Nobody talking about the Swiss?

[CosmicCowboy]

Damn. Their central bank threw in the towel. More than likely shades of things to come in the EU.

Totally fucked their economy overnight.

[boutons_deux]

play with the time-window slider

http://www.xe.com/currencycharts/?from=EUR&to=CHF

[ElNono]

The cheese is great...

[ElNono]

BTW, they're not EU members, IIRC...

[CosmicCowboy]

BTW, they're not EU members, IIRC...

No, but the first country to throw in the towel and admit their central bank couldn't do QE forever. They had been supporting the franc and finally realized it was hopeless. Same thing could happen to the EU with all their weak sisters teetering on bankruptcy.

[boutons_deux]

BTW, they're not EU members, IIRC...

... as if global finance weren't deeply interconnected.

[boutons_deux]

No, but the first country to throw in the towel and admit their central bank couldn't do QE forever. They had been supporting the franc and finally realized it was hopeless. Same thing could happen to the EU with all their weak sisters teetering on bankruptcy.

This isn't QE (central bank lending, selling bonds at extremely low rate to pump up liquidity) at all. It's foreign exchange intervention to peg one currency to another.

[m>s]

This isn't QE (central bank lending, selling bonds at extremely low rate to pump up liquidity) at all. It's foreign exchange intervention to peg one currency to another.
lol you don't even know what QE is, QE is when the central bank buys up bonds pushing down interest rates. you have a lot of opinions about this for someone who is ass backwards and could benefit from an entry level economics course.

[CosmicCowboy]

Whether you print money to but other currencies to support yours or you print money to buy up bonds it is still a form of QE. The central bank is intentionally creating new money to manipulate the markets one way or another. The key here is the Swiss were the first ones to throw in the towel and admit they couldn't do it.

[ElNono]

No, but the first country to throw in the towel and admit their central bank couldn't do QE forever. They had been supporting the franc and finally realized it was hopeless. Same thing could happen to the EU with all their weak sisters teetering on bankruptcy.

What does QE has to do with this? What they've thrown the towel on is pegging the Swiss Franc to the Euro to make commerce with the EU more competitive. They're not a member of the EU, so I'm not sure what do you mean about "same thing could happen to the EU"...

Pegging currency is hardly new, and it eventually failing isn't new either. Eventually the disparity in inflation on both economies makes it unsustainable (see ARG pegging the peso on the dollar in the 90s).

That's why becoming a full member of the EU includes replacing the currency (or in the case of Ecuador, switching their entire currency to the US Dollar). That's the only way to deal with this stuff long term. But Switzerland opted not to become a full member, so they're just going to have to deal with this.

[CosmicCowboy]

Lol if you just think this affects the Swiss. Are you saying the euro value isn't at risk? The whole reason the currency's were unbalanced was a flight to perceived safety of the franc vs the euro.

[ElNono]

Whether you print money to but other currencies to support yours or you print money to buy up bonds it is still a form of QE. The central bank is intentionally creating new money to manipulate the markets one way or another. The key here is the Swiss were the first ones to throw in the towel and admit they couldn't do it.

That's not entirely correct. Switzerland has to obtain Euros to do commerce with the EU bloc, which means they have to obtain currency that's not theirs. That's when you get inflationary pressure (due to printing to obtain a different currency).

QE had nothing to do with that. Under QE, bonds were still paid and traded in US dollars. There's no currency exchange in that scenario.

[ElNono]

Lol if you just think this affects the Swiss. Are you saying the euro value isn't at risk? The whole reason the currency's were unbalanced was a flight to perceived safety of the franc vs the euro.

It's not different than investors flying to the dollar on the same concerns. Currency traders will always flock towards currencies with less inflationary pressure.

[CosmicCowboy]

Couple that with EU QE next week of between 500 billion and one trillion and the political difficulty of deciding what bonds and how much to buy between 15 EU members, throw in the Greek bankruptcy and upcoming elections and anti austerity sentiment and it is going to be really difficult to support the euro.

[ElNono]

Difficult for who? The EU is not going anywhere...

