The Flinchum FileThoughtful Economic Analysis and Existential Opinions
The European Central Bank announced their second round of Long-Term Re-financing Operations” or LTRO this morning. It was bigger than the first round, and over 800 banks signed up. The European markets rallied on this news. But, what is it? Consider that the interest cost of government bonds in Europe has increased significantly, which starves … Continue reading Carrying the Water for Politicians
Yesterday, we learned that consumer confidence has risen to a one-year high, improving from 61.5 to 70.8 in the last month alone. It is interesting that their confidence has risen at the same time as gasoline prices have risen. This is unusual. Their confidence in the improving labor market is greater than their anxiety about … Continue reading The Confident Weakling
As a long-time member of the National Association of Business Economics, I pay close attention to their forecasting survey. Here is the bottom line on the latest survey, which was just released this morning: The NABE Outlook Panel of 45 forecasters continues to predict moderate real GDP growth through 2012. Economists expect the economy to … Continue reading A Survey of Economists . . . zzzzzzzzzzz
In the final scene of Ernest Hemingway’s 1940 classic, the American Robert Jordan lies wounded. He awaits his certain death at the hands of General Franco’s soldiers, but he is determined to take as many of those soldiers with him as possible. He never knows the outcome of the Spanish Civil War. Mario Draghi is … Continue reading For Whom the Bell Tolls
Suppose you have a first cousin living in California and another one living in Texas. You trust and respect them equally. Both of them have an investment proposal for you. You like each proposal equally. Incredibly, each proposal projects the same revenue as the other. However, one of the proposals shows higher expenses, which means … Continue reading Holding My Breath . . . Nope!
There is an old Wall Street adage that you should buy when you hear the cannons fire and sell when they fall silent. In other words, if and when Israel attacks Iran’s nuclear reactors, stock markets around the world will fall, which is a good time to buy. When a sustainable truce is announced, the … Continue reading The Smell of Napalm in the Morning . . .
Americans usually demand excellence but, being realists, accept something less. Our political debate often looks for the best or most excellent solution to problems. But, the politics of the possible makes us accept something less. Readers will recall we live in a tri-polar world of economics. We have Austrian economics, which argues that the budget should be balanced … Continue reading Framing the Election . . . ??
January was the best month for the stock market in 25 years. Unfortunately, a huge number of retail investors have been so shell-shocked by the 2008 collapse that they still remain on the sidelines. This is one of the primary reasons why trading volumes on the New York Stock Exchange and others have been so … Continue reading Market Timing?
First, a little review of Accounting 101 — If you subtract total liabilities from total assets, you get net worth or capital. If you sustain a loss on the sale of an asset, you decrease net income by the amount of the loss. If you have no net income, you must decrease net worth or … Continue reading Extend and Pretend
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