"Matthew Klein at WaPo reminds us of the reckless bet that Larry Summers made on interest rates when he was president of Harvard. The Harvard endowment suffered serious losses. These were the risky investments that Iris Mack warned Summers about in an email and which resulted in her getting fired. Summers is now being considered for chairmanship of the Federal Reserve, where he would be in charge of interest rate policy." Continue reading →
"As you can see from the first chart, total credit has jumped from 129pc to 195pc of GDP since 2008, and has completely departed from its historic trend. The great mistake, plainly, was to keep the foot on the floor in 2010 and 2011, long after the Lehman crisis had subsided. The deeper thrust of the IMF report is that the growth model of the past 30 years is exhausted. The low-hanging fruit has been picked. If the Communist Party fails to take radical action, it will soon be caught in the middle income trap. Loans have jumped from $9 trillion to $23 trillion since 2008, a faster pace of debt build-up than in any major episode of the past century." Continue reading →
"The country’s central bank raised a key funding rate 200 basis points to 10.25pc and took steps to drain money from India’s financial system, even though the economy is stalling and risks a hard landing. Foreign funds have been selling India debt at a record pace since late May, causing a 7pc fall in the rupee. Brazil and Indonesia have both had to tighten policy after a sharp slide in their currencies. Turkey signalled this week that it can longer afford to keep burning foreign reserves to protect the lira, and may have to raise interest rates instead. Nomura said India’s clamp-down is comparable to the funding squeeze last month by China’s central bank." Continue reading →
"It’s the stuff of science-fiction movies: A six-foot-two, 330-pound humanoid robot that is agile enough to climb using its hands and feet. And it is what DARPA, a research arm of the U.S. Department of Defense, hopes one of seven teams will be able to turn into an life-saving emergency responder in disasters. ATLAS is one of the most advanced humanoid robots ever built, according to DARPA. The robot has two sets of hands, 28 hydraulic joints, stereo cameras and a laser range finder. It was created by Boston Dynamics." Continue reading →
"Mortgage rates are up. Mortgage applications are down. New home permits are down. New home construction is down. Not a little down. 'Falling off the burning trestle' down. Bernanke did it. Let us not forget this after he retires next February. Bernanke did it. When the bad news on housing is on the evening news, recall once again: Bernanke did it. With QE3 pouring $40 billion of newly counterfeited money a month into Fannie/Freddie, and mortgage rates rising from 3.35% to 4.6% in two months, let us sing the chorus: Bernanke did it." Continue reading →
"Ed Yardeni posts this chart to put into perspective the cash flow out of bonds. WARNING: This is only the start." Continue reading →
"Ed Yardeni posts this chart to put into perspective the cash flow out of bonds. WARNING: This is only the start." Continue reading →
"New accounting standards are being applied by Moody’s to cities. It turns out that the two biggest cities in California — Los Angeles and San Francisco — are way deeper in the hole than previously admitted. But wait! There’s more! San Jose will be downgraded. So will Inglewood ('The Hood'). So will Azusa. The total unfunded liabilities for the state are now over $320 billion. That’s up from $128 billion. In one shot. California is not alone." Continue reading →
"New accounting standards are being applied by Moody’s to cities. It turns out that the two biggest cities in California — Los Angeles and San Francisco — are way deeper in the hole than previously admitted. But wait! There’s more! San Jose will be downgraded. So will Inglewood ('The Hood'). So will Azusa. The total unfunded liabilities for the state are now over $320 billion. That’s up from $128 billion. In one shot. California is not alone." Continue reading →
"As far back as ancient times, whenever civilizations fell into great crisis, people in desperation have almost invariably turned to a single individual who promised them better times. Of course, history is full of examples of men who did not give up power willingly once the crisis passed. The ancient historian Herodotus lists as many as fifty ‘tyrants’ in his writings, a word that has its origins in ancient Greek despotic rulers. For thousands of years, ambitious men have always taken advantage of crisis, social turmoil, and economic downturns to solidify their positions and take control… often creating even more destruction in their wake." Continue reading →