- Female suicide bomber attacks Somalia's National Theatre
- Spain is in 'extreme difficulty' and threatens renewed euro crisis
- Financial pundits worry about end of quantitative easing
- Greece may have to cancel Olympics participation
Female suicide bomber attacks Somalia's National Theatre
On Wednesday, Somalia's National Theatre was attacked by a female suicide bomber, killing ten people and wounding dozens. According to some reports, the woman was not checked for bombs because she claimed that she was pregnant. The attack was apparently meant to target Prime Minister Abdiweli Mohamed Ali, who was speaking at the event, but he was unharmed. The bombing is thought to be the work of indigenous terror group al-Shebaab, who recently announced that they were linking up with al-Qaeda. Most Somalis practice the Sufi form of Islam, and some al-Qaeda terrorists have declared that Sufism is an apostate religion. Sufi shrines have particularly been targeted by Taliban-linked terror groups in Pakistan. AP
Spain is in 'extreme difficulty' and threatens renewed euro crisis
We've seen the same thing over and over. The central government "prints" huge amounts of money and pours it into the banking system, and the pundits declare that the crisis is over. That's what happened starting in December in the European crisis, when the European Central Bank (ECB) began its Long-Term Repo Operation (LTRO). The ECB has poured an eye-watering €1.1 trillion of "printed" money into the European banking system, so that European banks could loan the money to businesses, and could drive down Spain's and Italy's bond yields (interest rates) by becoming a major purchaser of those bonds. But, as has happened every single time with one of these "nuclear options," the plan works for a while and the fails. When the LTRO began in December, Spain's bond yields fell sharply. But bond yields have been rising steadily since the beginning of March, and on Wednesday they took a sharp spike upward. Prime Minister Mariano Rajoy said on Wednesday, "Spain is facing an economic situation of extreme difficulty, I repeat, of extreme difficulty, and anyone who doesn’t understand that is fooling themselves." Bloomberg
Financial pundits worry about end of quantitative easing
Financial pundits on Wednesday blamed the fall in stock prices on a memo released on Tuesday by the Federal Reserve making it clear that there will be no more quantitative easing ("printing" of money). Apparently it never occurs to these pundits that if they really believe what they're saying, then they're admitting that the current stock market bubble has been CAUSED by quantitative easing, with the liquidity poured into the stock market, rather than being loaned to people and businesses. And so the obvious conclusion is that when QE ends, so does the stock market bubble.
The second interesting thing I heard from financial pundits on Wednesday is they're frustrated. After every recession in the past few decades, the economy has come roaring back, but that hasn't happened this time, and they wonder why. But as I've been saying for years, from the point of view of Generational Dynamics, nothing that's happened since the end of WW II is relevant to what's happening today. Generational theory says that the previous relevant period was the 1930s.
If you think about it, the pundits are answering their own question. They say that the economy came roaring back after earlier recessions, and that's because of the Law of Mean Reversion. If the economy has been below trend for a while, as it would be in a recession, then it should compensate by going above trend for a while.
But today it's different. As I've been pointing out for almost ten years, the stock market has been continuously above the trend value since 1995, sometimes FAR above trend value. The stock market was above trend value even during the so-called recession. (See "11-Feb-12 News -- Price/earnings ratio (valuations) trending toward collapse") So while the Law of Mean Reversion worked in favor of a roaring economy in past recessions, in this recession it predicts a stock market crash and a deflationary spiral. Wall Street Journal (Access)
Greece may have to cancel Olympics participation
The first recorded Olympic Games took place in Olympia, in ancient Greece, in 776 BC. Presumably, Greece has participated in every Olympic Games event since then, but that may come to an end this year, thanks to the debt crisis. The Greek Athletics Federation has indefinitely suspended all domestic competitions because of severe funding cuts, and may have to cancel Greece's participation in the London Olympics entirely. On May 10, Greece will hold the Olympic flame lighting ceremony in Olympia. The announced cutback will not affect the flame lighting ceremony, but will be an embarrassment to the nation. Guardian