Archive - Mar 2010 - Blog entry

In the Department of the Totally Obvious ...

The euro could be in an over-sold situation, says Goldman Sachs and Dr. Feldstein. However, a potential correction can not disguise the elephant in the champagne room - the political and structural weakness in the single currency union.

Sometimes I truly wonder if those who make broad proclamations of "the coast is clear", "everybody is safe", and "all is calm on the western (European) front" ever took the time to glean the facts and evidence before makings such a proclamation. Here is HARD evidence that easily shows that the Greek crisis is FAR from over. I welcome anyone and everyone to challenge the evidence and/or prove otherwise.

We think that China is an indestructible economic juggernaut but its economy is very fragile and it is sitting on a property bubble which will burst. What China does in response has major implications for their economy and the rest of the world. This is the first part of a three-part series on this topic.

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

The FDIC raised $1.8b with a junk deal and a guaranty. Who cares? We all should.

This week in The IRA, we remind one and all about the impending FDIC rule-making process on bank securitizations. Then we ponder whether zombie love won't bring together Barclays Bank and Citigroup in an unholy but politically fortuitous union. And we feature an interview with derivatives market veteran Bill King about OTC derivatives and earnings fraud. The rant on the President's Working Group follows below. -- Chris

In contrast to the cheery mood of the markets, the latest readings from consumers and small business owners indicate economic sentiment isn’t improving. This divergence has got the Wall Street scratching its collective head. In short, the disparity may be deciphered in one word – liquidity - which Wall Street has plenty of, while main street remains strapped.

With 3 out of 4 of our measures registering extreme readings, few words are needed to describe investor sentiment this week.

Do you know where credit really comes from?

Those that want to ban CDS don't understand how the world works. They certainly don't get the fact that the US mortgage market is one gigantic CDS mess.

Bill Hemling, a widely respected agricultural economist, told the Kansas City Star that “we’re heading for a recession we haven’t seen the likes of since the 1930s.” Let's pray he is is wrong — again.

When you factor in pension obligations, just how bad are the debt profiles of individual countries? Trust me, you don't want to know...

Are you having a good crisis?

Unlike economics, Wildland Fire Science is actually a science. Unlike economists, normal people actually know what the future holds. Debt matters, deleveraging is a bitch, and economist religious rituals ensure our destruction will be more severe and complete than any conceivable alternative. Beware the inevitable conflagration resulting from high levels of debt, followed by extended low interest rates.