Recently, I have written quite a few posts demonstrating the U.S. Federal Reserve has a ballooning balance sheet as it increases its purchases of assets at an unprecedented clip. In fact, that balance sheet had $800 billion in assets just this past August. By year’s end, we should expect it to have risen nearly four-fold to $3 trillion. This is a wild experiment without parallel in modern history.Read more ›
Stephen Roach must feel a certain sense of Schadenfreude because he has been warning since the end of the Technology Bubble that U.S. monetary policy was reckless and would end in a very bad way. The bubble reached heights few anticipated, making Roach seem like a Cassandra for a number of years. However, now that the bubble has burst and his economic predictions have proven right, we would be well advised to listen to him regarding where the global economy is now headed.Read more ›
Marc Faber is a hard money, old school investor who thinks that the U.S. government is going to reflate in order to avoid depression and that means gold. But, for those of you who don’t know economic history, the fact is that this has been tried before, in the Great Depression in the 1930s and the result was that the government had to confiscate Americans’ gold. It was Executive Order 6102 signed on 5 April 1933 right after Franklin Roosevelt came to office and it forbade all Americans from owning physical gold assets.Read more ›
Angela Merkel, the German Chancellor has rebuked the United States for its easy money policies, suggesting it was kicking the can down the road and setting up a greater problem later. It is high time the debate about monetary policy made it to the political arena.Read more ›
Unemployment claims declined this week to 529,000 from a reading of 542,000 last week. These are very high numbers — the highest figures in this business cycle. Despite the drop, all of the changes were related to seasonal factors as the unadjusted number was a massive 606,877.Read more ›
Today the Nationwide released their monthly UK-wide figures on house prices and the numbers were better. House prices fell 0.4% in the last month, bringing the annual fall to 13.9%, down from 14.6% in October.
Nevertheless, this is the 13th month in a row that house prices have fallen in the UK. Obviously, the UK is poised to have a sharp property fall that is worse than in the early 1990s.Read more ›
Back on November 7th, I posted a story on how Bloomberg News was compelled to sue the Federal Reserve under the Freedom of Information Act in order to find out what type of assets the Federal Reserve was accepting as collateral for loans to banks. Bloomberg has provided the latest update in that saga and it is not good. The Fed continues to stonewall and it seems apparent that it will only reveal how U.S. taxpayer money is being spent if forced to do so by law.Read more ›
James Montier, a market guru usually known as a permabear has turned bullish of late. In keeping with my bullish sentiments, I have posted his thoughts below according to Bloomberg News.
That said, I should always qualify my ‘bullishness.’ I still believe we are in a bear market and that equities will go lower on an inflation-adjusted basis. Investing only in index funds is a bull market strategy to be avoided like the plague. However, there are many stocks trading for 3 and 4 times earnings like Valero Energy or Chevron that deserve a look – Montier obviously agrees. This is shaping up to be a value investor’s dream.Read more ›
Willem Buiter has a very useful and provocative blog at the Financial Times website called Mavercon. The Dutch-born former Bank of England MPC member is not afraid to take policy makers to task or call a spade a spade. In his latest post on why banks are refusing to lend to creditworthy customers, he has some useful insights and a […]Read more ›
The S&P/Case-Shiller® Home Price Indices were released yesterday. Unfortunately, I was away all day and could not post. The indices showed a further decline in home prices in the United States through September 2008 (the data most recently available). In the year to September, prices dropped 17.4% for the Composite-10 index and 18.6% for the Composite-20 index versus 17.7% and […]Read more ›
The renowned money manager Jeremy Grantham has had his first television interview ever with Consuelo Mack on Mack’s program WealthTrack. Below is the video from that interview. Mack has promised to make a longer video available to those who subscribe to her podcast. Please find the podcast audio link here and the podcast video link here.Read more ›
Politics As the time for Barack Obama to take office moves ever closer, his policy team is coming into view. Obama has appointed a slew of economic advisors including Tim Geithner, Larry Summers and Paul Volcker. In addition, he looks to have filled out the key positions in his White House staff and to have nominated veterans to other key […]Read more ›