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Daily Digest 12/7 - New G20 Rules, Putin's Stash Of Oil Money Is Shrinking

Sunday, December 7, 2014, 10:49 AM

Economy

New G20 Rules: Cyprus-Style Bail-Ins to Hit Depositors and Pensioners (Doug)

It is a neat solution for bankers and politicians, who don’t want to have to deal with another messy banking crisis and are happy to see it disposed of by statute. But a bail-in could have worse consequences than a bailout for the public. If your taxes go up, you will probably still be able to pay the bills. If your bank account or pension gets wiped out, you could wind up in the street or sharing food with your pets.

Hiring Surge Shows Strength of U.S. Economy as Bears Flee (jdargis)

It was “the first good monthly report of the recovery,” DeLong wrote yesterday on his blog and in a Twitter post. That’s because it’s the first since before the recession in which payroll growth exceeded 300,000 with unemployment below 6 percent, he said.

Wall Street Moves to Put Taxpayers on the Hook for Derivatives Trades (pinecarr)

The bank perks are not a traditional budget item. They would allow financial institutions to trade certain financial derivatives from subsidiaries that are insured by the Federal Deposit Insurance Corp. — potentially putting taxpayers on the hook for losses caused by the risky contracts. Big Wall Street banks had typically traded derivatives from these FDIC-backed units, but the 2010 Dodd-Frank financial reform law required them to move many of the transactions to other subsidiaries that are not insured by taxpayers.

The Police In America Are Becoming Illegitimate (Michael W.)

This policy of constantly badgering people for trifles generates bloodcurdling anger in "hot spot" neighborhoods with industrial efficiency. And then something like the Garner case happens and it all comes into relief. Six armed police officers tackling and killing a man for selling a 75-cent cigarette.

Body Cameras Worn by Police Officers Are No ‘Safeguard of Truth,’ Experts Say (jdargis)

No consensus has emerged about when officers should turn on their cameras, which could leave departments open to accusations of selective recording. And tapes do not always lead to universally shared conclusions. The footage of Eric Garner’s death this year on Staten Island and of Rodney G. King’s beating by Los Angeles officers in 1991 ultimately revealed the shortcomings of video as evidence, even as they thrust violence against unarmed black men into the public eye.

As Ebola Rages, Poor Planning Thwarts Efforts (jdargis)

Even after patients recover, many treatment centers delay releasing them for more than a week until there are enough other survivors, sometimes dozens, to hold one huge goodbye ceremony for everyone — again, keeping desperately needed beds occupied. “I just wanted to get home and see my wife,” said Suliman Wafta, a recent Ebola survivor treated nearby. “But I had to wait eight extra days.”

Putin's Stash Of Oil Money Is Shrinking (jdargis)

The finance ministry says it will probably take $10 billion out of one of the funds to plug a hole in the government’s 2015 budget. And in his annual address to lawmakers on Dec. 4, President Vladimir Putin said that the other fund, which is intended to support Russia’s pension system, should be tapped for an unspecified amount “to implement a program for recapitalization of leading domestic banks,” which in turn would be expected to invest in infrastructure projects.

Energy Firms in Secretive Alliance With Attorneys General (jdargis)

The email exchange from October 2011, obtained through an open-records request, offers a hint of the unprecedented, secretive alliance that Mr. Pruitt and other Republican attorneys general have formed with some of the nation’s top energy producers to push back against the Obama regulatory agenda, an investigation by The New York Times has found.

Gold & Silver

Click to read the PM Daily Market Commentary: 12/5/14

Provided daily by the Peak Prosperity Gold & Silver Group

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1 Comment

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
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Great Attitude, excellent researcher

I really like and follow this guy.  Would that more had his approach. Go there if you want more.

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Macroeconomics Finally Gets Interesting
By John Mauldin | Dec 07, 2014

“The future is already here – it's just not very evenly distributed.”

– William Gibson, Hall of Fame science fiction writer

Since I began writing this letter some 15 years ago, I’ve always done an annual forecast letter, generally in the first week of January. That letter is typically the most-read issue of the year, and I spend more time thinking about it than any other letter. I typically take the last week of the year off from writing just to concentrate on my research, and I often begin to compile my reading material the first week in December, which the calendar tells us is now. Helping me this year will be my associate Worth Wray and a few members of the Mauldin Economics team, and of course my many friends and readers.

This year I’m going to open up a little bit about the process of how I actually write a forecast issue. First off, I am not a model-driven guy. Over the years, I’ve come to have access to a rather amazing array of researchers and analysts who do deep dives on their particular topics, and their models are far more complex than anything I could create. I also make a point of reading conflicting viewpoints, especially those of people I know to be smart but whom I disagree with. If I can’t figure out why they’re wrong, then maybe I have to change my mind.

I take all of those models about different segments of the world and try to figure out how they fit together. Admittedly, that exercise involves a great deal more art than science. (And speaking of art, this letter will print a bit longer because there are lots of graphs at the end.)

One of the advantages I have is that when I encounter two or more conflicting opinions I can often pick up the phone and simply discuss the topic with the various authors to see if I can come to some clarity. Sometimes the most instructive things I can learn are the reasons why two very smart people disagree. I have learned over time that there is not as much black and white in economics as one would hope. There are lots of nuances and hidden connections within the global economy that are not obvious to the casual observer. The effort to understand requires me to absorb and distill the massive amounts of information I encounter – while constantly being aware of the biases, assumptions, and basic presuppositions of other writers.

Finally, it’s never just about economics, because history, geopolitics, and psychology are always part of the mix. I simply try to read and view everything I can, a far wider variety of material than most economic commentators tackle, and then choose the path that makes the most sense to me as a forecast.

I tend to be more macro-oriented than market-oriented, but I do at least attempt some market forecasts (if only to demonstrate how futile they are, at least in the short term). In general, I find that macro events eventually lead markets. This approach makes timing rough if you’re a short-term trader, but for those with a longer perspective the macro-driven view adds a great deal of value.

For the next two letters we’re going to look at the issues I’m researching as we approach the end of the year. No deep dives but just a general discussion of the topics and questions we should be thinking about. Of course, we’ll look at tail-risk events. What could go wrong? But we also have to ask ourselves the opposite question: what could go right? What might get even better? I can list several major countries where I think things will get structurally better in the short to medium term, and I’m optimistic about the future of numerous industries.

The research shows, and I’ve done letters about this, that being too negative is actually more harmful than being too positive. Cautious optimism is generally the most rewarding path. But you have to have a large dose of reality. If you live in Japan, the prospect for your currency is markedly different than if you live in Mexico or Norway (more on that later).

 

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