You might reasonably ask why we are discussing first quarter bankruptcy filings now that the second quarter has just started. It’s because the Administrative Office of the US Courts takes its sweet, and increasingly long, time in publishing the data. And it’s a doozy. The story didn’t get much play because the AO’s quarterly report […]
Read more...Apologies for being a tad late on this item, an article by the Financial Times’ lead editorial writer Martin Wolf, “Risks and rewards of today’s unshackled global finance.” Power went down in parts of Manhattan today, which put a crimp in my schedule. So I will be briefer than I might otherwise be. I was […]
Read more...Warning: this post is only for those with sound constitutions. Tim Lee, head of a financial economics consultancy, tells us in a Financial Times article what a carry trade unwind will look like (answer: very nasty) and what it would take to prevent it (the Japanese have to allow a high enough level of inflation […]
Read more...We’ve been skeptical of inflation targeting, no doubt as a result of seeing Paul Volcker use monetary targets very effectively. Witness the proof of the pudding, namely, asset bubbles, deteriorating credit quality, and increasing inflation (at least in overall CPI, although core CPI is better behaved). But serious economists have only started looking into this […]
Read more...Ooh, when it rains, it pours. First Bear, now this. However, readers of this blog will know we have been posting for some time on rampant liquidity, inadequate risk premia, lax lending, and overvalued assets every where you look. We thank Michael Panzner of Financial Armageddon for pointing out this story from the UK’s Telegraph. […]
Read more...I’ve seen this factoid before, but lifted this recounting from Monday’s editorial in the Financial Times, “Why finance will not be unfettered“: According to the McKinsey Global Institute, the ratio of global financial assets to world output soared from 109 per cent in 1980 to 316 per cent in 2005. The value of the global […]
Read more...One of the hopes, or more accurately, fantasies of a few months ago was that increased business investment would offset slowing consumer spending. This forecast defied basic logic. Why would businesses take on more risk if consumer buying, the big driver of the economy, was sluggish? One would expect lower rather than higher capex. And […]
Read more...The press is all a twitter about the possibility of a Bloomberg presidential bid (see ReutersNew York Times, the Wall Street Journal, and the Financial Times). Despite the New York mayor’s statement that he is not a candidate, his announcement Tuesday that he was leaving the Republican party was seen as precursor to a bid […]
Read more...It turns out you have every reason to be confused. Even the data watchers can’t agree, which makes one wonder how the Fed can make sense of our situation. Barry Ritholtz at Seeking Alpha give us this recap: Over the years, we’ve looked at — and coined one or two — terms for the current […]
Read more...One of New York’s features is its acute housing cycle, a function of the local economy’s dependence on Wall Street. So the sounds of pain coming from real estate professionals are not unfamiliar. A point occurs in every cycle where the brokers, perennial optimists, can no longer deny how bad things are. It’s partly because […]
Read more...This is one of those days when there is quite a lot of good material, so forgive me for being brief. The Financial Times, on its editorial page, issued a warning to the US about getting chippy with the Chinese about the value of its currency. It did not stress some of the reasons argued […]
Read more...A Bloomberg story tells us that Japanese retail investors are undermining the forecasts (and worse, trades) of large investment banks. The banks think the yen is seriously undervalued. Unfortunately, when it appreciates, retail investors buy more assets in countries that offer more yield, which leads them to sell yen, keeping the currency in its place. […]
Read more...I know we are in the midst of a classic pattern, but it is still mystifying to watch it operate. At the end of a cycle, bonds start to decline in price before the equity market starts to fall. One would think that this sequence was sufficiently well established that the time lag between the […]
Read more...Bill Gross, storied bond investor and head of PIMCO, a fund manager with nearly $700 billion under management, made an important observation in a Financial Times comment, namely, that interest rate policy is having a very different impact on businesses and consumers. While the two groups were (most of the time) similarly affected, now interest […]
Read more...We are a tad late on this story on rising foreclosures, “U.S. Mortgage Foreclosure Filings Rise 90% in May,” which ran in yesterday’s Bloomberg, but then again, at least as of this hour, the Wall Street Journal has failed to take note of it. Keep in mind that the source of the data, RealtyTrac, uses […]
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