Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.Saturday, January 05, 2008
Fundamentals of Growing Public Debt a Big Negative for US Equities / Economics / US Debt
SummaryFor those who are only interested in the bottom line, it doesn't matter what the charts are saying. Neither US equities nor US Treasuries represent sensible investments from a fundamental perspective. Investments should be in assets which offer protection against the demise of the US Dollar.
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Wednesday, January 02, 2008
United States Transfer of Sovereignty to Sovereign Wealth Funds / Economics / Sovereign Wealth Funds
The Mega Picture - Sovereign Wealth Funds (SWF's) are being hailed as the saviors of the financial world, but in reality are more akin to harbingers of the economic apocalypse for countries such as the United States and United Kingdom.
The SWF's have been stepping in of late with tens of billions in financing and investments into the cash starved US banking and finance sector with financial institutions such as Citicorp selling off large chunks every other week to funds such as that to the Abu Dhabi SWF at 4.9% of the company for $7.5bn on a fixed yield of 11%, the terms are far more favourable than offered to domestic investors. Most recent speculation is that Rio Tinto maybe inline for a chinese SWF bid of as much as $150 billion.
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Tuesday, January 01, 2008
Taxes, Money and Surpluses: Fact and Fiction / Economics / Austrailia
John Stone's somewhat harsh criticism of the Howard government's fiscal policy was fully justified. ( Mr Costello's repeated budget failure , National Observer No. 73 - Winter 2007). However, Stone's comments on government revenues and budget surpluses missed a very important question: what generated such huge government revenues and massive surpluses? There was a time when the answer would have been self-evident to any economist worth his salt.Read full article... Read full article...
Monday, December 31, 2007
Memory Lane and President Bush's US Tax Suts / Economics / US Economy
As we enter the New Year I thought it appropriate to reflect on President Bush's tax cuts, the ones that the Democrats and their media flunkies screamed would wreck the US economy by generating an unsustainable deficit. It was easy — and still is — to spring to the conclusion that the Democrats' response was driven by opportunism and a deeply ingrained cynicism.Read full article... Read full article...
Friday, December 28, 2007
Public Sector Pay to Cripple the UK Economy During 2008 / Economics / UK Economy
The unproductive public sector renowned for demanding unrealistic pay hikes whilst at the same time failing to deliver competitiveness and anticipated output, looks set to go to war against Gordon Browns government during 2008. Which is already expected to be the worst year for jobs in a decade.Read full article... Read full article...
Friday, December 28, 2007
Credit Crunch Time for American Consumers / Economics / Credit Crunch
The subprime mortgage crisis is merely the tip of a very large iceberg. Beneath the surface lies not only a sea of tenuous loans to prime borrowers, but also an assortment of other liabilities backed by auto loans and credit card debit. Now that home equity extractions, "zero percent auto financing" and "zero interest" credit card rollovers are much harder to come by, Americans must do without the credit lifelines that have previously kept them afloat.Read full article... Read full article...
Monday, December 24, 2007
UK Economy GDP Growth Forecast for 2008 - NO Recession / Economics / UK Economy
The UK economy is being hit hard by the ongoing credit crunch with its sizable financial sector under strain and the UK housing market finally showing signs of the long anticipated downturn after one of the biggest bull runs in history. These and much other bad news will undoubtedly hit the UK economy hard during 2008, and in advance of this the media has finally turned decidedly bearish with much speculation of a recession during 2008.Read full article... Read full article...
Friday, December 21, 2007
The Battle Between Inflation and Deflation - Money Supply to Decide Outcome / Economics / Money Supply
Among those rational enough to perceive the looming economic downturn, a heated debate has arisen that centers on whether the slowdown will be accompanied by inflation or deflation.
Those in the deflation camp believe that money supply will collapse as a natural consequence of the implosion of the biggest credit bubble in U.S. history. As loans go bad, assets, which collateralize these loans, will be sold at fire sale prices to satisfy creditors. It is also argued that a recession will reduce consumer discretionary spending, causing retailers to slash prices to move their bloated inventories. This is the way the situation played out in the 1930's and this is how many expect it to happen today.
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Thursday, December 20, 2007
Global Inflation Surge Fueled by Explosive Money Supply Growth / Economics / Inflation
The worst is yet to come for the global banking system, which faces potential losses of more than half-trillion dollars from investments in toxic sub-prime US mortgage debt. “The problems in the financial sector remain with us,” said Bank of England chief Mervyn King on Nov 19 th . “A painful adjustment faces the global banking sector over the next few months as losses are revealed and new capital is raised to repair bank balance sheets,” he said.
To defuse the crisis, the Fed, the European Central Bank, and the Bank of England are pumping enormous sums of money into the banking system, at below market interest rates, to prevent a “credit crunch” from triggering a global stock market meltdown. “Central banks are working together to forestall any sharp tightening in credit conditions that might lead to a downturn around the world,” King declared.
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Thursday, December 20, 2007
Public Losing Confidence in Official Inflation Statistics - Inflation Brainwashing Starting to Backfire / Economics / Inflation
Larry Edelson writes:On at least three occasions over the last couple of years I warned you that inflation was already running at about 7%-10%.
It was a no-brainer. Like you, I experienced rising prices every time I went to the gas pump ... to the grocery store ... paid an insurance bill ... wrote a check for my kids' college tuition ... or bought new clothes.
