French for Trump
OUZILLY, France – There are two ways you can destroy a country: pull down its money or build up its military. Usually, they go hand in hand – one hand ruining the economic body, the other attacking the soul.
If French voters could elect the US president, they would overwhelmingly vote for the war harpy. We can excuse them on account of their ignorance (a state in which they are successfully kept by their media).
Wicked and Terrible
After touting her pro-labor union record, the Wicked Witch of Chappaqua rhetorically asked, “why am I not 50 points ahead?” Her chief rival bluntly responded: “because you’re terrible.”* No truer words have been uttered by any of the candidates about one of their opponents since the start of this extraordinary presidential campaign!
Electoral map (note that the coloration may no longer be applicable…)
Thousands of people recently demonstrated in Brussels against free trade deals negotiated by the EU. This happened just days before a meeting of EU trade ministers in Bratislava last Friday, which was considered the last push to salvage the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States. Not only is Europe divided on the deal, but the talks have been extremely secretive.
This placard carried by anti-TTIP protesters in Brussels goes to the heart of the problem, namely the secrecy characterizing the deal.
Photo via flushthetpp.org
Largest Theft in History
As expected, Ms. Yellen smiled last week, announcing no change to the Fed’s extraordinary policies. For the last eight years, she has been aiding and abetting the largest theft in history.
Asset valuations are not outside of historical norms, particularly if one disregards the past 5,000 years.
Cartoon by Bob Rich
A Litany of Failures
It was widely expected that the BoJ would announce something this week after it promised to perform a comprehensive review of its monetary policy. It certainly did deliver a major tweak to its inflationary program, but its implications were seemingly not entirely clear to everybody (probably not even to the BoJ).
This picture was taken back when the BoJ first introduced NIRP, but it has the appropriate horror movie atmosphere. Kuroda’s press conferences with these nifty little placards remind us a bit of school. As an aside, the term “quality” evidently got there by mistake. One cannot improve a money’s quality by increasing its quantity and enforcing negative rates (these are a particularly dangerous abomination).
Photo credit: Yuya Shino / Reuters
A Crucial Priority
This month the bright fellows at Harvard Business School came out with a new report. A lot of work went into its preparation. In fact, the report contains the culmination of five years of in-depth analysis of U.S. competitiveness and surveys of global business leaders and the general public.
Harvard Business School, Baker Library. It took them five years to cook up a weighty report on the US economy’s problems. Unfortunately the report fails to mention the biggest one.
Photo credit: Paul Giamou
OUZILLY, France – Imagine the poor economist without a sense of humor. How he must suffer! This week was to be dominated by central banks. Two big ones – the Bank of Japan (BoJ) and the Fed – were to make important policy announcements.
The BoJ’s chief lunatic Haruhiko Kuroda with one of his famous diagrams. How can this not work? It looks so neat!
Photo credit: Yuya Shino / Reuters
OUZILLY, France – “In the short run,” says billionaire investor Warren Buffett, “the stock market is a voting machine. In the long run, it’s a weighing machine.” Put another way, in the short run, the stock market responds to myths and fads. In the long run, these give way to facts.
The Wilshire Total Market Index (red line) vs. GDP (black line), indexed (1990 = 100). Maybe the stock market is actually mainly a gauge of monetary inflation. As an aside: Warren Buffett’s company Berkshire Hathaway reportedly holds more than $72 billion in cash at the moment. Apparently Buffett expects the market to soon make another transitions from the voting to the weighing phase – click to enlarge.
Former Federal Reserve Chairman Alan Greenspan, who was once laudably referred to as “Maestro” for his supposed astute stewardship of U.S. monetary policy, commented last week on the nation’s current political and economic climate:
“We’re not in a stable equilibrium. I hope we can all find a way out because this too great a country to be undermined, by how should I say it, crazies.”*
Help! The crazies are coming! And the Russians too, now that we think about it. Best hide under your desks!
John Hussman on Recent Developments
We always look forward to John Hussman’s weekly missive on the markets. Some people say that he is a “permabear”, but we don’t think that is a fair characterization. He is rightly wary of the stock market’s historically extremely high valuation and the loose monetary policy driving the surge in asset prices.
The S&P 500 Index and the NYSE advance-decline line. Most market internals weakened steadily until early February 2016, but strengthened noticeably thereafter. The a/d line is just one of many examples. A major reason for this was that market participants reassessed the likely future path of the Fed’s monetary policy – click to enlarge.
NORMANDY, FRANCE – We continue our work with the bomb squad. Myth disposal is dangerous work: People love their myths more than they love life itself. They may kill for money. But they die for their religions, their governments, their clans… and their ideas.
Famous French hippie and author Voltaire. He wears the same sardonic grin in every painting, whether he’s depicted at a young or an old age, doesn’t matter. His real name was François-Marie Arouet; he adopted the pen name Voltaire (one of 178 different ones he used) after spending 11 months incarcerated in a windowless cell in the Bastille, following the publication of a satirical verse in which he insinuated that the French regent practiced incest with his own daughter. Said regent was the infamous Duc d’Orleans, who shortly thereafter conspired with John Law to utterly ruin the country’s currency and economy in an early central banking experiment. Voltaire’s decision to insult him in advance reveals his excellent foresight and character judgment. The aristocracy was never sure whether it should fear Voltaire for his anti-authoritarian streak, or love him for his wit.
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