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Monthly Archives: June 2011

Greenspan just said SELL

Greenspan was on CNBC TV a couple hours ago and was highly critical of QE — not just QE2, but QE1 as well !     Nice!    A little late, but he’s got the right idea — and not just because it agrees with me. In his words : “There is no evidence that huge inflow of money into the system basically worked” “It obviously […] Read the rest of this entry »

Pretend and Pretend will fail

Let me illustrate how silly the ECB’s pretend and pretend plan is by this example… Say you own some of the 5 year Greek bonds paying 3.9% that come due on August 20. You are being encouraged to voluntarily roll that into a new 7 year bond paying the same interest rate. But you could buy a 2 year Greek bond paying 30% interest […] Read the rest of this entry »

US GDP Update and Forecast

The third estimate of 1Q 2011 US GDP was released on Friday. It showed the US economy grew at an annualized rate of +1.9% in the first quarter — a revision of +0.1% from the previous estimate of +1.8% growth. That makes for one of the most anemic quarters at this stage of an economic recovery — ever. I was expecting a larger revision […] Read the rest of this entry »

Weekly Short Economic Stories

• The yield on the 5-year T-note fell to 1.38% on Friday!! You’re probably thinking “so what”. Core inflation is running at 1.5% (and that’s up from where it was!). Having the 5-yr Tnote yield higher than core inflation is rare and means the bond market sees deflation over the next 5 years (or at least no inflation). The only other time this happened […] Read the rest of this entry »

Greece pushes Europe to the edge of the abyss

This week: • S&P further lowered Greece’s credit rating to CCC — the lowest rated sovereign bonds in the world. This means S&P sees no way out other than default. No argument there. • The Prime Minister could not get parliament to approve the latest round of austerity (a condition of the next bailout). So he fired his cabinet on Wednesday and re-hired 37 […] Read the rest of this entry »

Weekly Short Economic Stories

• August : the $600B month! The US Treasury must finance $100B in yet more deficit spending plus $500B in maturing debt. If Europe manages another grand lie in the coming 1 – 2 weeks, the US dollar and Tbonds are likely to come under pressure again. But if the Europeans fail to kick the PIIGS and sovereign debt crisis down the road one […] Read the rest of this entry »

(Greece) Europe’s problem child causes acrimony

What do the bailouts in Europe – and the US — have in common ?   In each case, the bailer had a great deal to lose. So in acting in its self interest, it bailed out the bailees and wanted to avoid or delay a reckoning. In Europe, those doing the bailing (bailers?) have varying degrees of financial health. Thus, as the sovereign debt issue spreads (it has and will), there are different […] Read the rest of this entry »

No QE3. Not now, anyway….

This week, Ben tipped his hand again. But it was not what he said. It was what he did not say. He failed to hint that the launch of QE3 was imminent. I’ve been writing about this for quite a while: the US dollar cannot be devalued without  causing global inflation. This is precisely what QE1 & QE2 did. This is also why Ben Bernanke tipped his […] Read the rest of this entry »

Update: US Real Estate SCUBA Report

There is a thin wedge of equity protecting millions of US homeowners from being under water with their home. This thin wedge –down 90% in the past 4.5 years– is what stands between large US banks and insolvency. Unfortunately this wedge continues to shrink as mortgages are being paid down (red line below) slower than house prices are falling (blue line). This is reducing the amount of […] Read the rest of this entry »

Weekly Short Economic Stories

The latest JOLTS survey from the labor department is troubling: · Job openings dropped 151K last month. · new hires dropped 95K last month. The latest Federal Reserve Beige Book came out this week. These are reports on the health of the economy published 8X per year. It reinforced the US economy is still growing, but the pace is slowing down. US exports hit a record in […] Read the rest of this entry »