Financial Infertility: From Euphoria to Paralysis
As readers of our publications, presentations, and commentaries could confirm, for quite some time now we have been talking about the dangers of over-collateralization, especially of collateralizing paper-assets a.k.a. financial instruments of various forms. Moreover,...
On Emerging Markets, Fed’s Recent Announcement, Bond Yields, and the Postman’s Bell
James Cain’s book The Postman Always Rings Twice is an allegory of greed, passion, judgment, and even divine intervention. Frank (the novel’s main character) got away with murder the first time. However, the second time around he was wrongly convicted for murder. Here...
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...
