The Japanese revised GDP accounts for the 2013 4-6 period has gone pretty much the way of the export-import data. It reveals not only the lack of depth in understanding the numbers on the part of the media (and most economists), it is actually a useful example of some of the primary flaws in the expenditure approach itself. The Wall [...]
Global trade is one of the primary “headwinds” facing the global economy, and it does contribute to the lack of dollar flow impeding exchange functions in troubled currency areas. A large part of the “solution” proffered by central banks is an appeal to currency devaluation in order to boost export activity. The primary impediment, something that flies in the face [...]
QE in any language has enthralled the mainstream media and economics profession so much that what should be so simple to interpret winds up as uncritical mush. For example, in the Washington Post with Bloomberg yesterday, the “business” section had this to say about Japan’s export data release for July: “Japan’s exports jumped by the most since 2010 in July, [...]
The old military axiom that battle plans never survive first contact with the enemy appears to have a corollary in the central banking world of interventionist finance. The allure of QE in Japan was an irresistible impulse to believe that a durable solution was to be had by retrying old ideas in a different scale. While that appeals to the [...]
Apparently it is time to celebrate inflation, however it might be defined. Inflation is looked on no longer as the bane of central bankers, but their reason to exist. This is now near universal, as one after another nation is forced by central banks to appeal to debasement as economic salvation. On the surface, it looks as if the Bank [...]
The key benchmark rates for gold as collateral in borrowing US dollars are the gold forward rates (GOFO). Like LIBOR, GOFO is a “fix”; a survey of LBMA “contributors” of the cost at which they proclaim to exchange gold for dollars. There is no transactional information which accompanies GOFO, so it is often misconstrued as a “market” rate. The appearance [...]
Interest rates, as measured by the 10 year Treasury note, are up roughly 100 basis points (1%) from the low yields set last year of about 1.4%. That has everyone and his brother calling for the end of the great bond bull market that has been going on all my adult life. The 10 year Treasury note peaked in yield [...]
Market volatility increased again last week and while I could point to a lot of different factors, I think the most important one was the uncertainty produced by the musings of Ben Bernanke. I along with everyone else - and that should have been a warning sign - believed that Bernanke would come to the press conference with the purpose [...]
While currency temptations run high in countries with more active central banks, there has been, as I noted yesterday, growing illegitimacy in trying to create academic conditions in the real world. The primary manifestation of the instability created by believing currencies can and should be actively managed has been an outbreak of “inflation”. I use quotes here because rising general [...]
If there has been one consistent source of strength in the US economy it has been automobile manufacturing and sales. However, even that is a bit of a misdirection since the growth in autos since 2009 owe mostly to the depth of contraction in the Great Recession. What looks like rapid growth is really a delayed attempt at returning to [...]
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