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    • Forecast 2013: Unsustainability and Transition

      As we begin a new year, we again indulge ourselves in the annual (if somewhat futile) rite of forecasting the year ahead. This year I want to look out a little further than just one year in order to think about the changes that are soon going to be forced on the developed world. We are all going to have to make a very agile adaptation to a new economic environment (and it is one that I will welcome). The transition will offer both crisis and loss for those mired in the current system, which must evolve or perish, and opportunity for those who can see the necessity for change and take advantage of the evolution.

    • Gambling in the House?

      The latest scandal du jour seems to be about what is now called LIBORgate. But is it a scandal or is it really just business as usual? And if we don’t know which it is, what does that say about how we organize the financial world, in which $300-800 trillion, give or take, is based on LIBOR? This is actually just the second verse of the old song about derivatives, which is a much larger market. Which of course is a problem that was not solved by Dodd-Frank and that has the potential to once again create true havoc with the markets, whereas LIBOR can only cost a few billion here and there. (Sarcasm intended.)

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    • The Lion in the Grass

      "In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently;they are not seen; we are fortunate if we foresee them.

      "There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

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    • Waving the White Flag

      For quite some time in this letter I have been making the case that for the eurozone to survive, the European Central Bank would have to print more money than any of us can now imagine. That the sentiment among European leaders was that they were prepared for such a move was clear – except for Germany, which is haunted by fears of a return to the days of the Weimar Republic and hyperinflation.

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    • The War for Spain

      I fully intended to ignore Spain this week. Really, truly I did. I had my letter all planned, but then a few notes drew my attention, and the more I reflected on them, the more I realized that the inflection point that I thought the ECB had pushed down the road for at least a year with their recent €1 trillion LTRO is now rushing toward us much faster than ECB President Draghi had in mind when he launched his massive funding operation.So, we simply must pay attention to what Spain has done this week – which, to my surprise, seems to have escaped the attention of the major media. What we will find may be considered a tipping point when the crisis is analyzed by some future historian. And then we'll get back to some additional details on the US employment situation, starting with a few rather shocking data points. What we'll see is that for most people in the US the employment level has not risen, even as overall employment is up by 2 million jobs since the end of the recession in 2009. And there are a few other interesting items. Are we really going to see 2 billion jobs disappear in the next 30 years?

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    • All Spain All the Time

      Last Monday I was in Paris and was asked to do a spot on CNBC London. I arrived at the studios an hour early due to a misunderstanding of the time zones, so while trying to catch up on the news I listened to CNBC. I had just written about Spain in last week's letter and guessed that was what they wanted to talk to me about, but for the full hour before I got on it seemed like every guest wanted to talk about Spain. When I had my turn and indeed got the Spain question, I smiled and noted that we were now in a period when it would be "All Spain All the Time," for at least the next year. I should have noted that there would be brief interruptions where we glanced at Portugal and perhaps Ireland, but the real focus would be on Spain.

    • Unintended Consequences

      For every government law hurriedly passed in response to a current or recent crisis, there will be two or more unintended consequences, which will have equal or greater negative effects then the problem it was designed to fix. A corollary is that unelected institutions are at least as bad and possibly worse than elected governments. A further corollary is that laws passed to appease a particular group, whether voters or a particular industry, will have at least three unintended consequences, most of which will eventually have the opposite effect than the intended outcomes and transfer costs to innocent bystanders.

    • Collateral Damage

      What Next? Where Next?
      A World with Too Much Debt
      Debt Restructuring and Write-Offs
      The Euro Zone: Pouring Fuel on the Flames
      What If… ?
      The Year(s) Ahead
      Auld Lang Syne

    • Where is the ECB Printing Press?

      Where Can I Find €3 Trillion?
      When Leverage Comes Back to Haunt You
      The German Dilemma
      So How Do We Solve the Eurozone Problem?
      Where Is the ECB Printing Press?
      DC, Cleveland, and New York

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    • European Summit: A Plan with No Details

      A Definite Plan (Minus Those Sticky Details)
      Dear Mario
      When Leverage Is the Kind-of Answer
      Meanwhile Back in Portugal
      Let’s Just Change the Rules
      San Francisco, Kilkenny, Atlanta, DC … and the World Series Loss

    • Twist and Shout?

      Bailing Out Europe’s Banks
      What Is the Fed Really Risking?
      What Will the Fed Do Next Week?
      Twist and Shout?
      Europe, Houston, NYC, and South Africa

    • Preparing for a Credit Crisis

      The Consequences of Austerity
      Euro Break-Up – The Consequences
      Welcome to the Hotel California
      The Slow March to Recession in the US
      Preparing for a Credit Crisis
      What Can You Do About the Weather?
      Europe, Houston, New York, and South Africa

    • The End of the World, Part 1

      What Is the CBO Seeing (or Smoking?)
      The End of the World, Part 1
      Who Will Rescue the Rescuers?
      The Problems of Debt in the Eurozone
      Thoughts on Jackson Hole
      Some Thoughts on Getting Older

    • Time to Get Outraged

      Is It Time to Buy a House?
      Time to Get Outraged by the Banks
      We Need a Mulligan
      A Congressional Investigation Is Needed
      How We Get Out of This
      20 Policies to Implement to Create Jobs
      Tuscany, Kiev, Geneva, and London

    • Muddle Through, or Crisis?

      In This Issue:

      Enemy of Spain
      The Endgame, Part 2
      Muddle Through, or Crisis?
      Philadelphia, Boston, Trequanda, Kiev, Geneva, and London