Global Economy

The Pathetic 'Talk Therapy' Of Janet Yellen

What in god’s name does Janet Yellen think she is doing? Just a few weeks ago she established the ridiculous Fedspeak convention that “patient” means money market rates will not rise from the zero bound for at least two meetings. Now she has modified that message into “not exactly”.

Janet Yellen Is Freaking Out About "Audit The Fed" – Here Are 100 Reasons Why She Should Be

Janet Yellen is very alarmed that some members of Congress want to conduct a comprehensive audit of the Federal Reserve for the first time since it was created. During testimony this week, she made “central bank independence” sound like it was the holy grail. Even though every other government function is debated politically in this country, Janet Yellen insists that what the Federal Reserve does is “too important” to be influenced by the American people. Does any other government agency ever dare to make that claim? If the Fed is doing everything correctly, why should Yellen be alarmed? What does she have to hide?

Sprott Money's picture

Although it may be unrealistically optimistic, I believe my paraphrase of a Churchill quote:

 

“Central Bankers will eventually do the right thing and return to a gold standard after they have exhausted all other alternatives.”

Regret? Why Take A Chance

Behavioral economics suggests that a little QE can change human behavior at the margins, but no amount of QE is enough to change human nature at its core. The High Priests of the IMF, the Fed, and the ECB are blind to this because all of modern economic theory – ALL of it – is based on a single bedrock assumption: humans are economic maximizers. Yes, we are maximizers of reward. But we are also minimizers of regret. We seem destined to learn the hard way... once again...  that you can’t change human nature by government fiat. But individual investors and allocators can listen and learn from these old good ideas, and that’s how you survive the Golden Age of the Central Banker.

10 Google Search Traffic Charts For The Fed To Consider

As the market anxiously await Janet Yellen's Humphrey-Hawkins testimony this morning, hanging on every word and intonation, ConvergEx's Nick Colas is reminded of Harry Truman’s famous request: “Give me a one-handed economist!”  The U.S. central bank clearly feels challenged by the cross currents of the global economy even as it reiterates confidence in domestic growth prospects. In an effort to help clear things up, Colas brings some 21st century data to the Fed’s distinctly old-school toolset and looks at the historical popularity of 10 Google search terms with a decidedly economic twist. Bottom line: the Google data is clear. The Fed needs to wait a while longer before raising interest rates.

20 Central Banks Have Cut Rates In 2015 After "Surprise" Rate Cut By Israel To Record Low 0.1%

Last week it was 19 central banks (including the ECB which accounts for 19 nations) which had cut rates in 2015, mostly in "surprise", unexpected easing decisions. Moments ago the number became 20 when the Israel central bank just cut its interest rate by 0.15% to 0.1%, the lowest on record, a move which once again caught the market by surprise as only 3 of 23 analysts had predicted it.

Tesla: Bonfire Of The Money Printers' Vanities

The trouble with the money printing madness in the Eccles Building is that it generates huge deformations, misallocations and speculative excesses in the financial markets. Eventually these bubbles splatter, as they have twice this century.  The resulting carnage, needless to say, is not small. Combined financial and real estate asset markdowns totaled about $7 trillion after the dotcom bust and $15 trillion during the 2008-2009 financial crisis. The Wall Street casino is now festooned with giant deadweight losses waiting to happen. But perhaps none is more egregious than Tesla - a crony capitalist con job that has long been insolvent, and has survived only by dint of prodigious taxpayer subsidies and billions of free money from the Fed’s Wall Street casino.

5 Things To Ponder: Salmagundi Introspections

This past week has been a virtual tennis match watching the evolution of the Greek bailout negotiations. No Deal, Deal, No Deal, Deal. However, despite the fallout that would likely come from a Greek "exit," the markets have largely managed to ignore the risk and hit an all-time high this week. Market valuations, bullish sentiment and complacency are all pushing higher as the focus remains on the ignition of the ECB's QE program as a stimulus for the markets. In fact, this is so much the case that the net percentage of managers overweight Eurozone equities is at the highest level on record.

Meet The Bureaucrat Who Had The Courage To Tell The Truth (& Will Be Jobless Tomorrow)

Meet Guan Tao. He oversees the foreign exchange of China’s $4 trillion stockpile of reserves (so he has an incredibly unique view of capital flows and currency movements in and out of the country), and he just admitted that capital flight from China is accelerating suggesting that outflows could be considerably higher than official channels show.

No Economy Is An Island

"Is it possible, in a global economy in which the United States' principal competitors are experiencing slow growth, disinflation or deflation, wage stagnation or slowing of wage growth, and slumping currencies relative to the US$, that the U.S. economy can be an island of relative prosperity unto itself?" (Spoiler Alert: No!)

It's Official: Global Economy Back In Contraction For First Time Since 2012 According To Goldman

After spending the past year deteriorating with each passing month, as global acceleration dipped decidedly in the negative camp, the only thing that kept the Goldman Global Leading Indicator "swirlogram" somewhat buoyant was that "Growth" measured in absolute terms had remained slightly positive. Not any more: according to Goldman's latest global economic read, the world is now officially in contraction, following a sharp plunge in both acceleration and growth in February.