Archive - Sep 21, 2010 - Blog entry

Regardless, the primary point is that the US credit bubble has not deleveraged in any meaningful way. The system remains debt saturated to the gills on a personal, corporate, state, and Federal level.

In plain terms, the entire US system is one giant debt bubble. And there are only three ways to deal with a debt problem:

1) Pay it back
2) Default/ restructure
3) Hyper-inflate it away

The US has no chance of #1, which leaves either #2 or #3. Both involve the Dollar taking a sizable hit, which might explain why Gold has begun breaking out while Treasuries are dipping.

We know where you live ...

President Obama and Secretary Geithner are talking yuan tough again as the currency has risen only 1.53% since June. Economists estimate the yuan is undervalued by 12% to 40%. This makes yuan an effective political diversion of the high U.S. unemployment in an election year. The prevailing argument in Washington is that a yuan appreciation would bring manufacturing jobs back to America. Nevertheless, I believe this is overly hyped, exaggerated, and mostly politically motivated. Besides, not everyone is as certain about how large a role the RMB's value would play in the U.S. economy.

Are "pension-protection bonds" the solution to the ongoing pension crisis? I don't think so...

On Monday the NBER reported officially that our Recession began in December, 2007 and ended in June, 2009. While that is nice to hear, in my opinion, when you get down on the ground where most of us are, it doesn't feel as if it has ended.