History Repeating

Bill Bonner: Why the Crowd Is About to Get Destroyed in US Stocks

"In the US, as in Japan, QE does not help stimulate a real recovery. But it does help simulate one. House prices are up (thanks, in part, to ultra-low mortgage rates). The middle class has more 'wealth' (albeit the paper kind) due to gains in their stock market portfolios. The rich are feeling fat and sassy, too. The Fed can continue modest tapering. But this is likely to produce a selloff in the stock market. Then the Fed will stop tapering. But it will be too late to reverse the damage to equities. They will go down for many years… bringing us even closer to the Japanese model. Our guess now is that this situation will persist for a few years." Continue reading →

Continue ReadingBill Bonner: Why the Crowd Is About to Get Destroyed in US Stocks

RBS has lost all the £46bn pumped in by the taxpayer

"Royal Bank of Scotland has lost all the money invested in it by the taxpayer six years ago when the lender came close to collapse. The bank has confirmed its total losses since its bailout have now drawn level with the £46bn pumped into it in 2008 in return for an 81pc stake. RBS made a loss last year of £8.2bn, its sixth consecutive annual loss, taking its cumulative losses to £46bn. The scale of the losses means that all the capital provided by the taxpayer has now been used up dealing with the toxic legacy assets on the bank's balance sheet. Despite, the loss RBS said it had put aside £576m to pay staff bonuses for 2013." Continue reading →

Continue ReadingRBS has lost all the £46bn pumped in by the taxpayer

Austrian Economics, Central Bank Disasters and the Housing Bottom

"Business cycles are in a sense predictable because the entire economic environment is structured via central bank money printing. It is this artificiality that makes Austrian economic forecasting viable. What one can never predict, of course, is the timing of the 'turning.' Exactly where we are in the business cycle is uncertain, though again, one can certainly point out that we are in a precious metals bull market, even despite the recent difficulties of gold. This particular pro-metals market started early in the 2000s and may well continue until we reach a precious metals 'mania' of sorts as we saw in the 1970s. The only way to puncture something like that in the short term is to raise interest rates." Continue reading →

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Debt hits 200-year high; IMF warns of ‘savings tax’ and mass write-offs

"Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund. The IMF working paper said debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, either negotiated 1930s-style write-offs or the standard mix of measures used by the IMF in its 'toolkit' for emerging market blow-ups. Financial repression can take many forms, including capital controls, interest rate caps or the force-feeding of government debt to captive pension funds and insurance companies." Continue reading →

Continue ReadingDebt hits 200-year high; IMF warns of ‘savings tax’ and mass write-offs

European Union Stripped of AAA Credit Rating at S&P

"The European Union lost its top credit rating from Standard & Poor’s, which cited the deteriorating creditworthiness of the bloc’s 28 member nations. Ratings remain under pressure more than four years after the outbreak of the European debt crisis, which led the EU to offer emergency financing to Greece, Ireland, Portugal, Spain and Cyprus to shore up their bonds and banks. European Central Bank President Mario Draghi’s pledge to do what it takes to save the euro has helped stabilize debt markets, while deficits and debt in most euro-area countries remain well above the limits set for membership in the single currency." Continue reading →

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Bill Bonner: The Fed’s Big Lie

"Whatever may be said about today’s cockeyed economies, there is nothing 'normal' about them. What’s normal about a government that runs up as much debt as it had in World War II – with no war… no national emergency… and no way to pay the money back? What’s normal about an economy that depends on the lowest interest rates in three generations… and a central bank that holds them down like a crooked butcher with his finger on the meat scale? And what’s normal about an advanced capitalist country where the typical man earns less than he did 43 years ago?" Continue reading →

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The Biggest Interest-Rate Turn in 37 Years

"We witnessed the power of bond market vigilantes in 1980, at a time when most of them were in the United States. Now it’s much worse because so many are overseas. We witnessed their power again in 1994, at a time when there was virtually no inflation scare. Now, it’s worse because all the Fed’s money printing is spooking investors about future inflation. We also saw their power repeatedly in 2011 and 2012, when they dumped the bonds of Greece, Spain and Italy. Now it’s worse because, unlike the situation in Europe, there’s no country or union in the world big enough to bail out America. In one sense, nothing has changed since Carter’s day of reckoning on April 15, 1980." Continue reading →

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Barbados PM: Central bank ‘indulgence’ a threat to economic stability

"Former Barbados prime minister Owen Arthur said that the Central Bank had printed BDS$370 million to purchase Government Treasury Bills, which had caused the country’s foreign exchange reserves to plunge. 'The printing of money on this scale to accommodate government’s fiscal deficit is the chief factor that has triggered the dramatic plunge downward in the country’s foreign exchange reserves. If this plunge downward is not immediately checked, the economic affairs of Barbados will enter a new and very dangerous territory,' he warned, reminding of the economic and social problems of Guyana and Jamaica as a result of excessive increases in money supply and inflation." Continue reading →

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Barbados Debt Higher Than Cyprus Prompts Firing of 3,000

"Barbados will fire 3,000 public sector workers by March and freeze wages as the eastern Caribbean island’s debt burden soars and the International Monetary Fund says 'urgent adjustments' are needed. Barbados’s ratio of debt to gross domestic product reached 94 percent in September, the IMF said today, more than the 93 percent that forced Cyprus to seek a European Union-brokered bailout in March. Finance Minister Chris Sinckler told lawmakers yesterday that the government risks 'further hemorrhaging' of its reserves and the local currency’s peg to the dollar if nothing is done. Barbados’s financial struggles are mirrored across much of the Caribbean, which has seen eight debt defaults since 2003." Continue reading →

Continue ReadingBarbados Debt Higher Than Cyprus Prompts Firing of 3,000

Bill Bonner: Don’t Invest Here in 2014…

"'Prices are very unreliable. So, we just look at what surprises might come… and what impact they will have on us. I mean, I know I will be surprised. So I want a surprise that I will like. And the way you get that is by making sure you always have more upside than downside. You look at the US stock market now and what you see is millions of people who are all sure that the market is going up… as long as the Fed continues to add money to the system. When the Fed stops, they think they are going to get out. But when everyone wants to sell, who will they sell to? So, in our view the surprise is likely to be on the downside… and it will be much more painful than a surprise to the upside.'" Continue reading →

Continue ReadingBill Bonner: Don’t Invest Here in 2014…