Central Banks

     

 

 

Debt Curse

NEW YORK – “Not a bad view. That’s the mayor’s house right beneath us.”

We were on the 16th floor of a new apartment building, looking out over the East River. With us was President Reagan’s former budget advisor and Wall Street veteran David Stockman – a man who has been closer to the Bubble Epoch than almost anyone.

The Dow rose 183 points on Wednesday – or just over 1% – after starting the day in the red.

 

SALOMON_3142495bWilliam Salomon in Salomon Bros. & Hutzler’s trading room in 1965. Salomon Bros. sold the first ever mortgage-backed bond on Wall Street in the 1980s

Photo credit: Arthur Brower / The New York Times

 

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Fighting to Lose

BALTIMORE – Where are we now? Dow down 296 points on Tuesday – or just under 2%. Cruz and Clinton win the Iowa caucuses. Oil is back below $30. An election has been described as two wolves and one lamb voting on what to have for dinner.

 

Sheep-On-Voting-For-a-Lion-Or-a-Wolf-On-Election-DayWe’re going to make a difference on election day! Or maybe not…

 

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Let’s Do More of What Doesn’t Work

It is the Keynesian mantra: the fact that the policies recommended by Keynesians and monetarists, i.e., deficit spending and money printing, routinely fail to bring about the desired results is not seen as proof that they simply don’t work. It is regarded as evidence that there hasn’t been enough spending and printing yet.

 

Bank of Japan (BOJ) Governor Haruhiko Kuroda speaks at a news conference at the BOJ headquarters in Tokyo June 11, 2013. REUTERS/Yuya ShinoBoJ governor Haruhiko “Fly” Kuroda: is that a windshield I’m seeing?

Photo credit: Yuya Shino / Reuters

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An Imaginary Bogeyman

What’s a Keynesian monetary quack to do when the economy and markets fail to remain “on message” within a few weeks of grandiose declarations that this time, printing truckloads of money has somehow “worked”, in defiance of centuries of experience, and in blatant violation of sound theory?

In the weeks since the largely meaningless December rate hike, numerous armchair central planners, many of whom seem to be pining for even more monetary insanity than the actual planners, have begun to berate the Fed for inadvertently summoning that great bugaboo of modern-day money cranks, the “ghost of 1937”.

 

Bugaboo of monetary cranks
The bugaboo of Keynesian money cranks – the ghost of 1937.

 

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Market Mythology

LONDON – Twice in the last 15 years, markets have tried to correct the mistakes and excesses of the Bubble Epoch. Each time, the Fed came back with even more mistakes and excesses. Trillions in new credit… lower lending rates… easier terms… ZIRP… QE… and the Twist!

 

MW-BX052_FOMC_m_MG_20140319160153The gaggle of price-fixers the job of which is to regularly falsify one of the most important price signals in the economy. The idea that the economy can be “improved” by the interventions of a handful of people who have zero practical economic experience and rely on extremely dubious theories to guide their decisions is downright bizarre. Who can possibly believe that this works? It is a huge farce – one that is very dangerous for prosperity and economic progress.

Photo credit: Bloomberg

 

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Dovish Cooing from the Desolation of Draghi

As Reuters informs us, on the heels of Mr. Draghi’s somewhat “disappointing” attempt to assassinate the euro on occasion of the previous ECB meeting, the chief European printing press supervisor and certified monetary crank has decided to assure everyone of his ultra-dovish stance again on Thursday, by announcing that even more monetary insanity must be expected soon:

 

Fading growth and inflation prospects will force the European Central Bank to review its policy stance in March, President Mario Draghi said on Thursday, a strong signal that more easing could be coming within months.”

 

bruning_euro_08.25.2014_largeThe economy isn’t doing well? Let us set fire to the currency then, maybe that will help.

 

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Testing the Breakers

One week down.  Fifty-one more to go.  No doubt, this has been a wild start to the New Year.  We expect many more to follow.

 

china-crashGood grief, not again! Typical Chinese stock market participants are puzzling over the resumption of the crash. Note: in China, green = red and vice versa.

Photo credit: AP

 

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