It’s difficult a lot of times to easily and succinctly describe what’s going on inside a monetary system that; 1. Spans the entire world, easily jumping across if not erasing geographical boundaries; 2. Is located in the shadows, leaving us with no direct data or statistics; 3. Often works in a dizzying array of complexities. I have to believe that [...]
One month ago, on May 24, Chinese regulators stunned the world by announcing the first bank restructuring in modern China’s history. Based in Inner Mongolia, Baoshang Bank was seized because of what the PBOC and China Banking and Insurance Regulatory Commission said was “severe credit risk.” Initial reports attempted to link Baoshang’s struggles to financier Xiao Jianhua who disappeared in [...]
One reason why Japanese bond yields are approaching records like their German counterparts is the global economy indicated in Japan’s economic accounts. As in Germany, Japan is an outward facing system. It relies on the concept of global growth for marginal changes. Therefore, if the global economy is coming up short, we’d see it in Japan first and maybe best. [...]
If you have nothing left, it can sound like a winning argument but you have to really try hard enough. In October 2015, with another false dawn dawning on the public, former Federal Reserve Chairman Ben Bernanke wrote and op-ed published in the Wall Street Journal. As had become his habit, it was full of praise – for his own [...]
After what is all but certain to be the final “rate hike” in this cycle, Bloomberg reported that President Trump had previously explored all possible legal ramifications of demoting Federal Reserve Chairman Jay Powell. The issue has become a major one, in the media, anyway, now that Mr. Powell has indicated his error. There will be no further hikes this [...]
In order for rate cuts to be insurance for a boom to continue, there first has to be a boom able to be continued. The FOMC meeting yesterday didn’t directly kill the idea, but that’s actually what’s coming up in the latest projections. This is why there’s been so much attention focused on inflation. The very idea of a strong [...]
In early January, much of the world was dazed and confused. What the hell just happened? Two weeks before, in the middle of December 2018, Jay Powell stood in front of the microphones confidently declaring his rate hikes justified by an extremely strong economy. Yet, even the stock market had turned against him. When the calendar changed to 2019, not [...]
UPDATED for imminent rate cuts and latest FOMC statement (June 19) Rate cuts will be insurance against whatever “trade wars” will throw at the global economy. That’s the current line from monetary officials in the US, anyway. The real question to ask is, how would they know? Starting with trade wars. Is that really what’s behind all this? The evolution [...]
Jay Powell has had his mind changed for him. Why? Not even a year ago he was downplaying things like federal funds. The rise in that one anachronistic rate was inconsistent with a healthy financial system poised for the good times that come with serious economic acceleration. Quite the opposite, actually. To dismiss the obvious contrary signal, in very place [...]
I’ve been writing since October when China reopened from that month’s Golden Week holiday that big dollar problems were imminent. You needn’t have taken my word for it, the PBOC said as much. Not directly, of course, but in interpreting the central bank’s anticipated behavior left little doubt. Over the next few months, more and more it seemed as if [...]
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