May 31 2005
Not everyone buys that CPI as a legitimate number… Jim Jubak at The Street writes about how this miscalculation, deliberate or otherwise, may be combined with the wrong policy objective at the Fed, for a double whammy.
May 30 2005
We hope you are enjoying your Memorial Day.
and
May 30 2005
May 28 2005
May 28 2005
Paul Krugman is always quick to point out the flaws with the republican economy. Read Running Out of Bubbles. Krugman references a few of our favorite sources, and sums up the echo real estate bubble in the NYT — about as mainstream as you can get. That, in and of itself, is an indicator of where we might be in this cycle.
Generally, however, when it comes to Krugman, I caution readers about his political conclusions. I also wouldn’t expect half this analysis if the President’s name weren’t Bush and the letter ‘R’ didn’t identify his party… but that’s a separate subject all together.
May 27 2005
I see now that real estate investment clubs are getting to be popular if the USA Today is covering the subject. Vestiges of the late 1990s stock market bubble psychology seem to be certifying that we are in the midst of a real estate echo bubble. We shall see what a few upward blips in the mortgage rates will do to this new breed of speculators.
Feel free to click through some examples of get rich quick material.
May 27 2005
While the powers that be acknowledge they are a tad uncomfortable with the deficit and the dollar arrangement, they generally are quite confident in the long-term prospects. Others don’t quite agree…. Bill Bonner is one of them. While Bill can come across as a bit caustic, sometimes a heavy dose of sober cynicism is exactly what carefree revelers need to pull them back to their senses before they plunge off some abyss.
We shall see if Bonner’s dire warnings about the dominance of the dollar come true. But as history guys, we note one truth is undeniable: no currency in existence has stood the test of time except those containing precious metals. For that matter, none has lasted as a reserve currency once no longer backed formally by a bonafide reserve. Of course, such things can take a long time to pan out.
May 27 2005
-Fed officials leave more hikes in little doubt
-Housing prices, sales set records
- Weak dollar ‘a threat to growth’
-Sales, prices of existing homes hit all-time highs on low mortgage rates
-What if China Slows? (Roach)
-Finch Ratings lowers General Motors’ rating to junk status
-30-Yr. Mortgage Rates Hit Downward Spiral
-States take in record $600B
-’What soft patch’? analysts ask, as US reports 3.5 percent GDP growth
and this gem:
- Two hurt in mock light sabre duel
May 26 2005
We hear a lot about China in the news. When we do, mostly its coverage related to cheap goods flooding the US via Wal-Mart at the expense of US jobs. With Congress beating the trade war drums in order to appease the protectionist lobby (and get more than a few votes and contributions in the process), we can expect a continued flood of demagoguery which, apart from its populist vote-getting appeal, also distracts the American public from the cold fact that, over the last seventy years, Congress has slowly made the US business environment a minefield of bureaucratic complexity, waste and inefficiency. Meanwhile, Continue Reading »
May 25 2005
Bill Gross is known for thinking outside the box (see our yesterday post “A Gross Call“), and I’ve come to value his insight. But that does not mean he is above critique: Sean Corrigan at Sage Capital dissects Bill Gross’ May-June commentary.
May 25 2005
Politicians never mind a little tax-windfall flowing through the back door; Its more pleasant than trying to convince citizens that they should stick their kids and grandkids with the bill by running up even more debt when taxpayers say ‘no mas’ through the front door. (Although, it seems the AARP these days manages to find many retirees willing to help them vote through that argument!)
Hence, its no coincidence that politicians don’t seem to mind inflation — or, for that matter, dramatic price run-ups that lead to bubbles. Continue Reading »
May 24 2005
Fabian Löw, a University student in Germany, has created a new website — jobdumping.de — designed to bypass the stranglehold the restrictive labor bureaucracy has on German citizens. Löw also intended it to be a provocative political statement about the German economy, and has succeeded: it has incensed the labor bureaucracy to a froth.
What exactly has Löw created? Jobdumping.de is an auction site that allows Germans to Continue Reading »
May 24 2005
Bill Gross of PIMCO, in his May 2005 commentary “The Strange Tale of the Bare-Bottomed King”, makes a call that inflation is in check… but also makes it clear that caution is certainly in order.
Gross posts up some revealing charts, and connects the dots on how, absent the “iron fist of government”, the economy might well have gone into a deep tailspin. But, he notes, that’s not a genuine recovery – its patchwork. Instead, as we note, we see debt related consumption binge to the tune of a 6% trade deficit. That kind of consumption means Americans are buying some fancy things. But, says Gross, while the emperor may be wearing some fancy looking clothes as a result, we should seriously question the quality of the threads holding it all together as a storm may be brewing.
May 23 2005
You may have heard news pointing out that US savings levels are at extremely low levels. Understanding the intricacies of savings is esoteric stuff for the layman. But if you want to understand why the US economy is sagging, or why political solutions for leveling the playing field and making everyone wealthy always seem to fail miserably… well, a basic understanding of the concept is critical.
I plan on doing a short posting on why savings is crucial for economic development and growth in the future. In the meantime, here is an article from economist Frank Shostak. Shostak makes the very important distinction between “savings held as money” vs. the Austrian School economic term “real pool of savings”. This is a distinction usually ignored, with only the money related definition usually being acknowledged. While the two can mean the same thing, that is not the case in a system that allows for the currency to be deflated (eroded) at over 3% per year (at least if the official number is to be believed), such as ours. As such, popular policies that make no distinction between the two concepts could be downright reckless.
May 23 2005
To be ignorant of what occurred before you were born is to remain always a child.
–Marcus Tullius Cicero (c. 106-43 B.C.)
