“Move over, Ben Bernanke. This is Mario Draghi’s moent,” wrote the Associated Press’s Paul Wiseman and Bernard Condon. The perception is that the monetary ball is in Europe’s court so all attention is on Mario Draghi, president of the European Central Bank (ECB).
The annual conclave at Jackson Hole, Wyoming missed the star player when Mario decided to stay in Europe rather than speak to the conclave sponsored by the Federal Reserve Bank of Kansas City. Last week, noted the New York Times, the “took its most ambitious step yet toward easing the euro zone crisis, throwing its unlimited financial clout behind an effort to protect Spain and Italy from financial collapse.”
Mario Draghi, the president of the central bank, won nearly unanimous support from the bank’s board to buy vast amounts of government bonds, a move that would relieve investor pressure on troubled countries but also effectively spread responsibility for repaying national debts to the euro zone countries as a group.
The decision propels political leaders farther down the uncertain and winding road toward a Europe with centralized control over government spending and economic policy, instead of a collection of nation states that sometimes seem to share little more than a currency and a slumping regional economy.
Draghi has famously said that he will “do what it takes” to keep the eurozone united and functioning. But Mario has a tough job – one that requires surgery has well has effectively drowning the patient in cash. “Super Mario, as European Central Bank president Mario Draghi has become known, cheered the world's financial markets last week with his bold plan to buy unlimited quantities of crisis-hit governments' bonds to shore up the euro,” noted the Guardian’s Heather Stewart. She noted:
The plan should bring down borrowing costs for Spain and Italy and break the vicious circle in which investors demand higher interest rates because they fear a country could be forced out of the euro – and the resulting pain would make a euro exit all the more likely. In the longer term, if we ever get there, it should also help Portugal, Greece and Ireland to go back to borrowing in international markets.
But central banks can only do so much: Draghi has no lever to pull which would fix the deep divisions between the "core" economies of Germany and its northern neighbours and the uncompetitive, recession-hit south.
Meanwhile, many of the world’s central bankers have decided to buy real money rather than print the fake kind. Chris Vermeulen has written that “central banks all over the world are rebuilding their stockpiles of gold. After two decades of heavy selling, central banks became net buyers of gold in 2010 and the momentum has built since. Gold will likely end up being used as "good" collateral by global central banks, as opposed to the shaky collateral sovereign bonds are turning into.” He wrote:
Central bank purchases, led by the emerging markets, are on track this year to hit a record high according to the World Gold Council. China alone in 2011 bought around 490 tons of gold. Other countries including Russia, Turkey and South Korea have added gold to their official holdings in recent months.
Ah, the super gold standard to which Super Mario can only aspire.
George Gilder, whose new book publishes today, is one of the original pillars of Supply Side economics. As stated by Discovery Institute, which he co-founded, “Mr. Gilder pioneered the formulation of supply-side economics when he served as Chairman of the Lehrman Institute’s Economic Roundtable, as Program Director for the Manhattan Institute….”
He was the living writer most quoted by President Reagan. And he is back with his most brilliant work yet — one of potentially explosive importance if taken to heart by our political and policy thought leaders. It is a radical guide, with surprising insights on almost every page, to the creation of a new era of vibrant prosperity.
As reviewer Paul Brodsky, a professional investor in New York City, perceptively notes,
"Lewis Lehrman is one of a very small group of contemporary gold advocates able to successfully bridge the gap separating practical conservative intellectualism from fleeting, half-baked idealism. His CV lists great success across many fields including education (degrees and teaching fellowships from Yale and Harvard); industry (past president of Rite Aid); politics (narrow loser to Mario Cuomo in the 1982 New York governor’s race); finance, (past Morgan Stanley managing director); private sector entrepreneur (founder, L. E. Lehrman & Company); public sector advocate (founder, Lehrman Institute); historian (author, Lincoln at Peoria: The Turning Point); and recognized philanthropist (awarded the National Humanities Medal by George W. Bush in an Oval Office ceremony). ... Only someone erudite and elegant in demeanor could hope to pull it off . In an irreconcilably over-leveraged world where irritated bond vigilantes question economic sustainability and angry Tea Partiers protest the immorality of it all, Lehrman’s views are considered and his convictions carry weight. He brings gravitas to his cause, and he does so from within as a member of the club."
Before the Fed: JP Morgan Summons the Bank Presidents
"Finally, on the night of Sunday, November 2, Morgan summoned the presidents of the major New York banks to his new library, at the corner of Madison Avenue and Thirty-sixth Street, an Italian Renaissance-style palace he had built next door to his house to showcase his collection of rare books, manuscripts, and other artwork. Its marble floors, frescoed ceilings, walls lined with tapestries and triple-tiered bookcases of Circasian walnut, crammed full of rare Bibles and illuminated medieval manuscripts, made it an incongruous setting for a meeting of the banking establishment. Once the moneymen had gathered, Morgan had the great ornamental bronze doors to the library locked and refused to let anyone leave until all had collectively agreed to commit a further $25 million to the rescue fund."
— Liaquat Ahamed, Lords of Finance (Penguin Books, 2009, p. 54)
Lately we have been engulfed by headlines reporting financial turmoil on every continent, in almost every nation, large and small. The commissars of central planning who so marred the history of the 20th century have been replaced by central banks in the 21st. In Cyprus, the new leadership now dares to confiscate citizens’ wealth with a one-time tax of up to 60 percent on bank deposits above 100,000 euros. Self-interested prime ministers blame continental monetary policies for instigating the currency wars that they themselves surreptitiously carry on.
Constitution.org provides an extensive and thoughtful Memorandum of Law by Larry Becraft, Esq., of Huntsville, Alabama, on Article I, Section 10, clause 1 of the US Constitution.
Sir William Blackstone courtesy of Wikipedia
One of many interesting matters the Memorandum treats is Blackstone's Commentaries, a book that was a fixture in the...
The value of the yuan has been slowly rising. The value of the Japanese yen has been sharply falling. Abenomics is attempting to reflate the Japanese economic – slowly, slowly. “Japan is back!” Prime Minister Shinzo Abe tells the Japanese.
Coming back isn’t easy. The Financial Times’ Jonathan Soble has noted...