Despite criticism, the Fed has been prudent in trying to pump up the money supply to prevent the economy from weakening further. For technical reasons, the money supply has not increased as much as they had hoped but still enough to help the economy anyway. A consequence of pumping up the money supply faster than … Continue reading A Temporary Change?

There has been much discussion recently how “The Greatest Generation” is stealing from succeeding generations with their generous government pensions, Social Security, and Medicare. There is indeed a surprising amount of resentment among young people about this. Yet, they have lost something maybe even more important and don’t even realize it. A few months ago, … Continue reading Generational Theft

I remember watching television that night with my daughter as the Berlin Wall fell. It was truly a momentous event, ending the Cold War. The events now happening in Egypt are gravely important but not momentous. Unless it spreads . . . Of course, nobody expected it would ever get this big. It started with … Continue reading November 9, 1989

Long used as a proxy for the degree of globalization, the Baltic Dry Index measures the shipping rates of dry goods. As the economy heats up, more goods are shipped, and the shippers can raise their shipping rates. When the recession began, the index or BDI dropped rapidly. After a slow, bumpy partial recovery, it … Continue reading Even with the Suez Canal Open . . .

Friday is historically the most volatile day of the week in markets. That’s because traders (as opposed to investors) would rather invest in cash over the weekend, if there is any fear on the street. There was fear on the street. In addition, the stock market has gotten too far ahead of the economy. Then, … Continue reading Friday Follies

Last week, the British government announced their preliminary estimate of their GDP growth in the fourth quarter was a negative 0.5%, instead of the positive 0.7% they were expecting. They blamed it on the weather. The morning, the U.S. government announced their preliminary estimate of Q4 growth in GDP was a surprisingly strong 3.2%, up … Continue reading Stronger GDP Than Expected?

I’ve probably read a dozen books by libertarians over the last two years. When I started reading “The Day After the Dollar Crashes” by Damon Vickers, I toyed with putting it down as just another tired rendition of Glenn Beck, who endorsed the book. But, when I read “I believe that the primary source of … Continue reading An Original Libertarian

The inevitable happened yesterday, when the Congressional Budget Office announced Social Security was starting to bleed, i.e., that payments out exceeded payments in. That is not good economic news. In addition, they announced the deficit for this year will be $1.5 TRILLION instead of $1.1 TRILLION. That is not good economic news. And, Standard & … Continue reading Markets versus Economies

Bond Vigilantes are arguably the most powerful people on Earth. They can topple governments without firing a shot. Apparently, they liked the President’s speech last night, as the Asia and European stock markets are up and interest rates are down. Whew! I suspect their focus was on the promised cut in corporate income tax rates, … Continue reading Last Night’s Speech

Has anybody noticed the difference in interest rates between 30-year and 2-year Treasury bonds? It has reached a new high of 4% or 400 basis points. This is an all-time record! One reason might be that the Chinese have stopped buying 30-year bonds. (The longer the term of a bond, the more volatile the market … Continue reading A Favorite Indicator

Kudos to Virginia’s Senator Mark Warner and Georgia’s Republican Senator Saxby Chambliss for introducing a bill that will actually take a step toward solving America’s deficit problem! Last week, a client faxed me a Tea Party newsletter that said “revenue is not the problem; spending is the problem.” While that sound bite is correct, it … Continue reading Goring Everybody’s Ox

At this time last year, 23% of U.S. companies expected to fire workers over the next six months. Only 29% expected to hire any. As the year ended, only 7% expect to fire workers, while 42% expect to hire more workers over the next six months. This is the latest survey by the National Association … Continue reading 2010 — In like a lamb . . . but out like a tiger!