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Monthly Archives: March 2011

Portugal Domino

Facing the prospect of not being able to find buyers for its bonds over the past half year or so, the Portuguese federal gov’t has implemented three substantial budget tightening efforts.  At the behest of the EU, the newly elected Portuguese minority gov’t tried and failed to pass a fourth round of austerity on Wednesday. The Prime Minister resigned and will lead a caretaker […] Read the rest of this entry »

Weekly Short Economic Stories

I am compelled to write something positive. The US manufacturing sector is doing fairly well. Weekly jobless claims are stabilizing under 400,000. And exports are improving markedly. The weakening dollar is having the effect intended. It is a beggar thy neighbor policy that is causing inflation, but so be it. This week’s housing data is arguably the worst in many decades: The mean price of […] Read the rest of this entry »

Inflation from QE2 is sinking QE3 before it sails

February’s inflation data for producers (i.e., wholesale, not retail) was released this week. See if you can spot anything interesting in it. OK, I helped with the red box.  (data from the Federal DOL) QE2 was announced in August last year. Since then, the dollar has taken a beating, causing inflation in food & fuel – and not much else. Total inflation for the […] Read the rest of this entry »

Weekly Short Economic Stories

Japan continues to dominate world news. The first half of the week saw the Nikkei stock market average bungee jump from 10600 to 8600 then close the week at 9200. I suspect the Nikkei will fall back to the 8600 levels this summer or fall because Japan is at the end of its rope. The federal gov’t has been propping up the economy for 21 years, racking […] Read the rest of this entry »

Finland is the spoiler to Europe’s banking system crisis

First, a reminder: The US exported $286B to Europe in 2010. For a $14.8T economy, that may not seem like much (FYI, the US exported $249B to Canada and $92B to China). But European and US banking systems are tightly linked. Financial WMD’s called Credit Default Swaps in the US & Europe measure at least $20T (my estimate). So, if the European banking system suffers a crisis, […] Read the rest of this entry »

Bahrain increases the odds of direct military conflict between Iran and the US

This article is considerably more geopolitical than you may like. So, to those that aren’t interested in Middle East military action speculation, here is the upshot: risk continues to pile up. The price of oil (North Sea Brent) could fluctuate anywhere from $70 to $150 / barrel this year. Sustained $120 oil will almost certainly push the world back into recession by year end. Just like it […] Read the rest of this entry »

Turkey makes friends

Turkey is in the limelight this week. Turkey is of interest to us because it is one of the places we will consider investing. We’ll need to see how global equity markets function without QE2 first. In Turkey’s case, we’re also watching how their political leadership handle this year’s election. If it goes well, Turkey could see its debt rating improve to investment grade […] Read the rest of this entry »

What to do with a falling dollar

Congress passed a stopgap budget that cuts $4B in spending over 2 weeks. This buys a little time to agree to a budget for the balance of the 2011 fiscal year. Given the track record of both parties and their need for political cover in order to attempt meaningful cuts, the odds are good a new budget will be passed with considerably less than $60B in cuts ($30B?). With […] Read the rest of this entry »

US Real Estate Scuba Report

The most recent data on the health of US residential real estate shows a market that is extraordinarily weak. The extent of homeowners that owe more than their home is worth is epic. Thursday saw an update on several measurements of the US economy via the Federal Reserve Flow of Funds quarterly report.  We have been tracking the health of the US residential real estate market because […] Read the rest of this entry »

Weekly Short Economic Stories

Japan suffered a massive 8.9 earthquake and Tsunami on Friday -after Asian markets were closed.. This is causing oil prices to pull back from recent peaks. Until the extent of the damage is known, there’s not much point in speculating on the economic impact. February saw a record rise in US exports thanks to the new & improved weaker US dollar. Unfortunately, this good news was […] Read the rest of this entry »