China Pulls The Rug From Under Europe, Halts French Bank Transactions, Makes Good On Trade War Ultimatum
A flurry of headlines out of China suggest global macro-economic volatility may be ready to take it to the next level. We discussed last week how China's oh-so-generous offer of help to Europe was merely a veiled threat playing US against Europe in a game of who-gets-the-funding. Well, tonight, it seems, they are making good on some of those threats. Aggravated by EU's lack of market economy recognition, they pull trading lines with French banks, express concern at the EUR's safety (preferring US Treasuries) and indicate a clear preference for bonds over stocks - all the while warning of growing trade tensions - consider the sabre-rattled.
UPDATE: Xinhua News claims Fitch bearishness on Chines banking industry is 'suspicious' and the US and Europe should ditch 'protectionist' measures; Ambassador Locke then opines on China's business climate and policies casting doubt in investor's minds.
This paper shows the kind of brilliant research that gets done now that economic commentary is only pursued by Ph.D.s. In this paper, Johansen
and Simonsen (2011) come to the surprising conclusion that (spoiler
alert!) the US economy operates on Keynesian principles; which differs
significantly from its official policy of creating credit whenever a
problem appears. The principal evidence
offered in support of the author's conclusions is the following chart,
showing that both the value of the Dow Jones Industrial Average (DJIA)
and the amount of public debt have increased logarithmically since the
late 18th century. And since correlation implies causation, the rise of the DJIA must be due to the increasing public debt. Now that we understand how the economy works, it becomes clear how we move forward. Raise public debt. Boost the DJIA! The trickle down effects on the economy shall enrich us all.
Lehman Brothers II crisis is coming soon
Where
a million essays, debates, rants, and denials have been littered over
the past month arguing whether or not Social Security is a ponzi or
not, we believe one simple chart should suffice to explain to the
reader just where we stand. As those who follow the data series know too
well, outlays exceeded revenues in 2010 for the first time ever, for a backward looking basis, and so when applying CBO data on
future SSTF revenues and outlays (as a % of taxable payrolls), using
10 year moving average data, for forward looking projections, outlays
surpass revenues and basically never look back until at least the end
of the century. In other words: this is a construct that relies
exclusively on new capital coming in to keep it funded and from
imploding under its own weight, something better known in literature as a
pyramid scheme. But yes: it is not a ponzi scheme in that it most
certainly is not voluntary.
Cutting The Deficit: A Bipartisan Joke
Peter
Schiff wraps his congressional testimony on the Obama jobs plan, which
was one of the most memorable such Congressional hearings on the topic
to date, with the following letter of caution to all Americans. To
wit: "I don't think those few open minds in the Capitol are
going to be enough to keep this ship from sinking. There just isn't
enough time or a strong enough will for reform from the American people.
That is why it is so important for you to act individually to
protect yourself and your family from the new age of stagflation.
Please take the time to view my testimony, understand the problems we
face, and align your investments accordingly." We urge anyone who has not watched Peter's testimony yet to do so below.
Day
after day we are brain-washed with the mantra of equity dividend
yields being greater than treasury yields implies 'cheapness' or "who
wants a 2% return from treasuries?". While we have tried again and again
to put this dead-end of apples-to-unicorns valuation to bed, SocGen
has an excellent treatise on the subject that should make all but the
most ardent Bill Miller fan comprehend the ultimate risk-reward
trade-off. Yes, bonds at sub 2% offer miserable returns, but
equities will always offer a higher probability of major losses and
until we have an investor base that is able to take such losses, low
yields and a systematic preference for bonds is likely to be with us
for a while. Risk capital will also be in short supply - if you have
it, better use it wisely.
The Hoax That Is The Infrastructure Bank
Is China Ready To Pull The Plug?
Is Revolution Hitting US Streets Tomorrow?
The Economic Collapse - Part 1
Mayor Bloomberg Predicts Riots In The Streets If Economy Does Not Create More Jobs
Interactive Infographic of the Doomed European Financial System
DSK Says Greece Is Done
Is September 20 Greek Default Day?
A flurry of headlines out of China suggest global macro-economic volatility may be ready to take it to the next level. We discussed last week how China's oh-so-generous offer of help to Europe was merely a veiled threat playing US against Europe in a game of who-gets-the-funding. Well, tonight, it seems, they are making good on some of those threats. Aggravated by EU's lack of market economy recognition, they pull trading lines with French banks, express concern at the EUR's safety (preferring US Treasuries) and indicate a clear preference for bonds over stocks - all the while warning of growing trade tensions - consider the sabre-rattled.
UPDATE: Xinhua News claims Fitch bearishness on Chines banking industry is 'suspicious' and the US and Europe should ditch 'protectionist' measures; Ambassador Locke then opines on China's business climate and policies casting doubt in investor's minds.