[CosmicCowboy]

El noon I understand that the position if the US fed / federal reserve and the EU is different but there are also similarities in creating new money out of vapor.

[CosmicCowboy]

Difficult for who? The EU is not going anywhere...

You really think the northern tier of the EU will be politically able to support the southern tier forever?

[CosmicCowboy]

Btw I think the free trade EU will survive, I'm just not as confident as you are on the common currency surviving.

[ElNono]

El noon I understand that the position if the US fed / federal reserve and the EU is different but there are also similarities in creating new money out of vapor.

Creating new money is a concern if you already have inflation... but what the EU is fighting right now is deflation. Last year, they posted mostly negative inflation almost throughout, peaking at -1.1 in June (2nd worst since Oct 2009).

It's not surprising they're trying to use the same methods the US used.

[ElNono]

European Central Bank inflation numbers:
https://www.ecb.europa.eu/stats/prices/hicp/html/inflation.en.html

[ElNono]

You really think the northern tier of the EU will be politically able to support the southern tier forever?

For the most part, none of the countries mostly affected by the economic downturn in the EU has expressed any intentions of leaving the union. 'forever' is a big word. I don't know I would use it with anything. But there's no indication the EU will change in the foreseeable future.

[ElNono]

Currency traders will do what's best for their money. If they get word that the EU will devalue to try to get out of deflation, it makes sense they'll flock somewhere else.

Of note is that Swizerland is also on a deflationary state right now. It will be interesting to see what measures they take (if any) now that they're not pegged to the Euro to get their economy going.

[boutons_deux]

EU Showdown: Greece Takes on the Vampire Squid (http://ellenbrown.com/2015/01/06/eu-showdown-greece-takes-on-the-vampire-squid/)

http://ellenbrown.com/2015/01/06/eu-showdown-greece-takes-on-the-vampire-squid/

[Winehole23]

In an accompanying move, the Swiss central bank will now charge banks 0.75 percent for the privilege of depositing money with it. In the bond market, investors in Swiss government bonds are getting negative yields on any securities with maturities of nine years or less; at one point this morning, your reward for lending to Switzerland for a decade dropped to 0.033 percent, or so close to zero that it really makes no difference.


In the past five years, Swiss consumer prices have dropped by an average of 0.1 percent; the most recent figures showed annual inflation dropped by 0.3 percent in December. It's clear from the central bank's comments that it sees a worsening global deflationary backdrop; keeping its currency weaker hasn't produced the higher prices suggested by economic theory.


For the rest of the world, today's move confirms that deflation is a clear and present threat to the global economy. Central bankers everywhere should be re-reading Ben Bernanke's November 2002 speech "Deflation: Making Sure `It' Doesn't Happen Here" -- and reviewing their policies to make sure they're doing everything they can to boost growth and make consumers and companies more confident about their economic futures.

http://www.bloombergview.com/articles/2015-01-15/switzerland-ambushes-the-global-economy

[Winehole23]

There are a handful of other immediate losers from the move. Any trader who was short the Swiss franc this morning is probably still in a state of shock; Forex.com, a currency trading website, suspended trading in the Swiss currency after the central bank announcement. Staffers at the Swiss central bank's Singapore branch, which opened in the middle of 2013 to replace the currency-defending night shift in Zurich, will probably be relocating.


Less certain are the implications for lenders including OTP Bank, Hungary's largest lender, Vienna-based Erste Group Bank, and Italy's Unicredit, who lent about $14 billion to Hungarians in foreign-currency mortgages prior to the financial crisis, the bulk of them denominated in Swiss francs. A November law obliges banks to convert those loans into forints (http://www.bloomberg.com/news/2014-11-25/hungary-passes-bills-on-mortgage-conversion-retail-loan-limits.html), and the Hungarian central bank arranged a foreign-currency transfer at that time to cover those conversion needs. The law obliges banks to switch at about 257 forints per franc; today's whipsaw puts that exchange rate at 310, meaning any bank that left itself exposed is facing a huge loss.

