It’s not any stretch to write that the real estate market has hit a soft patch. Resales are down if only a little as are construction indications (permits and starts). These do not indicate that the housing market is in trouble, just that it isn’t so great underneath the unattached boom commentary. To begin suggesting something more concerning than all [...]
In 1962, physicist Wolfgang Panofsky finally obtained funding from the Atomic Energy Commission. As a faculty member at Stanford University he wanted the federal government to fund his monster. Dubbed Project M, for monster, Dr. Panofsky was seeking a method for scientists to obtain evidence for what was really going on inside the atom. The project was really a linear [...]
Why so much wholesale emphasis on collateral? Easy. The monetary history of recent times hasn’t been very kind in that regard. On the one hand, the repo market has become so much more important than it was, as scared interbank participants fled unsecured eurodollar markets eleven years ago next month for the presumed shelter of security(ies). But in turning toward [...]
In 1999, real GDP growth in the United States was 4.69% (Q4 over Q4). In 1998, it was 4.9989%. These were annual not quarterly rates, meaning that for two years straight GDP expanded by better than 4.5%. Individual quarters within those years obviously varied, but at the end of the day the economy was clearly booming. It also helped that [...]
When I write, as I did again yesterday, Brazil may already be toast it’s not just Brazil who is likely to be on the painful end of the eurodollar. The balance of probability says that this one unfortunate South American country is potentially going to suffer more than most, for a second time, but they will not be unique in [...]
The reasons why the IMF stepped in to rescue Argentina were perfectly clear back on June 8. The peso was in freefall and though the Argentine government had spent two years fortifying the country’s reserve position, by borrowing heavily in the Eurobond market, that was merely orthodox thinking. Reserves are widely believed to be something like insurance. Insurance against what? [...]
One way to read the inversion in eurodollar futures is that the market expects the Federal Reserve to ignore growing economic and financial concerns. There is a very reasonable basis for this structure given recent history. Central bankers and Economists have shown a remarkable, and remarkably consistent, ability to talk themselves out of any negative indications. This is the idea [...]
After the Soviet invasion of Afghanistan in 1979, the Russians became hyperaware of US and NATO countermovements. There was an increase in bellicose rhetoric on both sides, and the Andropov years had left the Soviet leadership weakened by economic stagnation increasingly worried that the US just might launch a first-strike attack. The Communists developed a systematic intelligence approach in response. [...]
The Bank of Japan is run by clowns. All of their major moves have blown up in their faces. The NIRP fiasco of January 2016 was one of the most stupendous moments of technical ineptitude ever displayed by a central bank; and that’s saying something, being able to choose from such a long and prominent list of monetary policy errors. [...]
One of the most disgusting and least self-aware passages in any of the tens of thousands of published pages of FOMC discussions was in reference to the People’s Bank of China. On September 16, 2008, the US central bank’s operating and policy committee was sharing a laugh at the expense of their Chinese counterparts. Some solemnity and internal reflection should [...]
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