Ambrose Evans-Pritchard is outstanding in his expose on Europe's increasingly more evident deflationist cul-de-sac, and the ever more obvious L-shaped "recovery" facing Europe. While it has taken fans of the euro currency a mere two short months to not just diametrically change their exposure vis-a-vis the "long" currency of choice, but to allow speculators to build record euro short positions , the question of how America (and China by virtue of its dollar peg) will deal with euro currency that has no choice but to go lower, becomes an increasingly thorny issue
Much has been said about the 25 basis point Discount Rate rate hike announced on Thursday.
Marc Faber discusses America's unsustainable debt load in this interview with Margaret Brennan on Bloomberg TV. An amusing observation: the GDP growth from each $1 of new total debt has dropped from $0.25 to -$0.60.
As several pundits already pointed out, today's supposed political regime change (the polls are still not closed) implies that the stimulus spigot may well be closed for the Obama administration, after the Massachusetts "policy no-confidence" slap in the face, on the verge of the President's one year anniversary. What this implies is that the economy at this point could very well be on its own. Just ask Paul Krugman (or any economic skeptic for that matter) what will happen to the U.S
This latest bit of "economic" insight out of the Cleveland Fed is just too insidiously funny to be commented on . We present it au naturale , as in pot (Cleveland Fed), kettle (Krugman), and a whole lot of printer-ink stained fingers (Shalom).
Reading anything by Krugman these days is all about getting an understanding of why drowning in infinite debt within a decade to finance stimulus after stimulus is really a pretty swell thing. Well, today the Nobel-prize winner has decided to go on pro-stimulus hiatus and instead is focusing on providing asset allocation advice. According to Bloomberg , "Nobel Prize-winning economist Paul Krugman said he plans to sell some of his investments in Brazil, Latin America’s biggest economy, on concerns that asset prices are over-valued." “I am seeking to get out because of what’s happening
A picture is worth a thousand Krugman essays, which is why we present a chart comparing the US Monetary Base (and by subtracting Reserve Balances with Fed Reserve Banks, Currency in Circulation), and the Fed's holdings of MBS and Agency paper (worthless GSE/FHA garbage). In summary: Currency in Circulation: $920 billion; MBS/Agency Holdings: $997 billion.
Sunday, February 21, 2010
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