Gross Domestic Product

Weekend Reading: Yellen’s Line In The Sand

The central bank already missed the “window of opportunity” for normalizing rates in a manner that doesn’t hamper the recovery. While the big news for the market was the release of the April 27th FOMC minutes which once again suggested the Federal Reserve may be on a path to hike rates sooner rather than later. The reality is simple, with the markets hovering on critical support, a Presidential election just around the corner and no real evidence of economic recovery, the likelihood of a rate hike in June is approaching zero.

Frontrunning: May 18

  • Stocks sag as U.S. rate rise expectations revive (Reuters)
  • Clinton, Sanders hit final stretch of nominating contest (Reuters)
  • Bernie Sanders Wins in Oregon, But He Needed Kentucky, Too (NBC)
  • Clinton less than 100 delegates from nomination (The Hill)
  • Trump needs 66 delegates to officially clinch nomination (The Hill)
  • Japan GDP Rebound Not Enough to Stave Off Stimulus (WSJ)

The Endgame

There is a growing fear in financial and monetary circles that there is something deeply wrong with the global economy. Publicly, officials and practitioners alike have become confused by policy failures, and privately, occasionally even downright pessimistic, at a loss to see a statist solution. It is hardly exaggerating to say there is a growing feeling of impending doom. In short, growing evidence of price inflation and stagnant production can be expected to materially increase the risk of a global banking and currency meltdown. The best escape-route is ownership of anything other than purely financial assets and fiat currency deposits. No wonder the price of gold, which is the soundest of moneys, appears to have entered a new bull market.

Central Banks And The Rise Of Extremism

Perhaps the world will have to wait it out to finally be graced with leaders who are willing to stand by their convictions and make hard, maybe even unpopular, choices. Such leaders might have to risk sacrificing everything political to be crowned the next true champions of conviction, giving us all a shot at a once again storied fate. Where does that leave us? Apparently angry. Very, very angry.

China Stops Trying To Fool The World; World Is Sorry

China is the latest in a growing line of “command and control” economies that have risen to prominence, captured the imagination of people who find free markets too messy for comfort, and then blown up when it turns out that dictators have no idea how to allocate capital.

Greek Parliament Passes Further Austerity Measures To Unlock €4BN Bailout Loan

After some pointless debate, Greece promised to do even more of what has not worked at all in the past 5 years just to access some more European "bailout" money, the bulk of which will promptly be used to repay (after some more posturing by the Eurogroup in the coming weeks) maturing debt, held by the ECB.

These 9 Charts Explain The Global Economic Slowdown (And Why Central Banks Can't Fix It)

GDP growth has only two basic components: growth in productivity and growth in the workforce size. That’s it. There are two and only two ways you can grow an economy: increase the (working-age) population or productivity. There is no magic fairy dust you can sprinkle on an economy to make it grow.. and the following rather disconcerting charts showing the continuing decline in productivity and major shifts in demographics that are worsening the situation.

No Wonder We're Poorer: Wages' Share Of GDP Has Fallen for 46 Years

The problem is that limiting financialization will implode the system. The status quo now depends on financialization for its profits and taxes, and so ripping the heart out of financial skims and scams will also rip the heart out of the entire status quo. And so 95% of us will continue to get poorer, no matter who's in office.

Why The Obamacare Gold Rush Is Bankrupting America

Our health care system is going to implode under its own weight. National Health Expenditures are approaching 20 percent of gross domestic product — a figure that is expected to about double over the next half century. Obamacare didn’t start the process, but it’s expediting the end. Obamacare did not reform health care system; it merely transformed it to subsidize favored constituents. To pay for all this price gouging, employers are being forced to offer benefits that many workers themselves cannot afford or absorb in lower take home pay.

2.607 Days Later, The "Most Hated Bull Market Ever" Is Now The Second Longest In History

It's official: as of today the bull market that has been mocked as fake, doomed and history’s most-hated just earned a new title: the second-longest ever. And it only took $14 trillion in central bank liquidity, a global, coordinated central bank "put", central banks purchases of Treasuries, MBS, ETFs and corporate bonds,  and nearly 700 rate cuts in the past 7 years to achieve it.