Please watch my new YouTube video: Another Global Financial Crisis?
My one-hundredth-and-twenty-first YouTube video “Another Global Financial Crisis?” went up today. In this week’s video, I’m looking at Sri Lanka’s announcement that it will default on its foreign debt as the canary in the coal mine for a...
Don’t fight the Fed…and the Bank of Japan, and the People’s Bank, and the European Central Bank
Once upon a time–as late as 2018–the consensus thinking in financial markets was that the Federal Reserve was but the first central bank to raise interest rates. Other central banks, most notably the European Central Bank, (but not the Bank of Japan, which...If we may be headed to a bubble and bust, what should we do about it?
Double double toil and trouble. The world’s financial market are only facing two witches stirring the pot, but between them they’re quite capable of adding a third bubble and bust in 2011 to the run that began in 2000 and continued with 2007. I’d be a lot less worried...Whoops! Is the Fed about to do it again? Create another asset bubble, I mean
2000. 2007. 2011. Is the Federal Reserve about to do it again? Is the Fed about to preside over the creation of another financial bubble? Asset prices in the world’s emerging economies are climbing on the crest of a flood of dollars from the Federal Reserve. Central...China's new bank stress test is so tough it signals trouble ahead
Now that’s a stress test. Bank regulators in China said on August 5 that the country’s stress test of its banks will include a worst-case drop in real estate prices of 50% to 60% in the country’s most speculative markets. Take that Euro Zone and even the United...If China were to have a real estate bust, what would it look like?
The consensus is that China has a real estate bubble. The only argument is whether it will burst in some crash that will take down China’s economy or come in for a relatively soft landing that slows China’s economic growth but in no measure extinguishes it. It’s tough...Inflation or deflation–or maybe something worse
Inflation is a sexy worry. We can photograph it. A photo of a one billion dollar bill next to a pile of apples from Zimbabwe’s recent bout of runaway inflation stuns the imagination. It’s the stuff of national nightmares. The German electorate and German bankers are...Within six months global stock market performance will diverge–where do you want your money?
It may not look like it but the world’s stock markets are about to start moving in different directions. That’s certainly not at all clear now. Most days recently all the world’s stock markets have moved in the same direction—DOWN. On June 29, for example, U.S....Within six months global stock market performance will diverge–where do you want your money?
It may not look like it but the world’s stock markets are about to start moving in different directions. That’s certainly not at all clear now. Most days recently all the world’s stock markets have moved in the same direction—DOWN. On June 29, for example, the U.S....Don't expect the bond markets to cheer the G20 results
Maybe they shouldn’t have issued a joint statement at all. Certainly the meaningless promise that the leaders of the world’s 20 largest economies cobbled together after this weekend’s meeting of the G20 isn’t going to increase anyone’s confidence in the direction of...International regulators are getting trounced by the banks too
The lesson is clear: Never, never underestimate the ability of banks to beat back the regulators when it really counts. You might have thought that the international regulators in charge of formulating a new set of rules called Basel III would have had the upper hand...Could we be looking at (another) global credit crunch as central banks step back from the markets?
