On May 31, 2011, in The Public, by Joe Costello

High water risin’—risin’ night and day
All the gold and silver are bein’ stolen away
Nothing standing there, highwater everywhere
High water risin’, the shacks are slidin’ down
Folks lose their possessions—folks are leaving town
Bertha Mason shook it—broke it, then she hung it on a wall
Says, “You’re dancin’ with whom they tell you too or you don’t dance at all”
It’s tough out there, high water everywhere

High water risin’, six inches ’bove my head
Coffins droppin’ in the street like balloons made out of lead

“Don’t reach out for me,” she said “Can’t you see I’m drownin’ too?”
It’s bad out there, high water everywhere
B. Dylan(for Charlie Patton)

Home Prices Decline, Hit Post-Bubble Low – WSJ
U.S. home prices fell 4.2% in the first quarter, hitting their lowest levels since mid-2002, according to the S&P Case-Shiller data. Separately, the mood among U.S. consumers fell steeply in May.

Growth Slowdown a Concern — WSJ
After a disappointing first quarter, economists largely predicted the U.S. recovery would ramp back up. But there’s little indication that’s happening.

Throwing good after bad – Asia Times
Not all credit is created equal. Over the years, I’ve differentiated between “productive” and “non-productive” credit… I would argue that the capacity to produce real economic wealth matters a great deal – in terms of sustainable economic recoveries, stable currencies, and robust credit systems. The nature of bubble economy economic distortions matters greatly in how a system is able to respond to credit crisis. Will the post-bubble response emphasize ramping up production, trade and savings to work one’s way through a crisis? Or, instead, will it be more a case of depending largely on additional credit creation/inflation?

Financial systems and bubble economies in time become increasingly dependent upon increasing amounts of credit expansion to sustain inflated price structures and to ensure sufficient system-wide spending generic cialis levels. And if the bias is to de-industrialize and move toward a services and consumption-based economy, loose finance and inflating asset prices definitely grease the wheels of economic restructuring. At the end of the day, the resulting economic structure will have developed a gluttonous appetite for ongoing credit creation. Eventually, a credit bust will entail staggering amounts of ongoing credit assistance.

Thus far, we’ve received important confirmation of the thesis that there’s no simple prescription for resolving sovereign credit busts. They will surely prove incredibly expensive, controversial, and be resolved over many difficult years. The conventional view that a recapitalization of the banking system will go a long way towards sustainable recovery is proving overly optimistic – and much too simplistic.

Indeed, inadequate bank capital is not the greatest source of system fragility. Instead, the key issue is the amount of ongoing additional system credit required both to stabilize inflated price levels and to ensure expenditures sufficient to hold economic collapse at bay.

Going unappreciated was the extent to which previous bubble excess had inflated receipts and distorted the true underlying fiscal situation of most governments – along with the extent to which bubble economy structures had become credit gluttons. Unbeknownst to policymakers at the time – and remaining unappreciated, especially here at home – is how aggressive (fiscal and monetary) stimulus packages set a course for severely impairing the creditworthiness of the underlying sovereign debt. What was thought to be a couple of years of elevated spending to resolve post-bubble issues has evolved into ongoing public-sector borrowing and spending that does little more than hold the next crisis at bay.

The unprecedented expansion of sovereign debt throughout the “developed” world is all that sustains the entire private and public debt pyramid. I see overwhelming support for the bubble thesis, with (Minsky) “Ponzi finance” footprints all over credit systems, the markets and real economies.


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