Ruchir Sharma is a high-powered, globe-trotting executive with Morgan Stanley, in charge of Emerging Market Equities and Global Macro. I just finished his new book, Breakout Nations: In Pursuit of the Next Economic Miracles. He points out that China, Russia, and India are yesterday’s news and showing all the familiar signs of slowing. The future lies with such nations as Mexico, Indonesia, Turkey and Korea,…
In that 1991 movie classic, two women choose certain death driving over a cliff rather than continue living in grinding disappointment. At year-end, our country faces a similar decision. Remember: good economic policy requires both monetary policy AND fiscal policy. Monetary policy is controlled by the Federal Reserve, which can make decisions much more easily than Congress, which controls fiscal policy. The inability of Congress…
Yesterday was a long day, rising at 2AM and going back to bed at 1AM this morning. During that 23-hour day, I caught four different airplanes . . . and heard 19 different apologies from the airlines. By the end of the day, I was thinking about the purpose of apologies. Here are the definitions: 1. a written or spoken expression of one’s regret, remorse, or…
Despite my best efforts to consume mass quantities of information, there are many things beyond my comprehension. For example, I don’t understand why whole nations would riot, even killing people, over some tasteless movie trailer in the U.S. or some cartoons in Denmark. It just lies outside my realm of comprehension. Likewise, I don’t understand why it is “cute” to watch kids put unhealthy stuff…
The popular wisdom on Wall Street is that is the stock market can usually see six months or so down-the-road. Historically, when the market goes up, the economy usually follows. However, is it able to predict the election outcome? The analysts at LPL Financial just completed an interesting analysis. They divided the sectors of the economy that do well under Democrats and those that do…
The Finance Ministers of Europe had a meeting last weekend to deal with (1) the bailout of Spain’s government, (2) a two-year extension for Greece, and (3) a common banking system for Europe. The result of all that brain power was nothing, saying they were in “no rush.” After all, they have been in a crisis for three years, and the world is still alive.…
Since Fed Head Bernanke announced Quantitative Easing III (QE3) last week, I have been reading as much analysis about it as possible. It is another in a series of bold steps to triage the patient. But, first, quantitative easing occurs when the Fed Reserve buys bonds. By accepting the bonds, the Fed then credits the checking account of whomever sold them the bonds. In this…
This Spring, things were improving rapidly in Europe. The ECB had instituted its Long-Term Refinancing Operation (LTRO) program that essentially gave banks a new three-year funding mechanism or three year “lease-on-life.” Interest rates started falling. Their stock markets were rising. Optimism bloomed! Then, it all fell apart . . . This Fall, things are again improving rapidly in Europe. The German Supreme Court didn’t kill…
On Wednesday, the most important person in the world will be Andreas Vosskuhle. He is the head of the German Supreme Court, which will rule on the constitutionality of German support for the European Stability Mechanism (ESM). It is widely believed that the court will support it, which is one of the three legs critically necessary to deal with the European financial crisis. If the…
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Now that Paul Ryan has received the Republican nomination for Vice-President, there is a resurgence of interest in the writings of Ayn Rand. The hero in her books is always an intense, self-confident, self-made man who fights over-whelming odds to remain true to his beliefs. Ryan required his staff to read her book Atlas Shrugged, which describes how John Galt organizes a secret army of…
While jogging through Seashore State Park yesterday morning, I was listening to talk radio and heard the disc jockey say he had to get to bed by 9PM in order to do his 6AM show and had missed Obama’s speech the night before. Then, the conservative DJ and Romney-supporter added “but I heard it was a good one.” A few minutes later, an irate listener…
When is good news really bad news? The unemployment rate just dropped from 8.3% to 8.1% of the workforce. That must be good news? Nope! The latest monthly Jobs Report, prepared by the Department of Labor, was issued this morning. Economists were expecting about 125 thousand new jobs to be created last month. Instead, it was only 96 thousand. Once again, economists merely laugh at…
Understandably, economists are always asked about the economy. We rely on our training, and our experience, while trying to be mindful of our philosophical leanings between the Austrian, the Keynesian, and Supply-side schools of economics. Some try to avoid the discussion by relying on “technical analysis,” which means lots of charts and spooky terms like “double-inverted head & shoulders.” My thinking is that technical analysis…
From my window on Labor Day, I can see many Americans enjoying the beach. Meanwhile in Europe, the leader of Germany has finished hiking the Alps, and the leader of France has returned from the Rivera to cobble together enough agreement to end their financial crisis. At least, I hope so . . . it’s only been three years since this crisis began! Thursday will…
There was an informal survey of financial advisors on CNBC yesterday, showing an over-whelming 68% of us think the most important event this year will be the November election. I guess all those financial advisors watched the Republican Convention last week and are looking forward to the Democratic Convention this week . . . not me. I plan to watch the exact amount of the…