January 19, 2023

The head of the ECB said she is "pleased" with how this year is going better than expected. We assume she is talking about how profits in the financial sector have rebounded a bit. But, she still insisted the policy of the bank is to drive workers out of work through artificially high interest rates in 2023.

Christine Lagarde, president of the European Central Bank, told the World Economic Forum in Davos on Thursday that she was determined to “stay the course” with high interest rates to get inflation down. (FT)

There are few venues where central bankers are giving speeches today on their "charm" offensive to try to claim credit for inflation coming down. Sure, it was only a few months ago that they were saying that it will take much longer than this for their anti-inflation (read: "job destroying") policies would take affect. But, these are trying times, so they are taking credit where they can.

The reality is that the policies of the government in the USA, a mild winter in Europe, and China's economic effect of covid policies being not as bad as expected that have reduced headline inflation.

Also, unemployment numbers are expected to be up in the USA, which makes finance giddy at the prospects of more profit. This is even as European investors let the inevitable economic slowdown sink in.

European stocks and Wall Street futures slipped on Thursday after souring US economic data stoked fears of a coming recession, even as the figures lifted the chance of a smaller rate increase when the Federal Reserve meets at the end of the month.

But, debt is back. The bond markets are way up as there is a medium term promise of reduction in interest rates by central banks. The expansion of debt based on the bet that rates will come down quickly seems fraught with dangerous effects—even if it pans-out. While much of this debt is "investment grade" and relatively low risk, these calculation are based on the idea that 2023 and 2024 will be much better and better.

global bonds of all stripes surge 4.1% to start the year, the best performance in data stretching back to 1999.

In what is no surprise to any thinking person, it turns out that major backers of Bitcoin and other crypto seem to have rigged the game.

Founders Fund, the venture capital firm co-founded by billionaire Peter Thiel, closed almost all of its eight-year bet on cryptocurrencies shortly before the market began to crash last year, generating about $1.8bn in returns.

The crypto markets are unregulated, so insider trading is rampant.

In April 2022, about the same time that Founders Fund sold out of most of its cryptocurrency holdings, Thiel said he was optimistic about the future of bitcoin. He told a cryptocurrency conference in Miami that “we’re at the end of the fiat money regime” and suggested its price — which was then trading at about $44,000 — could increase by a factor of 100.

In 2017, JPMorgan’s Dimon called bitcoin a “fraud” (though, their traders did pick-up some trades recently).

By December, bitcoin had lost about three-quarters of its value from its peak and more than $2tn had been wiped off the value of the global crypto market. (FT)

Crypto has lost a lot of money in the previous year, but that has not stopped the scam artists in the industry. The rally in bitcoin (growing 30% from the beginning of the year) has meant money is actually flowing into it again in an attempt to take even more from retail bitcoin investors (read: working people who are taken in).

That's a lot of wealth transfer to some of the most evil people around.

Where is Theil's money now being put?

The fund is in talks to take an equity stake in OpenAI, the developer behind chatbot ChatGPT, at a valuation of $29bn.

The UK government is not so quietly complaining about USA protectionism. Hypocrisy knows no bounds for the UK Tories who only recently demanded the UK separate from Europe.

The whining by governments over any move by other governments to support their own economies is going to be in vogue this decade.

A UK minister has added Britain’s voice to European concerns about US subsidies for industry (…) it went too far in the US for the UK, which wants “the world to be open as well”, the business secretary said on Thursday at the World Economic Forum in Davos.

“At the edges, the [US] Inflation Reduction Act is dangerous because it could slip into protection,” Grant Shapps said. “It’s not its intention, but I think this is where we need to be particularly careful,” he said.

I hate to break it to you, Shapps, but the whole point of the IRA is protectionism.

In a Macron imposed "redo" of the previous battle with workers over their pensions, French unions are back out.

Though, it seems even more workers are out now when compared to just a few years ago:

In Paris, metro and commuter trains were running reduced services, while about 20 per cent of flights had been cancelled at Orly airport.

The SNCF national rail service was running one-third or fewer trains on its high-speed lines. Some 70 per cent of primary schoolteachers had notified of their intention to strike, which would cause the closure of one-third of primary schools in Paris alone, according to the Snuipp-FSU union.

“It’s a first day, there will be others,” Philippe Martinez, the leader of the hard-left CGT union, told Public Sénat TV.

CGT have promised to target billionaires and government officials with strike action that will see their electricity cut.

Targeted actions like this are part of the new creative strike actions in the country.

The strikes are over pensions. Or, rather, they are over productivity of work. The government wants workers to lengthen their working lives to increase state revenues without increasing taxes on the capital.

It is a ridiculous notion that this will work, but it is something Macron made promises about for the money that got him elected.