We’ve commented from time to time on loose credit conditions (see our “Rising Tide of Liquidity“, plus Part 2 and Part 3 on the same topic) and indifference to risk (“Where Has the (Perception of) Risk Gone?“). The tide may be turning. Today, the New York Times had a lengthy, well researched article, “Tremors at […]
Read more...We have pointed out various signs of complacency in financial markets regarding risk: declining credit spreads (January 16), a lack of concern about systemically high use of leverage (previous post plus January 18), and technical indications that suggest we are near a stock market peak (January 22). Yet there is an almost irrationally high level […]
Read more...The Financial Times reports that in 2006 the US economy showed its lowest level of productivity growth in more than ten years, according to a study by the Conference Board. This isn’t surprising. Falling productivity growth is an end-of-cycle phenomenon. And what has been unusual about this cycle has been business’ reluctance to invest and […]
Read more...An interesting set of posts, all more or less pointing in the same direction, namely, that investor optimism is out in front of reality, and some of the behaviors are consistent with a frothy market. On Seeking Alpha, Michael Panzner discusses how the view that “cash is trash” is getting traction, both leading private equity […]
Read more...A good couple of posts from The Big Picture (see the first and second) on the increase in margin debt. The data comes from a Wall Street Journal piece: Such debt is accumulated by investors who trade “on margin” with funds borrowed from their brokers. As tracked by the New York Stock Exchange, margin debt […]
Read more...The Financial Times has had three stories on loose credit conditions in three press days: one on Friday the 12th, two on Monday the 15th, all worried in tone. Apologies for getting this to you on a delayed basis, but the FT website was not cooperating from Friday evening through Monday (colleagues had the same […]
Read more...Martin Wolf is the Financial Times’ chief economic writer and is always thoughtful and balanced. This column in today’s paper presents a more jaundiced view than the sunny forecasts from most US economists. In particular, he focuses on the role of liquidity in the current expansion: What is going to happen to the world economy […]
Read more...Good post this morning on the debate over what the inverted yield curve means for economic prospects by Barry Ritholtz at The Big Picture | Yield Curve: Its different this time. The trigger was that Arthur Laffer has been arguing that the negative yield curve does not point to an impending recession, while a story […]
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