot quicker to that trigger than we will.

And they still have maybe thousands of nuclear warheads aimed our way.

Their next step for Russia is probably to make an offer to the rest of the ex-Soviet Union members they can’t refuse.

Russia sells the Eurozone something like 30% of their oil and gas and can do it at any price they want, and demand any real terms of trade they want.

The risk is we try to draw a line in the sand in some nowhere place over there, and it escalates to where we back down or get involved in lobbing nukes.

I suppose it’s just another case of this administration not seeing the forest for the trees.

We’ve let Russia be reorganized by the ex-KGB leadership that’s a lot smarter than ours, and now we’re paying the price.

Both the inflation and cold war of the 1970s is back, except this time our opposition is far stronger.

There is no even semi-quick supply response to dislodge the Saudis and/or Russians from setting any terms of trade they want.

The Russian consolidation is on the way up supported by a bath of capitalist type riches rather than crumbling under its own weight of a failed socialist economy.

Apart from that, I’m optimistic.


Posted in Fed, Inflation, Russia | 8 Comments »

Quick update

Posted by Sada Mosler on 20th August 2008

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(an email sent late this afternoon)

Hi all!

Sorry for this impersonal mass email- would have liked to do each individually.

I’m in Cleveland now, scheduled to get my mitral valve repaired Monday (aka heart surgery).

If so, should be back in this hotel room by Thursday, and home over the weekend. I’ve always had a mitral valve prolapse and at my physical last year testing showed that sometime in the last several years it has deteriorated some and should be repaired before it got worse.

Unfortunately the doctor at the Cleveland Clinic in Miami last year never mentioned this was happening, and if I hadn’t insisted on them forwarding my records for my personal physician Steve Martyak to check out (which took over 6 months) I still wouldn’t know what was going on.

The doc assigned to me here is more than concerned over what happened and is doing what he can to make sure it doesn’t happen again.

I have another test tomorrow, then a consultation Friday with a Dr. Sapik who is scheduled to do the actual surgery.

Will keep you all posted as to any progress/changes.

thanks in advance, no need to respond!



Posted in Email | 5 Comments »

Bloomberg: Vitol Reclassified by CFTC as `Non-Commercial’ Trader, WSJ Says

Posted by Sada Mosler on 20th August 2008

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Seems the liquidation may be ending, but just guessing.

Vitol Reclassified by CFTC as `Non-Commercial’ Trader, WSJ Says

by Alexander Kwiatkowski

(Bloomberg) Vitol Group was reclassified by the Commodity Futures Trading Commission as a “non-commercial” trader, the Wall Street Journal reported, citing people it didn’t identify.

The U.S. regulator changed the status of “one of the largest traders” in July, without identifying the company, the newspaper said. People familiar with the matter have now named the trader as Vitol, according to the Journal.

The change meant that bets by non-commercial traders, or speculators, represented half or more of all outstanding crude oil futures contracts on the New York Mercantile Exchange, the newspaper said.

Vitol hasn’t been contacted by the CFTC or by Nymex with regard to its trading status, a Switzerland-based company official said today by phone, declining to be identified. Vitol remains classified as a commercial trader, the official said.

Vitol “is not in the business of taking large positions speculating on the rise or fall of market prices,” the company said in a May statement on its Web site.


Posted in Articles, Oil, Trading | 4 Comments »

Bloomberg: Paulson continues weak USD policy

Posted by Sada Mosler on 20th August 2008

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Seems Paulson is still blocking foreign CBs from accumulating USD financial assets. This is a negative for the USD and a negative for US real terms of trade.

It does support US exports and reduces the need to add to domestic demand, even as US consumption remains low.

Yuan Rises Most in 3 Weeks After Paulson Calls for Appreciation

by Kim Kyoungwha and Belinda Cao

(Bloomberg) The yuan climbed by the most in three weeks after U.S. Treasury Secretary Henry Paulson urged China to let its currency appreciate to curb inflation and deter Congress from introducing trade penalties. Bonds gained.


Posted in Articles, CBs, Currencies | No Comments »

2008-08-20 US Economic Releases

Posted by Sada Mosler on 20th August 2008

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MBA Mortgage Applications (Aug 15)

Survey n/a
Actual -1.5%
Prior -1.5%
Revised n/a


MBA Purchasing Applications (Aug 15)

Survey n/a
Actual 314.0
Prior 315.2
Revised n/a

Been flat for several weeks now.


MBA Refinancing Applications (Aug 15)

Survey n/a
Actual 1034.5
Prior 1074.6
Revised n/a

Still drifting lower.


MBA TABLE 1 (Aug 15)


MBA TABLE 2 (Aug 15)


MBA TABLE 3 (Aug 15)


MBA TABLE 4 (Aug 15)


Posted in Daily | No Comments »