This year is the fiftieth anniversary of Murray Rothbard’s America’s Great Depression. In that work, Rothbard masterfully achieves three objectives.
1. He provides a restatement and extension of the Austrian theory of the business cycle (ABCT) while expertly defending the theory against critics;
2. He applies the theory to the inflationary boom of the 1920s and subsequent bust of 1929-30; and
3. He applies microeconomics, with special attention to what economists Richard Vedder and Lowell [...]
With earnings season underway, perhaps pulling back to 30,000 feet is worthwhile to glance at the macro environment that is backing these new all-time high nominal stock prices. These six charts say it all…
Macro-economic data (levels and beats/misses) have rolled over after looking like it was different this time…
And all three global risk factors are becoming increasingly worrisome - from US growth, European ‘risk’, and China growth…
The business cycle has turned into slowdown…
US Budget [...]
No Sure Thing
However, some economists doubt uncertainty has played such a central role holding back the U.S. economy. If they are right, growth next year could disappoint even if politicians wow investors with a grand bargain.
Researchers at Goldman Sachs say the weak economy might be boosting measures of uncertainty as much as the other way around.
The bank doesn’t rule out an “uncertainty shock” over the next few months – most [...]
by Phoenix Capital Research
Yesterday we assessed the impact a second Obama term would have on the US economy and markets. Now let’s assess what impact a Romney Presidency would have on the US economy and financial markets.
For starters, Romney has already stated that he would fire Fed Chairman Ben Bernanke if he wins office. While this doesn’t represent the real shakeup that the Fed needs, it’s definitely a step in [...]
To properly understand the events of the time (and to put them in today’s context), we believe, like the FEE, that it is factually appropriate to view the Great Depression as not one, but four consecutive downturns rolled into one. These four “phases” are: I. Monetary Policy and the Business Cycle; II. The Disintegration of the World Economy; III. The New Deal; IV. The Wagner Act.The first phase covers why the crash of [...]
by Charles Hugh-Smith of OfTwoMinds blog,
Does the Federal Reserve benefit the nation, or just the banks?
Cui bono–to whose benefit?–is a skeptic’s scalpel that cuts through the fat of propaganda and political expediency to the hard truth. Since the world has been trained (in Pavlovian fashion) to hang on every word issued by America’s privately owned central bank, the Federal Reserve, it’s appropriate to ask a simple but profound question:
Who benefits from the [...]
by Phoenix Capital Research
We’ve entered a truly dangerous environment in the financial markets.
Economic fundamentals are deteriorating rapidly. Consider the US…
By all counts, the latest ISM (a measure of manufacturing in the US) was a complete and total disaster. In August the ISM hit 49. Anything below 50 is considered a recessionary rating.
However, things are even worse below the surface. The ISM is made up of several components. Its Production component [...]
by Charles Hugh-Smith of OfTwoMinds blog,
The Federal Reserve is a wealth transfer machine, skimming wealth from the productive many and transferring it to the parasitic few.
Today I launch a series entitled “The Rot Runs Deep” that examines the moral and financial rot at the core of American finance, politics and culture. We have reached a unique junction of American history: the confluence of Big Lie propaganda, neofeudalism and the worship of false [...]
Majority of Wall Street dealers still expect Fed QE3 … Despite improved hiring last month, most Wall Street economists still expect the Federal Reserve to do more to stimulate growth this year, with the majority looking for action as soon as September. The median of forecasts from a Reuters poll of 17 primary dealers – the large financial institutions that do business directly with the Fed – showed a 63 percent chance thecentral bank will [...]
MAULDIN: We’ve Had A Good Few Years, But It’s Now Time To Prepare For A Huge Drop In Earnings
John Mauldin, Thoughts From The Frontline
A few weeks ago, Ed Easterling and I updated the work we published almost ten years ago about secular bear and bull markets. This week I am in Maine at the annual Shadow Fed fishing trip (for those of us whose invitation to Jackson Hole keeps getting lost [...]
By ANDY KESSLER
Did Mitt Romney and Bain Capital help office-supply retailer Staples create 88,000 jobs? 43,000? 252? Actually, Staples probably destroyed 100,000 jobs while creating millions of new ones.
