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  • Greece's Metaxas Moment? [View article]
    It's funny. You say "Nobody really wants Grexit..." yet you point to one Nobel prize winning economist, Paul Krugman, who thinks it's the best option for Greece. This morning another Nobel prize winning economist, Joseph Stiglitz, also came out in support of Greece exiting (or at least saying "No" in the referendum -

    So you have two Nobel prize winning economists who think Grexit is the best deal, not necessarily a GOOD deal, but possibly the best. Now one could say these are "ivory tower" types with o real understanding. Or one could admit that, while being very bad for very over-priced markets, Grexit could be the best thing for the world financial system in the long run.

    Many people believe that banks and governments failed to address the key issues leading to the 2008 Great Recession and that, until these issues are properly addressed rather than simply papered over, we will not return to real growth. Syriza may be the first govt that has had the courage not to accept a short-term, can-kicking solution to its problems. But it won't be the last.
    Jun 29, 2015. 04:54 PM | Likes Like |Link to Comment
  • Why The Probability Of Russia Or China Bailing Out Greece Is Low [View article]
    Yes, people forget that the run on Greek banks is presently, actually a run on the ECB. If Greece nationalises its bankrupt banks and repudiates the debt, then it will have managed to steal another 88 billion Euros from the ECB. People will be free to exchange their Euros for Drachma at the black market rate, automatically increasing the economic activity in the country.
    Jun 27, 2015. 06:11 PM | 1 Like Like |Link to Comment
  • Why The Probability Of Russia Or China Bailing Out Greece Is Low [View article]
    I understand the ECB has a call on all the deposits in the Greek Banking system as collateral. If Greece simply nationalises the main banks, I don't know that the ECB could claim the deposits then.

    But I agree. I wouldn't expect China or Russia to get involved until Greece has repudiated its debts. Then, with a clean slate, they could step in and float the country through its troubles.
    Jun 27, 2015. 06:08 PM | Likes Like |Link to Comment
  • Why The Probability Of Russia Or China Bailing Out Greece Is Low [View article]
    So, what are your predictions now that Greece has promised a referendum on whether to accept the institutions' proposals? Still no default? What about USA/IMF support now? What about China or Russia now?
    Jun 27, 2015. 05:02 PM | Likes Like |Link to Comment
  • Why Investors Should Care About The Yield Curve [View article]
    The difference between 3mo and 30yrs in 1999 was about 1.3%. From 1993 3mos went up by about 1.5% while 30 yrs came down about 1%. The gap now is about 3.3%. The June FOMC dotplot shows expectations on the FFR (presumably close to 3mos) of about 1.25% in 2016. That alone, without any 30yr drop would flatten the curve to 1999-like differences.

    Doesn't that suggest a similar 1999-like stock event? Or do you suspect that 30yrs will rise fast enough to maintain the spread? How would 30yrs near 5% (maintaining current spread over the next year) affect stocks?
    Jun 24, 2015. 03:15 PM | Likes Like |Link to Comment
  • Existing home sales rise past expectations [View news story]
    First revise previous month down by 2.3% then calculate increase from downwardly-revised figure to get 5.1%. All anybody sees is, it's up 5% from last month. But it's not. Increase is only 2.6% up from last month's unrevised figures. So, in April instead of an okay 3.3% decline, we had more like a 6% decline (p.s. NAR report says this figure is "upwardly revised"). This "fudging" of headline stats that are then quietly revised by more than 50% makes a mockery of statistical reporting in the USA. The next time someone complains about the reliability of Chinese statistics, remember this.
    Jun 22, 2015. 11:48 AM | 6 Likes Like |Link to Comment
  • Yellen press conference: Market volatility won't prevent hikes [View news story]
    Maybe they're waiting for everyone to lose interest in watching them. Being boring can be a good strategy for central banks.
    Jun 17, 2015. 07:59 PM | Likes Like |Link to Comment
  • Consumers Stay In Recession Which Is Taken As A 'Surge'? [View article]
    It looks like a matter of how one spins their stats. The link uses 3-month annualized data, so changes in any short period will be amplified. The above article uses Y/Y % change, so it will incorporate recent changes into an average since last year. Short-term vs. longer-term data. Who's view is better, I have no idea.
    Jun 12, 2015. 01:24 PM | 1 Like Like |Link to Comment
  • Reuters/UofM Consumer Sentiment [View news story]
    Wow that's one HUGE standard error measure (estimated at +/- 2.2% 95 times out of 100 - but never compared to a larger survey, so who knows?). Only landlines used, no cells, misses many young adults.
    Jun 12, 2015. 12:36 PM | 2 Likes Like |Link to Comment
  • Expectations For Lift-Off Solidify For September [View article]
    The lift-off date is clearly predicated on expectations of a recovery in Q2. The Atlanta Fed is not predicting much of a Q2 bounce in GDP. If the economy doesn't improve, do you expect that date to be pushed back again? Yellen has said, after all, that their decisions are now data-dependent. How long can the lift-off be pushed back before the Fed has credibility issues (I mean more than today)?
    May 15, 2015. 06:40 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Can Employment News Change The Fed's Course? [View article]
    Sorry, the link didn't work. Just google "NYSE investor credit and the market" and look at the first image. The S&P is way higher and market credit balance is now about $200 in the red.
    May 4, 2015. 09:09 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Can Employment News Change The Fed's Course? [View article]
    But couldn't you at least have put up the more recent (and much scarier) graph from Doug Short (;_ylt=AwrB8poCF0hV_QUA...
    May 4, 2015. 09:06 PM | 1 Like Like |Link to Comment
  • China Vs. USA: And The Winner Is... [View article]
    Yes, we in the western world have perfected the art of corruption in govt. If I give you money to do something while in power, that's bribery. If I promise to give you something (say $250,000 per speaking engagement) after you leave power, that's okay. They both look corrupt to me, but one version is legal. (Turn away, nothing to see here.)
    May 1, 2015. 03:04 PM | 3 Likes Like |Link to Comment
  • Japan Needs A Bigger Hole? [View article]
    Hello David,

    How sustainable do you think it is for CBs to own debt (some of which is presumably worthless)? At what point does it get recognized as monetization and lead to currency devaluations as in the yen's case? Clearly QE can't be forever, though many countries seem determined to make a go of it. Do you think The FED should re-implement QE at this point or at some other point where there is no crisis (outside of the stock market) but the economy is not doing great? Where/when would they stop? Or are we just stuck in this secular stagnation forever?

    The economies you mentioned are largely service-based economies with around 60% of GDP generated internally. Hence the difficulty in generating inflation simply by devaluing the currency, even for an exporting economy like Japan or Germany. Is the primary competitive strategy between exporting industries of various countries going to rely on currency devaluation rather than productivity increases or innovation?
    Apr 29, 2015. 05:18 PM | Likes Like |Link to Comment
  • Japan Needs A Bigger Hole? [View article]
    Hello David,

    Thanks for your considered reply. If capital has been leaving the US for a long time (presumably seeking better opportunities abroad) then would you recommend some kind of protectionist tariffs to level the playing field vis a vis globalization? (Also clearly not a monetary solution.) What are your thoughts on the various currency wars taking place under the guise of "only intending to increase local inflation"?

    Because you have been asking the question for some time, do you believe that the current monetary policies are actually the only policies that could work in this situation (we'll ignore QE1 as almost everyone agrees that was essential)? If not, what would you recommend.

    Thanks again for your analysis. I've enjoyed reading your comments at length.
    Apr 29, 2015. 04:57 PM | Likes Like |Link to Comment