Chart of the Day: Government Deficits as Far as the Eye Can See

The chart below from the blog Pragmatic Capitalism shows the U.S. Federal government deficit for each quarter since 1952. As you can see, almost the entire period is marked by deficits

[PREMIUM] The Fed’s Rate easing and Obama’s Mortgage refi plan are bullish

Investors must still be worried about the fallout from the European meltdown. However, the situation in the US is looking much better than it did last week because of this aggressive policy response

Bernanke’s 29 Trillion Dollar Fog of Deceit

Congress should immediately call Chairman Bernanke in for testimony on the veracity of the Fed’s response to the Bloomberg report. It should demand a comprehensive accounting for all the Fed’s commitments, by institution that benefitted. Bernanke should explain what the Fed did, when it did it, why it did it, and in whose interests it has been operating since the GFC began. No more obfuscation. No more secrecy. No more fog of deceit

What They Are Doing?

The quantity of debt grows as the quality recedes. The problem of bad loans is no longer just the pre-2008 mortgages, CDOs, and LBOs. Debt issued after the bust is defaulting, such as Greek sovereign bonds, issued in June 2010. Some securities are born to part investors from their money, but it’s remarkable the extent and variety of such instruments issued in 2011. The world choked on similar bonds and derivatives only three years ago, many of which are still held at false prices on financial institutions’ books

Who is winning the currency wars?

Judging from this chart drawn up by the Financial Times, it would seem that Turkey is winning the currency wars and China is losing them

China will retaliate if US imposes sanctions

Professor Professor Xiang Songzuo from the Centre for International Monetary Research at Renmin University in Beijing told the BBC yesterday there would definitely be retaliation if the US moves to sanctions against China. If this scenario occurs, wouldn’t this be similar to the trade dynamic from the 1930s

Here’s why inverted yield curves are a leading indicator of recession

Just following up on my last post about the expectations theory of interest rates, I wanted to explain why yield curve inversion signals recession – and why it hasn’t this go round in the

Treason?

If you believed the Republican leaders, you would say this is reckless monetary policy aimed specifically at supporting President Obama, a Democrat. You saw the last post I wrote, with the court scene from “A Few Good Men” tacked on. Boehner, Cantor, McConnell and Kyl would have you believe that Ben Bernanke is the misguided and dangerous Jack Nicholson character and they are the Tom Cruise character, trying to get him to admit to his crimes.

Is Bernanke ‘almost treasonous’ then, as Rick Perry has said he is?

Here’s my take

Rosenberg also sees Operation Twist QE3

David Rosenberg was on Bloomberg and sees operation twist. But he also says he doesn’t see how the Fed could prevent a US recession. His view is that the recession is already baked in. He goes further and says that Ben Bernanke is ‘always aggressive but never early’ meaning Bernanke will get the fed to do something – but it will be small beer until the economy collapses

Nothing New from Bernanke

The much anticipated Bernanke speech in Jackson Hole is under-whelming. He did not break any new ground. While much of the recent history is re-hashed, the only forward looking guidance is to reaffirm the recent FOMC statement and boilerplate language about being prepared to deploy its range of tools as appropriate. He did not go into much detail about those tools. In this sense he was more revealing at his April press conference

Bernanke: The Near- and Longer-Term Prospects for the U.S. Economy

Ben Bernanke’s Speech to the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming

The Curious Case of Benjamin Bernanke and QE3

Market action is quiet ahead of today’s Jackson Hole speech; US Q2 GDP likely to confirm slowdown. We do not expect an announcement of next round of asset purchases; yet doubt Fed will limit tools. EM asset prices are likely to continue trading as high beta irrespective of Bernanke’s speech