Over the years, Zero Hedge has proven to be a magnet for media attention. Today, it is Bloomberg's turn.
Students of Austrian business cycle theory are familiar with the term malinvestment. A malinvestment is any poor use of resources or capital, commonly made in response to bad policy (usually artificially low interest rates and/or unsustainable increases in the monetary supply). Here, we introduce a related term: malincentive. While not part of the official economic lexicon, I consider a 'malincentive' a useful word to describe any promise of short-term gain whose long-term costs outweigh any immediate benefits enjoyed. Malincetives and malinvestment go hand-in-hand. In my opinion, the former causes the latter. As humans, we respond remarkably well to incentives. And dumb incentives encourage us to make dumb investments.
The “bullish case” is currently built primarily on “hope.” Hope the economy will improve in the second half of the year; Hope that earnings will improve in the second half of the year; Hope that oil prices will trade higher even as supply remains elevated; Hope the Fed will not raise interest rates this year; Hope that global Central Banks will “keep on keepin’ on.” Hope that the US Dollar doesn’t rise; Hope that interest rates remain low; Hope that high-yield credit markets remain stable.
- World stocks gain along with oil, clock ticks down to ECB (Reuters)
- Draghi Expected to Defend ECB in Face of German Criticism (WSJ)
- Trump, Cruz, Kasich seek to win over Republican leaders at party meeting (Reuters)
- Donald Trump Plans to Adopt More-Traditional Campaign Tactics (WSJ)
- Japan, Not Germany, Leads World in Negative-Yield Bonds (BBG)
Corporate executives pay packages are performance-based. That is, pay if you do and pay if you don't perform.
Having already exposed the fakeness of China's most recent trade data (and implicitly its GDP data), we were not entirely stunned by the fact that, as Bloomberg's Tom Orlik reports, China’s growth rates for quarter-on-quarter and year-on-year GDP for the past year don’t match.
The lesson to be learned here is that, while minimum wage laws are bad, uniform minimum wage laws imposed across dozens of diverse economies are much, much worse. Naturally, imposing minimum wages at the statewide level leads to the same problem, but on a slightly smaller scale. If politicians wanted to increase real wages, they'd instead focus on lowering the cost of living and increasing worker productivity.
From a $30k required salary in the Midwest to $150k in San Francisco, the affordability of housing in America is anything 'united'.
While America managed (for the first time) to get two cities on the world's Top 50 most murderous list, it is Brazil that takes the proverbial cake. Brazil has been in crisis for some time now, but even that does not explain how the venue for the 2016 Olympics is home to a mind-boggling 32 of the 50 most murderous cities in the world.
It is our mission to rebut any mainstream article that spreads misinformation about gold and/or shows a gross misunderstanding of monetary history. Matt O’Brien argues in the Washington Post that a “gold-backed dollar would have been a much more volatile one” and that “[gold]…has nothing to do with the price of food or housing.“ We show in a few simple charts why Matt O’Brien’s arguments are misguided, misinformed and just plain wrong.
While Brazilians are angry and tired of their economic hardships, they are also incensed at the country’s history of corruption, which now includes a massive presidential scandal carried out by politicians and lobbyists during the current and previous administrations. This misconduct has given residents of all walks of life enough incentive to take their demands to the streets. Mainstream media has covered the major protests overtaking the streets of Brazil at the outset of an apparent political revolution, but few discuss the problems that have been brewing for decades in South America’s largest nation.
And so the great "oil production freeze" rumor, which helped halt oil's plunge after it hit a 13 year low in early February and forced a 50% short squeeze higher,has died after Bloomberg released an interview with Saudi Deputy Crown Prince Mohammed bin Salman, in which when asked if Iran needs to join freeze, he said: "without a doubt. If all countries including Iran, Russia, Venezuela, OPEC countries and all main producers decide to freeze production, we will be among them."
"Obama’s job was to talk like a marxist, but act like a robber baron. In this regard, his reign has been an unprecedented success." So are you ready to stop being suckers and take back the country?
For the first time since January 2009, 12-month Saudi interbank rates have breached 2.00% - double the 1% lows of August. This 'stress' is also evident in the record pace of collapse of Saudi money-supply and while Riyal forwards have rallied back from extreme bets on devaluation, they remain concerning for Saudi officials who to undertake some deep and fundamental changes to their economy, reforms that no amount of browbeating from organizations like the IMF could induce.
“About two years ago, I had a pleasure meeting with you, Professor Krugman. We were talking during that time that a rocket has to go out of the atmospheric region, which means that an escape velocity has to be earned in order to lift the Japanese economy out of deflation and we were looking for a good speed to do that. We worry about the accumulated debt. That is a source of another concern. What to do about it?”