[Winehole23]

The U.S. Commodity Futures Trading Commission allows investors to put down as little as 2 percent of the value of their foreign-exchange bets. Brokers may get stuck with the balance of losses suffered by clients who used leverage, borrowed on credit cards, or did both to bet against the franc.http://www.bloomberg.com/news/2015-01-15/new-zealand-currency-broker-closes-on-losses-after-swiss-shock.html


The market turmoil turned the $1.9 billion John Hancock Absolute Return Currency Fund (http://www.bloomberg.com/quote/JCUAX:US) into the biggest loser among U.S. peers. It tumbled 8.7 percent yesterday, the steepest drop on record and the most among more than 2,000 U.S.-domiciled funds tracked by Bloomberg with at least $1 billion under management.same

[boutons_deux]

Thanks, Obama! ( you know that's coming from the Repugs )

[Winehole23]

coincidentally:


U.S. consumer prices recorded their biggest drop in six years in December and a gauge of underlying inflation was flat, which could make the Federal Reserve more cautious about raising interest rates.

The Labor Department said its Consumer Price Index fell 0.4 percent last month, the largest decline since December 2008, after sliding 0.3 percent in November.


In the 12 months through December, the CPI increased just 0.8 percent, the weakest reading since October 2009 and a sharp deceleration from November's 1.3 percent rise.


"The odds of a rate hike in June are fading fast," said Michelle Girard, chief economist at RBS in Stamford, Connecticut. "The recent data cannot leave the Fed feeling more confident that inflation will move higher."


While Fed officials have viewed the energy-driven drop in inflation as transitory, a strong dollar is taming underlying price pressures, which could cause them some discomfort.


The so-called core CPI, which strips out food and energy costs, was unchanged in December. It was only the second time since 2010 that it did not increase.


http://www.reuters.com/article/2015/01/16/us-usa-economy-idUSKBN0KP1H620150116

[Winehole23]

so much for QE causing hyperinflation

[ElNono]

so much for QE causing hyperinflation

One thing I think it's helping the US economy is the lower gas prices. It seems a simple, innocuous thing, but it's probably one of the best ways to put money on the pockets of people of almost all classes.

[Winehole23]

should be broadly beneficial outside the energy sector.

[boutons_deux]

so much for QE causing hyperinflation

That was just another FUD LIE in the nothing-but-LIES coming from Repugs.

ARRA was also supposed to be a huge stimulus of hyper-inflation, Social Security MUST be privatized before it fails, trickle down is all the USA needs, cut taxes on the "job creators", etc, etc.

[Winehole23]

But was this a good idea? Well, probably not. Switzerland is still stuck in deflation, with prices falling 0.3 percent, and a stronger currency is only going to make that worse. Now, they tried to offset this by charging people even more to hold their money in Switzerland—aka negative interest rates—but that wasn't nearly enough to stop the Swiss franc from going vertical. The SNB, in other words, chose a slower economy today, because it was afraid of a bigger balance sheet tomorrow, maybe a much bigger one if the ECB buys more bonds than expected. Their thinking seems to be that the Swiss franc was inevitably going to get stronger, which will inevitably mean taking paper losses on their euro assets, so why rack up even bigger losses for what might only be a minimal gain?


If they're wrong, though, Switzerland's currency might not be the only thing that goes bang. Its economy might too—and not in a good way.

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/15/why-switzerlands-currency-is-going-historically-crazy/

[boutons_deux]

One thing I think it's helping the US economy is the lower gas prices. It seems a simple, innocuous thing, but it's probably one of the best ways to put money on the pockets of people of almost all classes.

gas money retained in shoppers pockets didn't keep Christmas sales from being below last year's

the 99% are still hurting badly, underemployed, employed at shitty wages, and future looking grim for themselves and their kids.

More than Half of US Public School Students Live in Poverty, Report Findshttp://www.alternet.org/education/more-half-us-public-school-students-live-poverty-report-finds

[RandomGuy]

Damn. Their central bank threw in the towel. More than likely shades of things to come in the EU.

Totally fucked their economy overnight.

