Manufacturing a Credible Irrationality: Slush Funds, August Memories, and a Prelude to the Chinese Case
In our June newsletter, we announced that in a few months we will publish our research on what we believe to be a Chinese bubble. In that issue we showed how the Chinese coincidental and leading indicators point to a slowdown in China. Since then, the numbers have...
From the Great Moderation to the Great Recession
The period from the mid 1980s to the middle of 2007 is known as the period of great moderation, when inflation was low and stable, unemployment also was low, utilized capacity pretty high, productivity growth rate very healthy, interest rates stable and declining,...
On Credit Contraction and Deflationary Pressures
The following is a series of thoughts about the threat of deflation knocking at the door of the U.S. economy. The U.S. economic growth is most dependent on the consuming culture of its citizens as it comprises 70% of our GDP. Yet the last decade saw the trend of...
Waking Up From a Dream: An Assessment of Recent Events and Emerging Indicators
The stress tests for Europe’s banking system have come and gone and now we feel obliged to provide you with our take. We prefer not to trust the fox guarding the chicken coop just yet. The stress tests are a pinnacle example of the world of finance that has gripped us...
The Majestic Ride of Sleeping Assets
As a break from our continued attention to the banking sector and the financial stress that persists around the globe we’d like to offer some thoughts on more general economic activity occurring at present, but which demonstrates the seeds of a new international...
Awaiting the EU Banking Stress Tests: Plethora of Food and the Anorexic Sector
This coming Friday, July 23, 2010, the EU will make public the results of the stress tests implemented on its banks. Three comments are in order prior to the release: First, will analysts be able to reproduce the results especially for weak banks (assuming that the...
Paul Volcker: A True Sage in an Age of Uncertainty
With financial reform just passed by the Senate, we wanted to take the time to express our delights and concerns of the bill while paying special recognition to Mr. Paul Volcker, a mind and figure unlike any other in modern financial history. The unfortunate thing, is...
A Prelude on Munis: The Drama of Debt, Deficits, Deflation, Entitlements, PIGS, & Austerity
It seems like these words have become part of every man, woman, and child's lexicon in the midst of the Great Recession. With issues of debt and liabilities reaching sovereign proportions, economics as a subject is currently a witness to some fantastic debates about...
On Debt Contagion and Banks’ Balance Sheets
For some odd reason there exists a split among even the most well-known economists regarding what the current Greek debt crisis means in the grand scheme of things, both for the country itself as well as the Eurozone as a whole. On one side are those who tout the...
On Recovery, Escape Velocity, “Death Crosses” and Market Developments
The job report last Friday was dismal. Payrolls fell for the first time this year, indicating that the private sector feels uncertain about the depth of this recovery. We remember that it was in early April when Larry Summers (head of National Economic Council) was...
