Yesterday, lumber. Today, copper. The “doctor” has been in reverse for better than two months now, with trading in the current session pounding the commodity to a new multi-month low. Down almost $0.19 for the day, an unusual and eye-opening loss, this brings the cumulative decline to 9.2% since the peak way back on May 11.Is this just another modest [...]
While capital “E” economics can never seem to get out of its own, infatuated with statistics and regressions instead, small “e” economics is proven time and again. Simple supply and demand curves aren’t a realistic simulation of potential conditions, yet they are far more helpful than DSGE models even if highly stylized representations. Take, for example, lumber prices. Anyone remotely [...]
Long-term Refinancing Operations (LTRO) became a standard non-standard monetary policy tool in the European Central Bank’s (ECB) toolkit late in 2011. A second confounding (global) banking crisis had struck yet again catching global policymakers with their pants down, this one seemingly centered directly upon Europe. On December 8, 2011, amidst constant rumors (probably real) that two of the major European [...]
When their paper came out in January 2010, Carmen Reinhart and Kenneth Rogoff put a number on bond vigilantism as it had been known in prior history. The idea behind investor fickleness was simple and intuitive: profligate governments who finance their ill spending ways by borrowing will literally end up paying the price once the exceed common sense. And when [...]
One other fascinating, corroborating angle to the short run picture comes at us from Europe, specifically Germany. As illustrated yesterday, there’s a whole bunch of market prices/indications from around the world which have keyed in on February 24-25 as a possible turning point. The most obvious candidate which may have triggered it would be February 25th’s major US Treasury selloff. [...]
It really is about abnormality. What I mean by that is, contrary to popular imagination fed by the Fed and other central banks, ever since 2008 the inflation paradigm has changed. The first global financial crisis (GFC1) has proven time and again how it wasn’t a one-off, and since it was a monetary breakdown (global dollar shortage) that’s been permanent [...]
The idea behind post-Georgia reflation is that globally fiscal-led “stimulus” will be enough to fix what’s still wrong. The economy broke down, by choice, last year but with sufficient zeroes behind governments spending around the world, from DC to Brussels and a bunch in between, whatever costs and consequences remaining due from 2020 aren’t going to be unmanageable for 2021. [...]
Everyone in Europe has long forgotten about what was going on there before COVID. First, an economy that had been stuck two years within a deflationary downturn central bankers like Italy’s new recycled top guy Mario Draghi clumsily mistook for an inflationary takeoff. Both the inflation puzzle and ultimately a pre-pandemic recession have taken a back seat to everything corona.Whereas [...]
Mario Draghi is back to save Italy by now running it. Like Janet Yellen resurfacing at the US Treasury, these people are thought of in the most positive terms simply because the public remains blissfully unaware of basic data. Not without good reason; the public had for decades come to count on central bankers (for all anyone knew) to keep [...]
I think because the big, public failures of GFC1 haven’t repeated the public has been given a false sense of stability. While the idea of subprime mortgages being responsible for all that went on during 2008 has remained generally accepted, there was for a time an awakened recognition that big financial firms were doing complicated things in the monetary shadows [...]
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