So, you’re convinced that low rates are powerful stimulus. You believe, like any good standing Economist, that reduced interest costs can only lead to more credit across-the-board. That with more credit will emerge more economic activity and, better, activity of the inflationary variety. A recovery, in other words. Ceteris paribus. What happens, however, if you also believe you’ve been responsible [...]
It’s called survivor’s or survival euphoria. Having just gone through a traumatically dangerous experience, and lived, a person might naturally become euphoric for it. Not uncommon in combat situations, your body marshals all its resources including many physiological responses and counteractions. When it’s all over, there’s evolution working overtime in your brain rewarding these survival instincts.And it can be a [...]
I suppose you can admire their zeal and persistence, but then again what is a zealot without his or her zeal? The desperation by which to rescue the Fed’s money printing exercise is palpable. Stocks, sure, bonds, however, aren’t making it easy. Especially inflation expectations which are crucial to Jay Powell’s fairy tale.That whole flood. Over the last several days, [...]
Time may not heal all wounds, after all. One thing it does do is clarify. There was a time not all that long ago when 20 million sounded absolutely enormous. How quaint today. At the end of March, initial jobless claims in the US were surpassing that unthinkable level leaving everyone to hope it wouldn’t get much worse. Having blown [...]
It’s now more than two months out from GFC2 and more importantly the Fed’s response to it. Why is Jay Powell’s reaction more important? Simple. Because it outlines what happens next. Had the FOMC been anywhere close to successful in anything other than convincing the media, GFC2 might’ve been a singular instance of disruption related to the non-economic shock of [...]
Another 2.1 million Americans have filed this week with their state governments in order to determine their eligibility for unemployment insurance. That brings the 10-week disaster total for these initial jobless claims to an enormous 40.8 million. How did it get to be so many, and why, as states are opening back up, is it continuing in the millions all [...]
It has to be a combination of confirmation bias and rationalizations. Not even the official story finishes up with the fairy tale ending. The “V” people seem to be ignoring what the most optimistic group is actually saying. And these optimists absolutely want it to be that way.It bears repeating the “V” case; that once the non-economic shutdowns are lifted, [...]
Most everyone has heard of the Chinese proverb – or curse – that wishes one to live in “interesting times”. You’ve probably also heard that in Chinese the word “crisis” is composed of two symbols, one that denotes “danger” and another that means “opportunity”. Well we certainly live in interesting times and there is indeed a crisis. We won’t know [...]
Count me among the bond vigilantes. On the issue of supply I yield (pun intended) to no one. The US government is the brokest entity humanity has ever conceived – and that was before March 2020. There will be a time, if nothing is done, where this will matter a great deal.That time isn’t today nor is it tomorrow or [...]
If there’s been one small measure of progress, and a needed one, it has been the mainstream finally pushing commentary into the right category. Back in ’08, during the worst of GFC1 you’d hear it all described as “flight to safety.” That, however, didn’t correctly connote the real nature of what was behind the global economy’s dramatic wreckage. Flight to [...]
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