Guest Post: Brilliant Discovery In Economics, US Economy Works On Keynesian Policies
This paper shows the kind of brilliant research that gets done now that economic commentary is only pursued by Ph.D.s. In this paper, Johansen
and Simonsen (2011) come to the surprising conclusion that (spoiler
alert!) the US economy operates on Keynesian principles; which differs
significantly from its official policy of creating credit whenever a
problem appears. The principal evidence
offered in support of the author's conclusions is the following chart,
showing that both the value of the Dow Jones Industrial Average (DJIA)
and the amount of public debt have increased logarithmically since the
late 18th century. And since correlation implies causation, the rise of the DJIA must be due to the increasing public debt. Now that we understand how the economy works, it becomes clear how we move forward. Raise public debt. Boost the DJIA! The trickle down effects on the economy shall enrich us all.Lehman Brothers II crisis is coming soon
Social Ponzi Insecurity In One Easy Chart
Where
a million essays, debates, rants, and denials have been littered over
the past month arguing whether or not Social Security is a ponzi or
not, we believe one simple chart should suffice to explain to the
reader just where we stand. As those who follow the data series know too
well, outlays exceeded revenues in 2010 for the first time ever, for a backward looking basis, and so when applying CBO data on
future SSTF revenues and outlays (as a % of taxable payrolls), using
10 year moving average data, for forward looking projections, outlays
surpass revenues and basically never look back until at least the end
of the century. In other words: this is a construct that relies
exclusively on new capital coming in to keep it funded and from
imploding under its own weight, something better known in literature as a
pyramid scheme. But yes: it is not a ponzi scheme in that it most
certainly is not voluntary.Cutting The Deficit: A Bipartisan Joke
09/19/2011 - 18:50
Peter Schiff On Obamanomics: "There Are Not Enough Open Minds In The Capitol To Keep This Ship From Sinking"
Peter
Schiff wraps his congressional testimony on the Obama jobs plan, which
was one of the most memorable such Congressional hearings on the topic
to date, with the following letter of caution to all Americans. To
wit: "I don't think those few open minds in the Capitol are
going to be enough to keep this ship from sinking. There just isn't
enough time or a strong enough will for reform from the American people.
That is why it is so important for you to act individually to
protect yourself and your family from the new age of stagflation.
Please take the time to view my testimony, understand the problems we
face, and align your investments accordingly." We urge anyone who has not watched Peter's testimony yet to do so below.Why Everyone Hates Equities And Loves Bonds
Day
after day we are brain-washed with the mantra of equity dividend
yields being greater than treasury yields implies 'cheapness' or "who
wants a 2% return from treasuries?". While we have tried again and again
to put this dead-end of apples-to-unicorns valuation to bed, SocGen
has an excellent treatise on the subject that should make all but the
most ardent Bill Miller fan comprehend the ultimate risk-reward
trade-off. Yes, bonds at sub 2% offer miserable returns, but
equities will always offer a higher probability of major losses and
until we have an investor base that is able to take such losses, low
yields and a systematic preference for bonds is likely to be with us
for a while. Risk capital will also be in short supply - if you have
it, better use it wisely.Why Was Congress Forced To Subpoena Head Of Obama's Budget Office To Get Info On Solyndra?
As more developments arise in the Solyndra case, we find the specifics of how it was none other than Jacob Lew, the head of the Office Management Bureau, elsewhere known as the guy who puts together all those forecasts that Obama pulls out of his hat as seeing growth of 3.7% in 2012 here and budget savings of $4 trillion there, got subpoenaed, and not just over anything, but over the deal that is rapidly becoming Obama's Solargate: Solyndra. As a recap: the man who is the "expert" on how the US will get out of its multi-trillion deficit had to be subpoenaed by Congress to explain his secretive actions that ended up most likely harming US taxpayers for reasons still unknown (but not for long), and what is far worse, Congress has to subpoena the head of the OMB because it failed to exercise proper oversight of the stimulus money in the $787 billion American Recovery and Reinvestment Act... and all this under the tutelage of a White House which recently won an award for Anti-Secrecy....which was present to the president by among other Gary Bass of OMB Watch...And somehow we are expected to believe that fiscal stimulus in America has even a remote chance of being allocated productively (a fatal Keynesian flaw which Andy Lees described earlier) instead of pumping up crony capitalism schemes that enrich vested interests, and which drown in opacity and obscurity over which not even Congress has any supervision?The Hoax That Is The Infrastructure Bank
09/19/2011 - 17:12
Is China Ready To Pull The Plug?
Is Revolution Hitting US Streets Tomorrow?
The Economic Collapse - Part 1
Mayor Bloomberg Predicts Riots In The Streets If Economy Does Not Create More Jobs
Interactive Infographic of the Doomed European Financial System
DSK Says Greece Is Done
Is September 20 Greek Default Day?
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