hat tip jka on economics UKRead more ›
The U.S. Dollar got more bad news today when the Bank of England (BoE) decided to not follow the U.S. Federal Reserve’s lead to a Zero Interest Rate Policy (ZIRP). The BoE was seen as the most likely to follow in the Fed’s footsteps as i suffers from the same debilitating economic problems a popped housing bubble and record writedowns followed by job losses, a lack of consumption, and economic stagnation. Most importantly, U.K. banks simply are not lending. But that does not mean they want to follow the U.S. to zero.Read more ›
Given the Fed’s dramatic cut to a Zero Interest Rate Policy (ZIRP) and a verbal commitment to quantitative easing, I wanted to change things a little for this round-up. I am going to link out to myself by going back in the archives and fishing out to see what I actually said about inflation and deflation over the last 8 months.
In my own head, I would say I have been saying all along that the real threat is deflation, especially debt deflation. But, I could be totally full of it. You be the judge. Here’s what I wrote in chronological order below.Read more ›
I recently wrote a post about U.S. Treasury securities which have been rising in price as interest rates have come down. In the post, I called the Treasury rise a bubble and I stick by that moniker despite protests from some astute readers.
However, I do want to point out one reason why Treasurys are rising. Inflation.Read more ›
To my mind, lowering interest rates in the aftermath of an enormous credit bubble where institutions have just destroyed $1 trillion in capital is wrong. It distorts lending decisions such that yet more money will eventually be lent out imprudently. The only way to increase credit availability is by getting reserves into the system. And normally you do that by making a profit. However, profits are hard to come by for financial institutions right now.Read more ›
Jim Chanos, the famous hedge fund guru and short-seller does not think stocks are going to be up for long. He sees the recent rally on the back of promised government stimulus as temporary and expects markets to resume their downward course. In fact, he is now shorting cement as a play on continued weakness in construction. This is what […]Read more ›
Here’s a little video that should teach you why you need to erase all data permanently before you sell or get rid of any computer, Blackberry or computing device.Read more ›
You have probably never heard of Glencore. Well you have heard of its founder Marc Rich, the man infamously pardoned by President Clinton before he left office. And I suspect that you will soon hear a lot more about the company as well.
Glencore is a metals production and trading company based in Switzerland. It is one of the largest privately-owned companies in the world and a very large employer in Switzerland. The problem is that commodities prices have been absolutely decimated. So, the secretive Swiss company’s credit default swaps are trading at huge premiums, something we alluded to last month.
The obvious question is: why is that? Unfortunately, the answer is: nobody knows. But rumors of financial problems are mounting.Read more ›
In a world of limited resources where oil prices have plummeted, Russia’s military is ever more stretched. Yesterday, I highlighted the implosion in the Russian economy, suggesting that many in Washington see Russia as a potential problem due to its aggressive foreign policy and its declining economic fortunes.
In response, a friend who I know from my foreign service days sent me an article from the BBC suggesting that this confluence of events has increased a nuclear bias in the Russian military — with obvious negative consequences for U.S.-Russian relations. The country simply cannot afford to have strong technological capabilities and provide for its large infantry that is serving on the front lines of Russia’s increasingly unstable borders. It is choosing the nuclear option.Read more ›
Happy Monday. It was a fairly slow news day actually. But that doesn’t mean there weren’t a lot of stories to follow on economics and finance, because there were a lot. I am officially stopping the Madoff madness and moving on to something else. But I actually do have one story on Bernie today.
Stories that I really want to pint out? There’s the German-British political mess wich is leaking out into currency markets. This basically boils down to a debate between Austrian-style economics and Keynesian economics. So, I have a whole section on this.Read more ›