Pretend, for a minute, that your country responds to the bursting of a credit bubble by borrowing unprecedented amounts of money and using it to prop up banks and construction companies. This doesn’t work, so you create record amounts of new money and push interest rates into negative territory in an attempt to devalue your […]
Expect the UK to drop out of the headlines as it chooses new leaders and untangles itself from the EU. The big news going forward will be the trend Brexit started, as other European countries consider their own variations on the “leave” theme — with all that that implies for interest rates, bank stocks and […]
One of the first results of Britain’s voting to leave the European Union was a sharply lower pound. Which means the UK is now winning the currency war. Henceforth its exports will be cheaper around the world, enabling its major companies to sell more stuff, make more money and hire more people. Inflation will pop, […]
Gold analyst Michael Ballanger just posted an article noting how much things have changed — perhaps for the better — in the gold market. Here’s an excerpt: Commercial Traders Have Just Gone Over the Top (24hGold) – With Friday’s Commitment of Traders Report, the ridiculous has just metastasized into the sublime as the Commercial Cretins […]
The first few months of this year gave a little taste of what’s to come for the junior precious metals miners, if this is indeed the start of a new gold/silver bull market. Some sample charts: There were dozens more like this, obscure little miners that soared when investors concluded that maybe they […]
The most widely-reported result of the recent G-7 meeting was Japan’s attempt to convince the other major economies to admit that a crisis is imminent and take appropriately radical steps. The response seems to have been a bunch of blank stares. As India’s Business Standard noted: G7 pact offers minimal cover for Abenomics reset A […]
It’s unclear what China was thinking when it was borrowed all those trillions to quadruple its capacity to make steel, cement and other basic industrial products. There’s no record of it checking in with the other countries that have such industries to see if a sudden surge of cheap imports was okay with them. Turns […]
Austrians went to the polls today to elect a new president. But for the first time in living memory the country’s two mainstream parties — Austrian People’s Party and Social Democrats — are out of the running while far-right and far left candidates stage an acrimonious run-off. Early returns (as of Sunday morning US Pacific […]
Somewhere back in the depths of time the world got the idea that easy money — that is, low interest rates and high levels of government spending — would produce sustainable growth with modest but positive inflation. And for a while it seemed to work. But that was an illusion. What actually happened was textbook, […]
“Of course there are true copper bottomed mistakes, like spelling the word “rabbit” with three m’s, or wearing a black bra under a white blouse, or, to make a more masculine example, starting a land war in Asia.” — John Cleese We all make mistakes, but some are bigger than others. An example of a […]
Macy’s reports horrendous earnings and Italian banks finally reveal their non-performing loans. Share prices plunge accordingly. China, meanwhile, admits that it’s over-leveraged and promises to stop borrowing. In other words, wherever you look, a global slowdown is coming and a massive currency devaluation will soon be the only politically feasible solution.
China’s most recent borrowing binge didn’t work, while Japanese and European negative interest rates sent their currencies up rather than down. The result: Global growth is slowing and governments are panicking. Look for fiscal stimulus to pick up the slack in the year ahead — that is, bigger deficits, more government borrowing and maybe even […]
The dollar is tanking lately. From a high of around 100 in December, the dollar index — which measures USD against a basket of foreign currencies — is down about 8%, and the decline is steepening. In counterintuitive currency war terms, that means the US is winning the latest battle. After three years of the […]
These are shockingly bad times for big banks, especially when you consider that the overall economy is supposed to be fairly healthy. The latest example is Germany’s Deutsche Bank: Deutsche Bank Q1 ‘most challenging in several decades’: CFO (CNBC) – Deutsche Bank posted a 58 percent drop in net profit in the first quarter, to […]
Goldman, Morgan Stanley and IBM release numbers that look, well, depression-like. Housing starts plunge, gold and silver spike, China’s bond market seizes up, and Deutsche Bank prepares to name names in its gold manipulation scandal. And US stocks keep rising…what’s wrong with this picture?