Last month, I wrote about the current debate over the 2010 paper by Ken Rogoff and Carmen Reinhart (hereinafter referred to as RR) on the correlation between debt and GDP growth. I said that the most important part of their work, which is the construction of an enormous database on debt and financial crises over the last few hundred years, was to be found in their book This Time Is Different and elsewhere. And their fundamental conclusion: Debt is not a problem until it becomes one. And then it reaches a critical mass and you have what they call the Bang! moment.
[Read more...]Record Highs from the Kamikaze Rally
May 3, 2013 by Leave a Comment
The deflationists continue to run rampant with glee as stocks, gold and commodities in general get hammered. Is this the market giving a big “thumbs down” to quantitative easing (QE)? Have central banks started to lose the final battle in their war to reflate asset prices? Or is this just the big dump before the insiders buy at the bottom and start the next pump?
[Read more...]Committed to Ruining the Economy
April 20, 2013 by Leave a Comment
The Central Planners are at it again, Fellow Reckoner. Greasing the gears…feeding the engines…and speeding headlong and strapped to their seats towards the next crisis.
Leaders of two of the world’s largest criminal organizations gathered in Washington, D.C. this week for the World Bank/IMF Spring Meetings. The Mob fête was attended by all the usual suspects…central bankers…trade secretaries…finance ministers…policy wonks and assorted other rapscallions and reprobates.
[Read more...]How to Go Gold
March 11, 2013 by Leave a Comment
Central banks have become net buyers of gold for the first time in 20 years. There is uneasiness within the United States and among its trading partners with exotic Federal Reserve policies such as quantitative easing (QE), QE2, QE Infinity, and Operation Twist. The value of the dollar has eroded by about 85% since Nixon, breaking the dollar’s last link to gold, declared on Aug. 15, 1971, that “Your dollar will be worth just as much tomorrow as it is today.” Some argue that the Fed caused the housing bubble, the housing bust, the crash of 2008, and the Great Recession.
[Read more...]Benny and the Monetary Jets
March 1, 2013 by Leave a Comment
“My inflation record is the best of any Federal Reserve chairman in the postwar period,” said the great bearded one, a bit annoyed, responding to a question by Sen. Bob Corker. “We are not engaged in a currency war.”
Ben Bernanke told lawmakers to forget that helicopter stuff they’ve been hearing about him, he’s the greatest inflation hawk the Fed has had at the helm of America’s central bank in modern times.
[Read more...]Witches, Warlocks and Federal Reserve Chairmen
February 27, 2013 by Leave a Comment
A few months ago, the insightful and engaging financial market observer, James Grant, drew a comparison between “witchcraft, on the one hand, and modern central banking, on the other.”
Grant presented this novel comparison in an address to the “Investment Decisions and Behavioral Finance” meeting at the Harvard Kennedy School.
[Read more...]Chinese Inflation and Economic Growth Soar
December 13, 2010 by Leave a Comment
Well, the pause for the cause by US Treasury yields, lasted but one North American trading session on Friday… The 10-year yield has jumped higher once again this morning, all the way to 3.35%!!! WOW! Once again, I wonder aloud if the Treasury Bubble that I’ve cried wolf about for three years, is coming to fruition, or… Is this just another head fake, that will be corrected once the FOMC begins to really pull the trigger on their quantitative easing…
[Read more...]Markets React to Disappointing Jobs Data
December 6, 2010 by Leave a Comment
Well… The cold fell over the dollar on Friday, as we saw something that has happened very often in the past two years, and that is a downright – no two-ways about it – convention reaction to the jobs data! First of all, the Jobs Jamboree turned sour when it was learned that US corporations only added 39,000 jobs in November… You may recall that on Friday morning, I told you that the number would be less than the forecast of 150,000 jobs created, but even my guess was higher than the actual, 39,000 jobs created.
[Read more...]Time to Sell Bonds
November 29, 2010 by Leave a Comment
Every time a frightening headline jolts the financial markets, investors flock to the relative “safety� of US Treasury bonds. But just how safe is a “safe� Treasury bond?
The most insidious and dangerous part of the global debt story is hiding in plain sight. US Federal debt is now roughly 85% of American GDP, according to “official� figures. But after including the present value of future liabilities like Social Security and Medicare, US debt-to-GDP soars to nearly 500%.
[Read more...]
A Grotesque Economic Experiment
The newspapers and TV channels reported the Dow 15,000 story last week as though it were just a stepping stone on the way to 16,000… or 20,000… or 30,000.
Heck, the sky’s the limit!
Investors have reached a new level of bullishness. They’re borrowing again to buy stocks, confident that prices go in only one direction.
[Read more...]Click for detailed story