The vaseline, in other words, already has sand in it. The global faith in US institutions has already been undermined. The mechanism by which catastrophe would arise has already been set into motion. And as a result, economic growth in both the US and the rest of the world will be lower than it should be. Unemployment will be higher. Social unrest will be more destructive. These things aren’t as bad now as they would be if we actually got to a point of payment default. But even a payment default wouldn’t cause mass overnight failures: the catastrophe would be slower and nastier than that, less visible, less spectacular. We’re not talking the final scene of Fight Club, we’re talking more about another global credit crisis — where “credit” means “trust”, and “trust” means “trust in the US government as the one institution which cannot fail”.
The Life of a Newspaper
This is the last time you will be reading The International Herald Tribune; as of tomorrow, it is The International New York Times.
The Fed’s Surprise and Yellen’s Challenge
To ask what Janet L. Yellen, the nominee to succeed Ben Bernanke as Chair of the Federal Reserve, has in store for US monetary policy is to pose the wrong question. The real issue is the decline of the Fed’s policy effectiveness.
96.8% of Trades Placed in the US Stock Market Are Cancelled
New data from the US Securities and Exchange Commission (SEC) show that only 3.2% of the orders placed in the stock market in the second quarter of 2013 actually went through.
Financial Apartheid
The increasing reliance on private, rather than public, markets creates a system of financial apartheid. Retail investors, and the mutual funds they depend upon, have fewer and fewer U.S. companies to pick from. Private equity firms get access to the future Facebooks and Googles of the world, and they extract all they can before exiting into what is left of the public markets.