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Thursday, December 20, 2007
Australian Economy Heading Into Stormy Seas / Economics / Austrailia
The problem with Terry McCrann's economic opinions is not that they are terrible but that they are largely shared by the rest of our economic commentariat. For instance, McCrann cheerfully reports that over the year to October credit for business rapidly expanded. Now he did temper his enthusiasm with the observation that the trade deficit jumped from $1 billion in July to $1.8 billion in August before jumping to $3 billion in October. As he put it: "Import volumes are soaring, thanks to the high Aussie dollar."Read full article... Read full article...
Wednesday, December 19, 2007
US CPI Inflation Statistics Manipulation and Deception? / Economics / Inflation
CPI: Sophisticated Economic Theory, Terrible Ethics Is Institutional Deception Embedded In Public Policy?
Introduction
In late November, 2007, the Commerce Department’s Bureau of Economic Analysis (BEA) announced the United States had achieved a third quarter real Gross Domestic Product (GDP) gain of 4.9 percent. The price index for gross domestic purchases, which (theoretically) measures prices paid by U.S. residents, increased 1.6 percent in the third quarter.
Tuesday, December 18, 2007
UK November Inflation Drifts Higher - CPI 2.1%, RPI 4.3% / Economics / Inflation
Figures for November show that inflation remained steady in terms of the CPI at 2.1%, whilst the more widely recognised RPI measure rose to 4.3% from 4.2% last month. The ONS sited rising food prices offset by falling gas and electricity prices.The movements are inline with the Market Oracle forecast for inflation to drift higher into a January 2008 peak.Read full article... Read full article...
Tuesday, December 18, 2007
US Inflation Soars - Largest Rise in Producer Prices Since 1973! / Economics / Inflation
Martin Weiss writes: Suddenly and without warning, price inflation — long ignored and forever understated — has burst onto the American scene with the force of a cat-5 hurricane.
The November jump in the U.S. Producer Price Index has exceeded the largest single-month rises of the Bush 2000s ... the Clinton '90s ... the Reagan '80s ... and even the Carter '70s. It's the worst bout of wholesale price inflation since the aftermath of the 1973 Arab oil embargo.
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Tuesday, December 18, 2007
"Reckless" Lending by Central Banks Risks US Recession / Economics / Recession
On Wednesday, December 12, 2007, leading Central Banks surprised the markets by promising to “rain money” on American and European banks. After years of Fed facilitating the pushing of debt on households by private financial institutions, including turning blind-eye to obvious abuses in the mortgage market, it suddenly is pushing debt on banks (ready money, or reserves, in exchange for questionable collateral) with the hope that they would continue lending to households. Would it work? Hell no.Read full article... Read full article...
Monday, December 17, 2007
America's Currency Problems are due to Bad Economics / Economics / US Economy
Bernanke has now cut rates three time in the last three months. Given Bernanke's Keynesian instincts it was always on the cards that he would go for cuts. The real question is how far will he go. Some commentators are urging him to cut rates further. The origin of this dangerous advice comes from the inverted treasury yield curve, with short term rates now at 4.25 per cent as against 4 per cent for long term rates. Now what these people are really saying is that Bernanke should force rates down below 4 per cent.Read full article... Read full article...
Monday, December 17, 2007
US Fed Inflationary Money Printing Intervention Does More Harm than Good / Economics / Money Supply
Crying All the Way to the Bank - The Fed has angered many and pleased few in its ongoing effort to unclog the credit markets. They have lowered the Fed Funds rate a total of 100bps to 4.25% in the last three meetings and have also taken the Discount rate down to 4.75%. Most market pundits clamor for the Fed to ease more aggressively in an attempt to bolster flagging market returns. Meantime, an increasingly rare strategist argues for a stable currency and low inflation. In light of the recent actions by our Central Bank, I thought it important to lay out the reasons why it would be better for our economy if the Fed allowed the free market to work.Read full article... Read full article...
Saturday, December 15, 2007
Sharp Rise in US CPI Inflation as Energy Prices Surged during November / Economics / Inflation
The Labor Department reported sharply higher inflation in November as consumer prices rose 0.8 percent, the steepest increase in 26 months. From year-ago levels, inflation was a full 4.3 percent higher, the worst year-over-year reading since Hurricane Katrina.Read full article... Read full article...
Saturday, December 15, 2007
Academics at the Fed Have No Real Money Markets Experience - US In Stagflation / Economics / US Economy
In this issue:
- Things That Go Bump in the Night
- Foolish Investor of the Year?Really?
- Breaking the Buck at Bank of America
- Inflation Rears it Ugly Head
- Academics at the Fed
- 1% Growth plus 4.3% Inflation = Stagflation
- London, Switzerland, and Barcelona
From ghoulies and ghosties,
And long-leggedy beasties,
And things that go bump in the night,
Good Lord, deliver us!
-Traditional Scottish Prayer
It's been a long time since we have looked in my worry closet, but there are definitely bumping sounds coming from behind the door. While largely over-looked, Bank of America closed down an "enhanced cash" fund and did the unthinkable and broke the buck. But the real story is even worse. I make the suggestion that you look at your cash funds and see what is in its portfolio. You may want to redeem ahead of the crowd.
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Sunday, December 09, 2007
Why US Interest Rate Cuts if GDP is Growing by 5%? / Economics / US Interest Rates
Overall, the Federal Reserve must be given decent marks for keeping up appearances in the wake of the onset of the largest credit crisis in US history. For the situation is now ubiquitous, wreaking havoc in virtually every market. True to form, the Fed has continued to modify its statements, perceptions all in an attempt to manage the public's confidence in the fact that yes, they are still in control of the economy. There have been, however, an increasing number of discrepancies and important issues emerging over the past several weeks and some startling but expected developments.Read full article... Read full article...