I know it’s bad form to express sympathy for the people running the world’s central banks. But come on, they’re human beings in an impossible spot with no idea how to escape. The pain they feel is both intense and legitimate, and we should respond with at least a bit of empathy. Just kidding. It’s […]
Deutsche Bank, Commerzbank, the Italian banks…it’s getting ugly across the pond, and the worst is yet to come. Here’s a brief look at the reasons why, including derivatives, ridiculous capital rules, dumb lending practices and, of course, negative interest rates. If you’re looking for short sale candidates, Europe’s banks should be on the list.
These are great times for financial assets — and by implication for finance companies that make and sell them, right? Alas, no. Just the opposite. Each part of the FIRE (finance, insurance, real estate) economy is imploding as “modern” finance hits the wall. Interest rates, for instance, have fallen for three decades… Stock prices are […]
Calling Wall Street’s banks stupid and dangerous is like calling the sun “big and warm.” It’s a clear understatement of an obvious fact. The same goes for calling Japan and China economically clueless. Their actions pretty much guarantee that they’ll ultimately enter some sort of death spiral. Germany, meanwhile, is many things, but clueless and […]
One of the jarring things about visiting less-well-off countries is the seemingly inexhaustible supply of girls and boys available for anyone with hard currency. These are someone’s kids. But apparently there’s not enough food in the rural village or urban slum to sustain them, so they end up living lives that are absolutely inconceivable for […]
Last week the Fed found out what will happen if it raises rates: The global financial markets will melt down. So this morning a new member of the central bank’s seemingly endless army of talking heads said some soothing words, which stabilized the US stock prices. Now the question is when the Fed will finally […]
The “whatever it takes” economy is progressing nicely around the world, with governments and central banks doing things that no 20th century economist would have viewed as possible, let alone wise. Now the question becomes, where does this process hit the wall first? Based on recent events, Europe is looking like the best bet. Consider […]
One of the big advantages of being a Latin American or Asian country used to be — somewhat counter-intuitively — the lack of credit available to most citizens. The banking system in, say, Brazil or Thailand simply wasn’t “advanced” enough to offer credit card, auto, or mortgage loans on a scale sufficient to turn the […]
The most obvious difference between “rich” and “poor” countries is that the former provide health care for most or all of their lucky citizens. At least they used to: Obese patients and smokers banned from routine surgery in ‘most severe ever’ rationing in the UK (Telegraph) – Obese people will be routinely refused operations across […]
The world’s central banks clearly have no idea what they’re doing. Yet they keep on making threats, promises and predictions, most either nonsensical or contradictory, while acting in ways that make their countries’ problems worse rather than better. The end of their credibility is in sight.
For most of the world, the past decade’s monetary and fiscal experiments are viewed as failures. See, for instance, French support for the EU project crumbling on both left and right and Why were smart people suckered by Abenomics? So what do the best and brightest now running global economic policy do when their experiments […]
Citizens of the developed world are watching Venezuela’s descent into financial and political chaos mostly, it seems, with amused detachment, safe in the assumption that we’ll never end up hunting our cats and dogs for food. But – since Europe, Japan and the US are making essentially the same mistakes as Venezuela’s past and present […]
Precious metals investors are a conflicted bunch right now. Most are happy with the recent action, and still expect rising gold and silver to send high-quality mining stocks to the moon. But most were also caught a bit off-guard by the miners’ recent spike. For every investor who loaded up on, say, First Majestic Silver […]
It’s no secret that one of the main things propping up the US stock market has been corporations’ willingness to buy back their own shares with borrowed money. The following chart illustrates the rather amazing correlation between share repurchases and share prices. This was obviously a short-lived strategy, one that would end when companies got […]
One of the big surprises of the past few years is the number of brand-name hedge funds reporting terrible results. Their customers are not amused: Hedge Funds Are Losing Endowments After Exodus of Pensions (Bloomberg) – Following the lead of pensions, some U.S. endowments and foundations are souring on hedge funds. Hedge fund fees and […]