"The former head of Zimbabwe's central bank, Gideon Gono, wrote a book in 2008, Zimbabwe's Casino Economy. The book is about his running of the bank during the country's period of hyper-inflation." Continue reading →
"A funny thing happened on the way to the next Bull market: the price-earnings (P/E) ratio has entered bubble territory--again. Note the P/E soared to bubble heights in the early 2000s, which set up the epic collapse of stock valuations in 2008-09. Thanks to Federal Reserve manipulation/goosing/QE, the SPX P/E has once again reached bubble levels. It's clear the SPX is extended far above what can be considered historical fair valuations. What's more profitable, a slow melt-up or a panic sell-off and sharp rebound? Definitely the latter, if you're heavily short, the market is teetering on record margin debt and you can kick out the critical 2X4." Continue reading →
"In 1927, when T.S. Hogan announced plans for a 12-story office building called the Petroleum Tower, many here were incredulous. A skyscraper? On the plains of West Texas? But city leaders embraced the building and the status it conferred on the city as the heart of the new Permian Basin oil field, historians say. At least until 1929, when the price of a barrel of crude dropped to 15 cents and the just-opened building sat empty. Eighty-six years later, the Petroleum Tower still stands—and history may be starting to repeat itself." Continue reading →
"New York Fed economists Fernando Duarte and Carlo Rosa are out with a new article on Liberty Street Economics titled, 'Are Stocks Cheap? A Review of the Evidence.' The answer: judging by the equity risk premium (ERP), stocks are about as cheap as they've ever been. The last time the Fed said something so bold was when in 2004 when NY Fed economists wrote that there was no housing bubble." Continue reading →
"Although the Dow Jones Industrial Average closed for the first time above 15000 Tuesday, a new poll finds that the percentage of Americans who own stocks stands at a 15-year low point. Barely half of Americans, 52 percent, now say they own stock outright or as part of a mutual fund or self-directed retirement account, the polling group Gallup reported Wednesday. The level has been falling for six straight annual surveys, even though US stocks have more than doubled in value since hitting a recession low point in 2009. The decline in stock investing has been largest among middle-aged and middle-income Americans, the poll found." Continue reading →
"Investors have reached a new level of bullishness. They're borrowing again to buy stocks, confident that prices go in only one direction. There's also a swift current of economic analysis telling us that the commodities boom is over, the Fed has the situation under control and the bull market in gold is finished. All of which is amazing and often breathtaking. Stock market investors don't seem to know or care that the only thing holding up their investments is something that will ultimately destroy them. And that the longer it continues, the bigger the mess when it finally blows up. We're talking, of course, about the Fed's monetary policy." Continue reading →
"Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion. With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt. The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. As long as the Fed keeps the spigot open, nominal profits are there for the taking." Continue reading →
"It made all the sense in the world for the insurgents to release some sarin here and there, make some videos of the victims, and email the links to some very willing Israeli generals and McCainian rabid warhawks in the US and their absurd poodles in the UK and France. The question is, whence came the chemical weapons? Perhaps the Syrian government was not lying when it asserted at the end of last month that the chemical weapons used by the Syrian rebels originated in Turkey. The Syrian official's claim was reported in the Western press as an example of mendacity, laughed at by the US administration. But it seems he may well have been telling the truth." Continue reading →
"With Muammar Gaddafi dead, the hunt is on for a new hate figure on whom to spew venom; far more satisfying than actually evaluating our own role in the creation of human misery. For the governments that lead us into war, of course, it makes perfect sense that we do not stop to look back at the last invasion before impatiently demanding the next one - if we realized, for example, that the 1999 bombing of Serbia - the textbook 'humanitarian intervention'- actually facilitated the ethnic cleansing of Kosovo it was supposedly designed to prevent, we might not be so ready to demand the same treatment for every other state that falls short of our illusory ideals." Continue reading →
"US defense contractors had the Moet flowing as Hagel merrily congregated with that prodigy of democracy - United Arab Emirates (UAE) Crown Prince Mohammed bin Zayed - to celebrate the sale of 25 F-16 fighter jets. There's more on the way; 48 Terminal High Altitude Area Defense, or THAAD missile interceptors, at a cool US$1 billion. The Pentagon is sending one of its only two of such systems to Guam this month to counter that other threat - missiles from North Korea. Obama in Syria is fast becoming a remix of Reagan in 1980s Afghanistan. We all know what came out of those 'freedom fighters' afterwards." Continue reading →