Tag Archives: credit bubble

Conditions today mirror 2016, when growing weakness in the global economy and wobbling financial markets caused the world’s central banks to absolutely freak out.

They responded by dumping more thin-air money into the system than ever before in history. And it worked (for them at least). Economic growth stabilized; and the prices of stocks, real estate, and other assets enjoyed another three-year joyride.

Similary, as things started getting shaky in late 2018, the same playbook was deployed. And again, we've seen stocks rocket upwards ever since. 

But will the strategy actually work this time?  It's unclear. And a lot is riding on the answer.

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Through the long sweep of history, the bursting of asset bubbles has nearly always been traumatic.  Social, political and economic upheavals have a bad habit of following asset bubbles, while wealth destruction is a guaranteed feature.

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The Christmas and New Year's break, when Europe shuts down and stops thinking, is now well and truly over, and we are reawakening to the same old problems: Greece, Spain, Cyprus, Portugal, Italy, France…all with their hands out for money from Germany, Holland, Finland, and Austria.

The holiday from the banking crisis, which was the result of the determination of the ECB to put a lid on it, is also over, with yields on the supplicant countries’ debt rising again.

However, joining the bad news list is the United Kingdom. Ominously, the pound is sliding in the foreign exchange markets, providing a very tricky background for Chancellor Osborne’s budget on March 20^th. I shall examine the UK’s position later, but first let’s update ourselves on developments in the Eurozone.

The reality is that all the problems of the Eurozone are still with us, despite the fall in bond yields and their modest subsequent recovery. There is now the likelihood that we are about to enter the final phase of the end of the Eurozone experiment, with far wider consequences. So we need to pick up the story where we left off.

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• Dennis Kneale "Recession…it is now over" ‘Real data?’ & ‘Gut feeling?’ ‘Digital Dic…., ‘Bloggers in mothers basement’ (Video)
• ‘Fell zero point nine percent?’ (Chart 1)
• ‘Fell zero point nine percent?’ (Chart 2)
• June Economic Summary in Graphs
• California IOU Update
• REAL Jobless rate near Depression levels, Hyperinflation Coming: John Williams
• Hotel RevPAR off 20.5 Percent
• YoY Change in Jobs by Sector (Chart)
• More Intentional Misdirection (H/T Fujisan)
• Lowry’s Paul Desmond on a Substantial Correction (Video)
• The credit bubble: the gift that keeps on giving
• Personal Income (Chart, Chained (Adjusted) Dollars)
• Yuneec Electric Aircraft Makes First Flight (Video)
• Philly Fed State Conincident Indicators for May (1 state is green)
• ISM: Is this the mother of all inventory corrections? (Chart on page)

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