The Federal Reserve has created a semblance of normality, but by suppressing interest rates they have enabled non-linear, and very possible ugly outcomes, to become entrenched in US public debt dynamics. The euro crisis from 2010 to this day show how difficult it can be to regain investor trust when the unsustainability is first revealed for all to see.
Somewhere back in the depths of time the world got the idea that easy money - that is, low interest rates and high levels of government spending - would produce sustainable growth with modest but positive inflation. And for a while it seemed to work. But that was an illusion.
What do financing your retirement as well as finding affordable healthcare and the possibility of losing your job all have in common with each other?
Destroying our ability to discover the real cost of assets, credit and risk has not just crippled the markets--it's crippled the entire economy.
For Caterpillar, the great recession was bad, for about 19 months. In May 2010, after declining sharply for just under two years, CAT posted it first positive global retail sales comps and never looked back... until December 2012 when comp sales once again turned negative and have been negative ever since. For the past 41 months!
The increasingly obvious trend reversal in inflation, amid softening growth, indicates the long predicted arrival of stagflation. While not unexpected, this is likely to propel the gold price higher.
There is a great deal that is wrong with mainstream economic commentary, starting with its unwavering devotion to orthodox economics and unshakable faith in their “stimulus.” No matter how little is actually stimulated there is never any doubt that the media will simultaneously forget the last one while lavishing praise on the next one. It is, however, the actual economic commentary itself that may be the most damaging. Because nothing works, every news story is printed from the shallowest, narrowest perspective. It is a grave disservice to the public and journalism.
As pensions dry up and blow away under the relentless erosion of the Federal Reserve's zero-interest rate policy (ZIRP), unaffordable property taxes may well start evicting homeowners from the "asset" they mistakenly thought they "owned." If your Social Security pension can barely pay your property tax, never mind your Medicare, healthcare costs, food and other living expenses, then what exactly do you own? If politicos and tax authorities think people will passively watch their neighbors lose their homes to sky-high property taxes, they will soon discover their mistake.
These are not normal times; treating them as such will likely turn out to be a grave error...
- 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)
After two violently volatile days in which the market soared (Monday) then promptly retraced all gains (Tuesday), the overnight session has been relatively calm with futures and oil both unchanged even as the BBG dollar index rose to the highest level since April 4. This took place despite a substantial amount of macro data from both Japan, where the GDP came well above the expected 0.3%, instead printing 1.7% annualized, which pushed stocks lower as it meant the probability of more BOJ interventions or a delay of the sales tax hike both dropped. Meanwhile, in China we got proof of the ongoing housing bubble when new property prices were reproted to have soared 12.4% Y/Y in April, which in turn pushed the local stock market to two month lows amid concerns the rampant housing bubble sector could divert funds from stocks. Yes, China is trading on the "risk" one bubble will burst another bubble.
Peddling some facts... "This is no longer statistical “noise” that can easily be brushed off."
"We're becoming like a third-world country. This is how it feels to be sold out by your country. We’re going to have nothing left but fast food... Fast food and hedge funds. That's where we're going."
We are not in a recession. We are in a depression, and have been since the turn of the century.
You have to love it when one of Donald Trump’s wild pitches sends the beltway hypocrites into high dudgeon. But his rumination about negotiating a discount on the Federal debt was priceless. No sooner did the 'unschooled' Trump mention out loud what is already the official policy of the US government than a beltway chorus of fiscal house wreckers commenced screaming like banshees about the sanctity of Uncle Sam’s credit promises.