Even funnier were the shits who were shorting on margin... ROFL...

http://www.reuters.com/article/2015/01/15/swiss-snb-shorts-idUSL1N0UU1OE20150115



Hedge funds, speculators face big losses on Swiss franc rally
Jan 15 (Reuters) - Currency speculators, particularly large global macro hedge funds with big short positions in the Swiss franc, are staring massive losses in the face after the Swiss National Bank shocked markets on Thursday by removing a three-year-old cap on the currency.

The move sent the safe-haven franc soaring against the euro and the U.S. dollar at a time when more than $3.5 billion was positioned in favor of franc weakness, the largest such position in more than a year and a half.

Only days ago, the SNB termed the 1.20 francs per euro cap the cornerstone of its monetary policy.

The damage from the Swiss franc's sharp moves comes as a blow for macro hedge fund managers nursing wounds from nearly four years of mediocre performance.

http://agnosticcomputing.com/wp-content/uploads/2014/04/schadenfreude_pic.jpg

http://comments.bmartin.cc/wp-content/uploads/2014/11/Police-lights-chadenfreude.png

[Splits]

The Swiss Bank Should Burn in a Special Hell

Thu Jan 15, 2015 7:17am
http://ibankcoin.com/wp-content/themes/roots/assets/img/icon-headline-comments-count.png 18 (http://ibankcoin.com/flyblog/2015/01/15/the-swiss-bank-should-burn-in-a-special-hell/#comments)
1,866 views


So I went to sleep around 4:10am to Dow futures up 150. I woke up at 6:10am to them down more than 110. The news is, as you already know (http://www.marketwatch.com/story/swiss-stocks-sink-the-most-since-1989-after-snbs-shock-move-2015-01-15?dist=beforebell), the Swiss bank removed the “Swiss ceiling” and “Euro floor”, paving the way for an incredible one day +15%+ move in CHF vs Euro. As a result of this, the Swiss market is down more than 12%, the largest decline since 1989.

Everyone wants in on the Swiss Franc and people are selling euros every which way but loose. This is NOT a fucking reason to sell stocks. You’d have to possess the thinking capacity of a horse to view this as a negative for stocks. Who gives a shit, really? The Swiss bank couldn’t keep up the charade any longer, with their artificial pegging to the euro.

Why?

Because the ECB is going to announce and begin massive QE next week. If they permitted this peg to stand, they’d need to bag hold euros on an epic scale. So, they figured now was the time to end the stupidity and the market is responding in kind.

I view this market response with the same demeanor as a serial killer would view his next target. I have nothing but unadulterated disdain for all parties involved. I want them to perish in fires, crushed under elevators, dropped down manholes. This dip will be bought, or NOT! It’s not like the +150 market open was gonna stick anyway, right?

We are living in very interesting times. America shall thrive off this news and punch our european counterparts in the fucking face, many times over.

[CosmicCowboy]

An excellent read:

http://www.telegraph.co.uk/finance/economics/11358316/Central-bank-prophet-fears-QE-warfare-pushing-world-financial-system-out-of-control.html

[boutons_deux]

An excellent read:

http://www.telegraph.co.uk/finance/economics/11358316/Central-bank-prophet-fears-QE-warfare-pushing-world-financial-system-out-of-control.html

unregulated, criminal finance and unregulated, crimianl banks, thanks!

[CosmicCowboy]

Boo doesn't know the difference between banks and central banks?

[ElNono]

An excellent read:

http://www.telegraph.co.uk/finance/economics/11358316/Central-bank-prophet-fears-QE-warfare-pushing-world-financial-system-out-of-control.html

Thanks for sharing. There really are no guarantees that QE will work for them, but they just can sit idly while deflation keeps ravaging their economies. Just a tough situation.

[Agloco]

I'm mostly ignorant of the finer aspects of these financial moves. Can anyone explain to me the likely scenarios that will arise once the U.S. and UK attempt to undo all of the QE they've done. It's gotta come back out right?

Seems to me like we've treated the symptoms of a bad market rather than the underlying conditions no?

