Nouriel Roubini verged on apocalyptic during the course of the crisis, and was proven largely right. Now that he has softened his stance, some have accused him of moderating his tone as a result of his much higher profile. While that’s possible, a couple of factors seem more likely. First and foremost, much of Roubini […]
Read more...This blog is a card carrying hater of the stress test farce of earlier this year, The Treasury said from the start that the purpose of the stress tests was to restore confidence and show that the 19 banks tested, which hold 70% of the nation’s deposits, were well capitalized, and then said more or […]
Read more...This story on Bloomberg, about stockpiling of base metals by Chinese farmers and housewives, highlights a type of speculation that observers in the West haven’t considered deeply. Since these were purchases by individuals, sometimes in the form of scrap, it’s hard to ascertain how significant a factor this activity has been. If nothing else, the […]
Read more...There is a not-too-bad article up at the Wall Street Journal on how consumers have hunkered down and are unlikely to resume their freespending ways any time soon. Even though it has useful on the ground observations about the new consumer austerity, it repeats the oft-repeated tidbit that consumer spending is 70% of the economy. […]
Read more...Reuters reports that a number of credit card issuers reported modest improvement in their chargeoff rates for July. While any improvement is good news, it is way too early to break out the champagne. First, some of the improvement may be related to tax refunds being used to pay down debt, a strictly seasonal affair. […]
Read more...I don’t believe in market calls, and trying to time turns is a perilous game. But most savvy people I know have been skeptical of this rally, beyond the initial strong bounce off the bottom. It has not had the characteristics of a bull market. Volumes have been underwhelming, no new leadership group has emerged, […]
Read more...Submitted by Edward Harrison of Credit Writedowns. It has been my thesis for some time that we are seeing a secular change in consumption patterns in the United States. This will have grave implications for a world economy used to seeing the American consumer as an economic growth engine and consumer of first choice. Retail […]
Read more...Frank Veneroso was kind enough to write as a result of seeing a guest post “Debtor’s Revolt?” by his colleague Marshall Auerback. Veneroso also provided his latest newsletter and gave us permission to post it. It it pretty long (12 pages), I extracted the executive summary and other key bits. Be sure to read the […]
Read more...Ambrose Evans-Pritchard has a good piece up at the Telegraph on an issue that appears not to have gotten the attention it merits, namely, the level of underutlization of capacity and the risk it poses to anything dimly resembling recovery. Evans-Pritchard brings up a related topic, that deflation is a bigger issue that most commentators […]
Read more...It was conventional wisdom in the US and UK financial press that Europe was dong a hopelessly bad job of responding to the economic downturn, that it needed to do vastly more in the way of fiscal stimulus, that it was consigning its citizens to continued recession, and the Te Germans in particular were to […]
Read more...As the economy limps along, with jobs still falling (despite keen efforts to call a turn, and with the figures a bit more dodgy if you look under the hood), more and more overindebted and underemployed citizens are out on the street. Reports of tent encampments or parking lots with cars that serve as shelter […]
Read more...Japan may be on the verge of some major shifts, The fact that what amounts to one-party rule in Japan appears at an end ought to be significant, but the proof will be in the pudding. The island nation has been ruled by the Liberal Democratic Party for virtually the entire postwar period, with politics […]
Read more...We’ve been seeing an even higher than usual amount of skepticism on China’s official data releases, as if such a thing were even possible, given the general dim view of Chinese government data. Some observers, including yours truly, had looked to electrical usage as a better barometer of economic activity. Well, it turns out that […]
Read more...Submitted by Edward Harrison of Credit Writedowns If you recall, at the end of May, I wrote a post “Both initial claims and continuing claims now pointing to recovery” that said jobless claims data were pointing to an imminent recovery. The general gist of my argument was recovery would come by year’s end or early […]
Read more...It was mathematician Benoit Mandelbrot who first discovered in 1962, by crunching 100 years of cotton trading data, that markets have “fat tails” or more extreme risks than the standard models predict. A less oft cited finding of Mandelbrot’s was that markets have memory, in colloquial terms. Calm days tend to be followed by calm […]
Read more...