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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.

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  • 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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  • 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.

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  • 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

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  • Twist and Shout?

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

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