[ElNono]

I'm mostly ignorant of the finer aspects of these financial moves. Can anyone explain to me the likely scenarios that will arise once the U.S. and UK attempt to undo all of the QE they've done. It's gotta come back out right?

Seems to me like we've treated the symptoms of a bad market rather than the underlying conditions no?

The idea is to buy vast amounts of depreciated (due to recession/deflation and the economic outlook) assets (in this case bonds) in order to inject liquidity in the market, in hope this newlyfound liquidity finds it ways into economic growth. With interest rates near zero, there's little incentive to save that kind of money. Once the economy expands and is back into growth, such assets bought should appreciate, and can be resold for a profit.

That's the theory of it anyways. It's basically temporarily growing the monetary base to spend in very specific assets that can be redeemed in the future, as opposed to just spending at will.

[CosmicCowboy]

I'm mostly ignorant of the finer aspects of these financial moves. Can anyone explain to me the likely scenarios that will arise once the U.S. and UK attempt to undo all of the QE they've done. It's gotta come back out right?

Seems to me like we've treated the symptoms of a bad market rather than the underlying conditions no?

Technically QE wouldn't have to be unwound if the underlying economies could grow fast enough to absorb the surplus. Unfortunately they haven't.

[RandomGuy]

I'm mostly ignorant of the finer aspects of these financial moves. Can anyone explain to me the likely scenarios that will arise once the U.S. and UK attempt to undo all of the QE they've done. It's gotta come back out right?

Seems to me like we've treated the symptoms of a bad market rather than the underlying conditions no?

U.S. QE is pretty much over. The unwinding will be the slow work-off of the massive FED balance sheet. They bought a LOT of bonds with created money, and will likely not replace those bonds as they mature, or even slowly, discretely sell them.

We have changed some things (tightening mortgage underwriting standards), but the underlying faults that caused the financial crisis have not, by and large, been solved. Too Big To Fail still should worry/anger anyone.

[RandomGuy]

http://www.heritage.org/~/media/infographics/2014/08/bg2938/bg-fed-balance-sheet-chart-1-825.ashx

On the other hand... they are now earning interest on four fucking trillion dollars. That is a lot of money that will be forked over to Congress, as all Fed profits are.


The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 billion and transferred $79 billion to the U.S. Treasury.[22]
http://en.wikipedia.org/wiki/Federal_Reserve_System

[RandomGuy]

I find it hard to say four trillion dollars without going all tourettes. That is just an insane pile of money.

mea culpa.

[CosmicCowboy]

U.S. QE is pretty much over. The unwinding will be the slow work-off of the massive FED balance sheet. They bought a LOT of bonds with created money, and will likely not replace those bonds as they mature, or even slowly, discretely sell them.

We have changed some things (tightening mortgage underwriting standards), but the underlying faults that caused the financial crisis have not, by and large, been solved. Too Big To Fail still should worry/anger anyone.

Don't be so sure about QE being over. The are rewriting US growth projections as we type. Some pretty terrible earnings reports from some blue chip bellweathers today. if the economy stalls again they will be right back trying to pump it up again.

[boutons_deux]

Don't be so sure about QE being over. The are rewriting US growth projections as we type. Some pretty terrible earnings reports from some blue chip bellweathers today. if the economy stalls again they will be right back trying to pump it up again.

Repugs will help stall the economy with austerity at all levels then blame it all on the dems in 2016 campaign

[CosmicCowboy]

so much for having a spittle free converstaion.

[boutons_deux]

so much for having a spittle free converstaion.

Cosmic Dime Store Cowboy can't handle the truth.

We saw the Repugs do EVERYTHING the could running up to 2010 and 2012 elections to keep the economy down, sputtering. All their govt budget cutting at all levels will continue. They absolutely don't want Dems running on a booming economy in 2016.

The condition of the economy IS defined by political decisions. I spit in your coffee

[boutons_deux]

Congress Should Help the U.S. by Reversing Its Recent History of Starving Basic Research

The $3.8-billion federal investment in the Human Genome Project between 1990 and 2003 added $796 billion to the economy, estimates Battelle Technology Partnership Practice. Economists have calculated that a third to a half of U.S. economic growth since World War II has come from basic research.

