Archive - 2010 - Blog entry

We ran an interview with our friend Yves Smith of Naked Capitalism today. She has done an excellent job of describing how the intellectual ghetto that was once financial economics has helped to destroy the world of investing and involuntarily turn us all into day traders. The full text follows below. -- Chris

While anal-ytic 'debate' about whether Chinese real estate prices have reached nose-bleed territory continues in merry-go-round circle-jerk fashion, there is only one (very simple) question to ask:

is this the kickoff to a new bull market in Chinese RE or a terminal throw-over (cause there ain't anything in between) ?

In this installment of the Pan-European Sovereign Debt Crisis, I illustrate the potential contagion effects of the portion of Europe that is in a flat out Depression. Yes, Depression! There are quite a few strategic banks that have significant claims on this region, as well as Greece. Just imagine the potential consequences if all of the stars aren't aligned properly...

Some big governors on TV. What do they propose? Spend an additional $350b a year, that we don't happen to have. When will the bond market say no to all of this? Sooner than Ed and Arnie know.

The investor sentiment data is consistent with a market that is in bounce mode.

Gold typically has the strongest inverse correlation with the US Dollar. In the last month, however, the trend has broken with gold trending inversely with Euro and positively with Dollar. Will this new trend hold and for how long?

According to Pew, there's a $1 trillion gap between the $3.35 trillion in pension, health care and other retirement benefits states promised their current and retired workers as of fiscal year 2008 and the $2.35 trillion they have on hand to pay them. How dire is the pension problem in the US and what will ultimately shape the future of the pension crisis?

We are told we are in recovery. We are told we are not having deflation. We are told a lot of things but the facts seem to keep working against Messrs. Bernanke, Summers, and Geithner. The latest core CPI belie their Keynesian beliefs.

A silly story in a Japanese paper. Based on this you would have to conclude that our biggest creditor doesn't think too much of us.

I was interviewed by BusinessInsider about China, click here to watch.  If you did not see it, this presentation covers a lot of points I discussed in this interview.

A quick glance at Greece's progress in implementing its austerity measures to placate the EU enough to justify a publicized bailout.

This issue is actually important to the economy, civil rights, and the political causes which are most important to you . . .

Does the Fed's move spell the end of easy bank profits? Not a chance! They will continue making a killing on prop trading and the revival of M&A activity. Then there is OTC derivatives, which fatten up profit margins and remain unregulated. We need another Brooksley Born and fast!

Famous short seller Jim Chanos characterized China as "Dubai times 1,000, or worse.” While talking his books, Chanos could stand to lose big on his China shorts by basing his view on flawed analogies with the US real estate market.

In our recent post, Coming to America, we encouraged readers to study Nail Ferguson’s concerns voiced in the Financial Times – A Greek crisis is coming to America. It does not take a wild imagination to see that ballooning debt levels on government balance sheets pose a grave systemic risk to the global economy and capital markets. This is precisely why we are left with our tongue on the floor when we hear Nobel laureate Joseph E. Stiglitz describing the prospect of a US or UK default as absurd, “particularly in the US because all we do is print money to pay it back.”