The world is starved for credit. I know it doesn’t seem that way what with huge stimulus packages in 2009, massive expansion of the money supply in the United States, China, and Europe, and hand-over-fist expansion of the balance sheets at the U.S. Federal Reserve and...Want to know how painful it will be to get the U.S. budget deficit under control? Take a look at the new austerity budget in the UK
Maybe it’s their weather. But for whatever reason the Brits are really good at creating dystopias, those worst of all possible worlds. 1984. A Clockwork Orange. And now finance minister George Osborne’s austerity budget. The plan announced yesterday projects roughly...Three bombs that could still wreck the recovery from the global financial crisis
I’d love to believe that the global financial crisis is over. But I can’t. I just see too many unexploded bombs in the road ahead for me to believe the danger is past. And I’m not talking about the big bombs ticking away and set to explode in decades. You know the...So virtue is its own reward? Not when it comes to budget cuts
Ah, somebody finally spelling out the trade-offs if the world’s developed economies move now to cut government spending or to raise taxes. This isn’t another one of those exercises that says healthcare spending and welfare payments will get cut if governments adopt...That's a whole lot of supply that stock markets are being asked to digest
In the short-term news about ephemera can drive stock prices—and that’s what’s happening today and this week. In the longer term the stock market isn’t any different from the markets for chickens or Las Vegas real estate: it’s supply and demand that counts. And one of...Is the global economic recovery about to go into reverse? Watch Germany's proposed spending cuts to see
In gauging the dimensions of a crisis, you have to make certain assumptions. One thing I’ve assumed about the current euro debt crisis is that no politician there would do something unusually stupid. Venial. Short-sighted. Duplicitous. Sure. But not something so...Add rising political risk from Japan and Spain to the global toxic brew
Political risk moves stock markets. Investors are getting a reminder of that today from Japan where the resignation of Prime Minister Yukio Hatoyama has sent the yen falling against all but one of the world’s most traded currencies. The Nikkei 225 stock index is down...Get used to it: the global debt crisis will play out over and over again in the next decades
Someday the euro debt crisis that started in Greece and spread to engulf Europe will be over. Politicians in the 16 nations that currently use the euro will figure out the right mix of carrot and stick to get Greece, Portugal, Spain and other member states to adhere...Wall Street blames regulation for the stock market's drop
Pardon me, but I’ve got a little trouble with this explanation of the stock market’s tumble. The problem, Wall Street is telling us, is that investors are afraid of a regulatory crackdown on Wall Street. Here’s a representative explanation from this morning’s...Have things stopped getting worse faster? (Sorry that's as positive as I can get today)
Here’s the big question for investors: Is this just a correction—the usual and useful 10% or so drop that refreshes a rally for the next leg up—or something worse? Today, pending a big rally as we head into the market close, the Standard & Poor’s 500 Index took...Germany makes the euro crisis worse
All attempts to figure out how bad a crisis will get depend on the assumption that none of the parties will do something stupid. Germany just did. Yesterday, May 18, without any discernable coordination with the other members of the European Monetary Union, Germany...So exactly why does Europe need a $1 trillion bailout plan? Look at these banks–they all needed a bailout in the post-Lehman crisis and they're in trouble again
Before we get too euphoric over the European Union’s $1 trillion rescue plan, take a look at these names. They’re distressingly familiar. Fortis (FORSY). Dexia (DXBGY). Societe Generale (SCGLY). BNP Paribas (BNPQF). ING (ING). Barclays (BCS). Deutsche...How long before financial markets ask, So who's going to pay that $1 trillion?
The European Union’s $1 trillion rescue plan will reassure financial markets for a while. But at some point the bond markets are going to ask “So how are they going to pay for this?” In the coming days you’re going to hear lots of comparisons between this $1 trillion...Will they make SpongeBob do a perp walk?
Where will the madness stop? Is no one innocent? The U.S. attorney’s office in Brooklyn today arrested two top executives at SpongeTech Delivery Systems (SPNG) for conspiracy to commit securities fraud. The company makes soap-filled SpongeBob SquarePants bath sponges...Go figure: Markets rally on news that Euro leaders will have a plan to bailout Greece "soon"
Sure glad that’s over. Suddenly Monday’s downgrade by Standard & Poor’s of Greece’s sovereign debt to junk doesn’t matter anymore. European stock markets have hauled out the rally monkey today on news that—well, on news that discussions on an aid package for...All the world's stock markets are breaking down (or so it seems) except for the U.S. market–so far
U.S. stocks tested 11,000 on the Dow Jones Industrials again. Successfully again. The Standard & Poor’s 500 Stock Index and the NASDAQ Composite index held near last week’s lows of 1150 for the S&P 500 and 250 for the NASDAQ. All in all a reasonably promising...How much could it cost to bailout Greece, Portugal, and Spain? Would you believe $630 billion?
Economists and investment banks are starting to put some concrete numbers on the Greek—and Spanish and Portuguese—debt crisis. And they’re large. To me shockingly large. Kenneth Rogoff, a former economist for the IMF (International Monetary Fund) turned Harvard...Greek bonds get junk rating from S&P
You know that your country is in trouble when investors want 15% to buy your bonds. If you still needed confirmation of the depth of the Greek debt crisis, today Standard & Poor’s lowered its long- and short-term rating on Greek government debt to BB+ and B,...Jim’s Daily Email Alerts:
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