Venice video link here.

Also, Trichet Friday, the German elections, and G8 reports seem to be setting the tone for the euro zone to do something about the solvency issue. This is very good for equities and the rest of the credit stack.

At the same time it does not seem likely that any growth proposals will include fiscal relaxation, so the euro zone will have to get by the best it can with the deficits it has, which I’d guess should mean flat GDP, +/- 1% or so.

The US should also continue to muddle through with modest top line growth, and inflation low enough and the output gap wide enough to keep this Fed from hiking any time soon.

16 Responses

  1. On your presentation during Q&A you say that the issue of capital flight is a myth. The name of the account holder at the cb just changes. ‘From Joe to José’.
    But how about the impact on the banks? If all Greeks transfer their euro’s from their accounts at Greek banks to their euro accounts at non-Greek banks outside Greece?

    1. @walter,

      I’d love to see this discussed more. Capital flights are a real issue with real effects on the banking system, the exchange rate, etc.

      I don’t agree it’s just the name of the account holder changing from Joe to José. It’s rather José moving his dollars from his Argentinean bank to a bank in Uruguay, Panamá, or the US.

      1. careful about confusing liquidity issues with capital.

        also, any net dollars in an argentine bank, for example, are held in their US member bank account

    2. all that happens is that the greek banks borrow from their friendly cb branch and post their assets as collateral. and the euro deposits taken out go to another bank’s account at its cb branch. it doesn’t change anything in the economy or the level of the currency

      1. @WARREN MOSLER, Of course decreases in deposits (liabilities side) will be matched by additional loans from cb and/or decreases in reserves (asset side).

        But how long the cb is going lend to banks that can only get finance from the cb?

      2. if I were running the cb there would be no limit as long as the bank has sufficient collateral, and I would take any ‘bank legal’ asset as collateral as well. see my proposals for the banking system thanks

  2. Warren how do we save thier purchasing power? I don’t care to frame the debate as one of solvency anymore since I think that is a bankster trick, I want to frame it as one of purchasing power in a world where no one trust any corrupt government or any fiat money.

    Warren, I always thought when you went to Italy to save them from that MIT economist (who shall not be named) who assured their default it was an act of doing god’s work and a matter of conscience (as you say often lately about your current efforts) It is illuminating for you to admit it was just about enriching your coffers of money. A lot of finance people don’t have the class or honesty you have to admit something like that, you are a prince among thieves.

      1. @WARREN MOSLER, i.e., that distributed profits swamp local ones?

        i.e., return-on-coordination dwarfs individual effort

        Our lost output is a travesty so devastating it would bring all to tears if they could only recognize it. If they could, however, we’d all just start cooperating in exploring distributed options.

      2. @roger erickson, Lets define it, there is the lost output from underemployed, lost output from unemployed, lost output from starving and malnourished, lost output from those that have given up completely and no longer looking, lost output from misdirected military initiatives worldwide from africa to south america to middle east, lost output from failed incarceration policies, lost output from failed political pork barrel government that misallocated, the list goes on and on….

        My god it is STAGGERING how much waste is in the system. If all this lost output the past 200 years had been properly focused and directed, we would be like the ancients in stargate, already ascended…. Why can’t you get those dummies in DC to realize how they are shooting themselves in the foot being so selfish and not worrying about all this lost output Roger? I still have to fight with hundreds of people a day on the internet that burying gold in a hole in your backyard doesn’t make the world better…

  3. unfortunately, that video link cuts off just before the end. and the Q&A vids didn’t come out right. apart from that, great lecture, warren!! and i really loved the point you made about capital flight. for those of us who are clueless, i wish you would make a post about that and expand on that a bit more. for example, i was reading the other day that there’s a big capital flight going on right now out of Argentina. i’m wondering, is that a serious issue for the Argentinians?

    oh, one more thing… talking thru an interpreter takes a little practice. next time you might want to limit your “utterances” to 3-4 seconds or less (for a “western” language), that way you 2 aren’t talking over each other and both english speakers and speakers of the “target language” will be able to hear both of you separately. anyhow, i noticed, towards the end of your talk, your “rhythm” got better…

    anyhow, that interpreter was really good. i know a little italian and all her translations were accurate.

  4. Will there be a trascription made available eventually? Or do you plan a post as per the request above?

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