This is why recent spending trends are worrying. A growing share of U.S. research is funded by the private sector, whose money shifts around quickly based on short-term corporate needs and tends to focus on applied, rather than basic, research.

Government investment, in contrast, is considered crucial to the success of basic research because it is continuous. Yet it has generally declined for a decade as Congress has tried to squeeze budgets.

In 2013 cuts from congressionally mandated budget sequestration caused the largest reduction in federal R&D spending in 40 years, according to the American Association for the Advancement of Science.

Both political parties are to blame: federal science budgets declined during periods when Democrats controlled both chambers (2007–2011) and when Republicans did so (2005–2007).

http://www.scientificamerican.com/article/congress-should-help-the-u-s-by-reversing-its-recent-history-of-starving-basic-research/?WT.mc_id=SA_HLTH_20150127

[CosmicCowboy]

I'm not against research but I call bullshit on your alleged 3.8/796 economic benefit.

[boutons_deux]

I'm not against research but I call bullshit on your alleged 3.8/796 economic benefit.

call Battelle

[Agloco]

I thank all of your for your responses. One other question. I've read that we're threatened with a deflationary spiral. What force or forces cause that in spite of the fact that a bunch of Monopoly money is being printed up? I thought that a bunch of funny money equals inflationary pressure?

[boutons_deux]

I thank all of your for your responses. One other question. I've read that we're threatened with a deflationary spiral. What force or forces cause that in spite of the fact that a bunch of Monopoly money is being printed up? I thought that a bunch of funny money equals inflationary pressure?

the monopoly money goes to the financial sector, where it mostly stays, as casino chips (backed by taxpayers)

the demand from 99% is flat, down because their income is flat, or down, and they aren't confident about their future prospects.

[ElNono]

I thank all of your for your responses. One other question. I've read that we're threatened with a deflationary spiral. What force or forces cause that in spite of the fact that a bunch of Monopoly money is being printed up? I thought that a bunch of funny money equals inflationary pressure?

Deflation happens because the economy contracts instead of expanding. Job losses, weak economic prospects, etc causes people to stop spending and opt to save instead, which in turn slows down the economy, causes companies not to make investments or take risks, etc. That causes people to save even more, companies shed jobs even more, and there you find yourself into the economy shrinking and a deflationary spiral.

To combat that, funny money is indeed used to "cause" a moderate amount of inflation. Basically, it's injecting enough money in the market such that there's moderate inflation instead of deflation, basically punishing people that are saving (they're not beating the inflation rate, so their savings depreciate) in order to cause them to put the money in the economy, which in turn gets the economy wheel going again.

That's the theory behind it anyways.

[TeyshaBlue]

Still waiting for some front-loaded QE.
About 50 grand should do it.

[RandomGuy]

Don't be so sure about QE being over. The are rewriting US growth projections as we type. Some pretty terrible earnings reports from some blue chip bellweathers today. if the economy stalls again they will be right back trying to pump it up again.

You are talking about a very large economy with its own momentum. My gut says growth will slow, as it must given global conditions, but there is just too much cash sitting around in corporate coffers at this point. U.S. businesses have a lot of capital, and will be under some pressure to deploy it.

I don't see any QE being really needed, and the Fed tends to be more cautious than I am.

(edit)
YET.

Heh, always with the caveat...

[RandomGuy]

I thank all of your for your responses. One other question. I've read that we're threatened with a deflationary spiral. What force or forces cause that in spite of the fact that a bunch of Monopoly money is being printed up? I thought that a bunch of funny money equals inflationary pressure?

US is in little danger of such. EU on the other hand, is much closer to it.

Think of the economy like a giant vector addition. Inflation is merely an increase in price. Can you think of an important good that has fallen in price recently? yeah, that one. :)

Balance that with the concept of "velocity of money" The more money changes hands in a given year, generally, the better the economy is doing. If everybody, except for the very richest, has more money to spend, odds are they will take the money they saved on gas, and buy other things. This mitigates the effect of that deflationary pressure.

