Martin Wolf, in a Financial Times comment, “Villains and victims of global capital flows,” looks at the two competing theories of the causes of global imbalances. One is the savings glut story, in which parsimonious Chinese and Japanese force the US to consume to keep the world from falling into recession. This view is favored […]
Read more...We have been muttering on this blog for some time that the powers that be should take more interest in money supply, and it appears that European central bankers are coming around to our point of view. David Altig in “Putting The Money Back In Monetary Policy” at Macroblog has a very useful, detailed without […]
Read more...Even though the US Treasury market has taken a nasty downward move through an important level that many participants see as the beginning of a bear market in bonds (which will inevitably lead to a bear market in equities), actors in other sectors of the financial markets seem remarkably sanguine, at least so far. Is […]
Read more...The sudden disappearance of bees from many colonies is arguably the most underreported environmental story. Varroa mites have devastated the feral bee population, and as a result, one-third of the crops in the US depend on commercial beekeeping operations (meaning bees are brought in to a farm solely for the purpose of fertilizing its crops). […]
Read more...We have been saying for some time that a housing recovery was quite a way off, and official opinion has finally caught up with our views (or more accurately, has decided to acknowledge obvious but unpleasant reality). The Weekend Wall Street Journal reports in a page one story, “Economists See Housing Slump Enduring Longer.” The […]
Read more...We observed that the sharp fall in the bond markets Thursday, which was triggered not by news, but by a collective recognition that credit was too cheap, seemed to many to be an inflection point, an end of a long cycle of falling interest rates. This development is important not just for fixed income investors, […]
Read more...The Wall Street Journal features a story, “Boom Aside, Not All LBOs Look So Hot,” which reports that some LBOs are in trouble a surprisingly short time after the deal closed. Now the Journal goes to some lengths to present these failures as deal specific by stressing that these cases are isolated, the economy is […]
Read more...For quite some time, we have written about indifference to risk, unjustifiable asset prices in many markets, and high levels of liquidity all as different aspects of what John Authers called “overvalued credit” meaning overly bullish (more accurately speculative) conditions in debt markets which fuelled overheated conditions in asset classes that could be financed (and […]
Read more...The blog Long or Short Capital is amusing and often astute (and we all need comic relief sometimes). From “I’m Calling the Top today, my ten signs“: 1. Shares of Odyssey Marine Corporation (NYSE: OMR) recently doubled when they announced they found sunken treasure. 2. Microsoft (NASDAQ: MSFT) (supposedly smart people) paid 38x EBITDA for […]
Read more...Edward Charles Ponzi Jr. occasionally comments at Angry Bear, and a recent submission became a post of its own. Ponzi makes several observations: what we have counted as growth (as in GDP growth) may be largely inflation (that statement is more accurate than you might think after you back out hedonic adjustments); that a lot […]
Read more...We are late to this excellent post by Barry Ritholtz (which also reminds us of the consistency of Business Week covers as a counterindicator; this example is from February 2007). And I’ve wanted to say something about rates creeping up, but I got beaten to the punch (although we have made the currency-realted observations, #5 […]
Read more...The government that told us that there were WMD in Iraq has also told us that payrolls increased by 157,000 in May. We’ve pointed out before that the Bureau of Labor Statistic’s monthly job report has a well established history of being unreliable and overstated. The Business Employment Dynamics report, which is far more detailed […]
Read more...The most puzzling element in the recent set of economic releases and revisions on GDP growth is the disconnect between overall growth and consumer spending. The initial release for the first quarter showed GDP growth of 1.3% despite a rise in consumer spending of 3.8%; the revisions released last week reduced GDP growth to a […]
Read more...We had anticipated that the ho-hum initial GDP growth figure for the first quarter of 1.3% might be revised downward. Thursday, the Commerce Department changed its GDP estimate to 0.6% and altered many of the components. In particular, it increased its estimate of consumer spending growth from 3.8 to 4.4%. Not only was the 4Q […]
Read more...For those who don’t know about him, Jim Grant of Grant’s Interest Rate Observer has been a long standing and highly regarded advocate of probity, common sense, and historical memory. Of course, that means he is completely out of fashion. But Grant has a loyal following and even those who differ with his skeptical outlook […]
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