This touches on one of the more fucktarded Republican economic "theories", i.e. the "job creator" myth. "don't tax the job creators". This is a bunch of bullshit, because as wealth goes up, the propensity to spend any new dollar goes DOWN. A dollar sitting in a 20 year bond creates fuckall of jobs after the first year. Shifting money from the poorest, to the wealthiest, which we have been doing for the last 20 years, is really putting a drag on overall growth.

Again, fucktarded Republican economic theories are to blame. We have shifted government spending from the federal level, where most revenue comes from progressive taxes (i.e. income), to state and local level, where most taxes are regressive, i.e. property and sales taxes.

Only now the GOP has been handed the keys at the state level too. So we end up getting the fucktarded "cut taxes, and revenues will grow" grabassery, a misapplication of the Laffer curve by people who know juuust enough about economics to be dangerous. Read up how that is working for Kansas, where they have put their policies in place with a vengeance.

This points to the last force on the economy that most rank and file GOP tend to be completely stupid about: Government spending. Government spending is a key component of economic growth. It is REQUIRED for economic growth. You CANNOT have a larger economy, or a larger population, without spending more on bridges or education, or a legal system for that mater.

Conservatives model of how the world works assumes that taxes disappear into a hole, to be wasted and never seen again. The point though, and the fatal flaw for this assumption, is that even a dollar that is almost 100% wasted, goes back out into the economy... it will be spent again, by SOMEBODY. Take, for example, a tool purchased that is never used. The government purchases it, pays SOME company for it. That company, in turn pays their people that dollar, and off it goes to the races.

In reality, very few federal dollars are deployed so wastefully. Social programs, despite the vitriolic diatribes, tend to produce a return to the economy GREATER than their cost. Unemployment insurance, for example. This goes back to the marginal propensity to spend, and the ability to keep people who lose jobs from defaulting on debts like mortgages, which have second order damages beyond that one person. When you start talking about federal funds given for early education, drug treatment, and so forth, the multiplier effect can be profound, on the order of 7 dollars economic benefit for each dollar spent by some studies of some programs. Some of it is wasted, but the overall cost to benefit of government spending to the economy as a whole is nowhere near the low figure that most conservatives seem to believe.

Personally, I think the conservative disconnect from reality tends to stem from the overall religiousness of the right. Once you start thinking that you don't need evidence to support a belief in one area, I think that tends to inhibit critical thinking when it comes to other areas.

ANYHOO, time to shower and get ready for work.

Summation: GOP control of a lot of government spending recently has indeed lowered/dampened government spending. This is having a mild drag on the economy. The slow down in new oil rig activity is another drag. To be perfectly fair to the conservative point of view... red tape is hindering things, but the red tape really holding small business back... isn't federal, generally. Think of all the licenses you need to start any given business. Those licenses aren't federal, and the fees you pay to get them, don't go to Washington. Just sayin'....

[boutons_deux]

"conservative disconnect from reality tends to stem from the overall religiousness of the right"

nah, conservatives don't GAF about religious stuff, other than than to sucker Bible humpers, rednecks, evangelicals into voting Repug with God/abortion/guns/gays/Freedom! bullshit. Repugs as the party of God! :lol

But conservatives have the same detachment from facts as religious freaks. With conservatives, their religion is an ideology of sociopathic bullshit and class warfare.

[boutons_deux]

Homeowners in Poland Borrowed in Swiss Francs, and Now Pay Dearly

“I was frozen,” he said, seeing that the franc’s value had soared that day.

Like hundreds of thousands of other Eastern Europeans, Mr. Szczepaniak, 46, is paying off a mortgage he took out in Swiss francs, instead of his local currency, the zloty.

In an instant, his monthly payment rose by more than 20 percent

http://www.nytimes.com/2015/01/29/business/international/polish-homeowners-feel-the-weight-of-a-heftier-swiss-franc.html?partner=rss&emc=rss&_r=0

Same story with countries that buy oil sold in $US. The use their currency to buy $US to pay for the oil. A strengthening, strong US$ means their oil import bill goes up.