Since 1986, Staples has opened 2,000 stores, eliminating the jobs of distributors and brokers who charged nasty markups for paper and office supplies. But it enabled hundreds of thousands of small (and not so small) businesses to stock themselves cheaply and conveniently [...]
July 12, 2012
Last week my subcommittee held a hearing on fractional reserve banking and the moral hazard created by government (taxpayer) insured deposits. Fractional reserve banking is the practice by which banks accept deposits but only keep a fraction of those deposits on hand at any time. In practice, nearly 100% of deposits are loaned out, yet depositors believe that they can withdraw the full amount of their deposit [...]
With more investors and consumers concerned over the Recession 2013threat, Europe and China today (Thursday) took action to motivate their sluggish economies and prevent a drastic global slowdown.It hasn’t even been a week since a crucial European summit provided a blueprint for the 17-memberEurozone to pull out of its debt crisis. But already the rally that immediately followed has fizzled. At issue is how European leaders will work out the tricky [...]
Goldman Sachs reports their Global Economic indicators show the world has reentered a contraction and a steep stock market crash lies ahead.
Goldman Sachs Global Leading Indicator (GLI) show that the global economy has entered into a contraction phase “suggest this could be a much more severe downturn” than Wall Street is currently anticipating.
Notably the GLI turned negative ahead of the Internet bubble bursting at the turn of the millennium and far in [...]
The business cycle shifted into the Contraction phase of Goldman’s ‘Swirlogram’ framework that we introduced here three weeks ago. The latest observations in their Global Leading Indicator (GLI) as well as the way we entered this Contraction phase suggest this could be a much more severe downturn. In their own words: “We do not yet see clear reasons for optimism in the data, and our GLI framework still suggests that the current phase [...]
From David Galland, Managing Direct, Casey Research:
Glancing at the news most days, it’s hard not to feel like Bill Murray’s character inGroundhog Day. In the event you are unfamiliar with the movie, in it Murray’s character becomes trapped in the same day… day after day.
In the current circular condition, we have the powers-that-be assuring us that the next high-level meeting will finally produce a permanent fix to the broken economy, [...]
May 31, 2012
The Hegelian dialectic comprises three dialectical stages of development: a thesis, giving rise to the reaction called an antithesis, which contradicts the thesis, and is then resolved by the synthesis. It is used in modern times as a means for so called experts to sway or pacify public opinion through the deception of compromise.
The Federal Reserve is a private Bank that is not subject to any United [...]
Because the proper trade is to respond only after JCP blew up proving that the US consumer is finished, here is Goldman finally joining the bandwagon of shorting the terminally tapped out all buying, all eating, all charging Joe Sixpack.
Moments ago from Goldman:
Recommending short positions in the US Consumer Discretionary sector
We are recommending a short position in the US Consumer Discretionary sector, with a target of a -6% move and a stop [...]
Yes, U.S. GDP is still rising, according to the latest reports. But that doesn’t mean we’ve dodged a new recession.
Sound surprising? What most people don’t understand is that recessions often begin when gross domestic product is still showing positive growth.
Four of the past six recessions started during a quarter when GDP was growing, as did 72% of all recessions in the past 94 years .
How can that be? The answer [...]
What if the Fed, through all its efforts, can’t buy more employment? What if unemployment is structural, with an inadequately trained workforce or labor immobility preventing employers and job seekers from hooking up?
Signs are pointing in this direction. Long-term unemployment hasn’t been this high for this long since World War II, with 41.3 percent of the unemployed out of work for 27 weeks or more in April. The longer Americans [...]
The president hopes for a Reaganesque reelection, but the Gipper had a surging economy behind him
The choice in this election is between an economy that produces a growing middle class and that gives people a chance to get ahead and their kids a chance to get ahead, and an economy that continues down the road we are on, where a fewer and fewer number of people do very well and [...]
It appears that after months of abuse for their water-is-wet economic insights, the San Francisco Fed may have stumbled on to the cold harsh reality that this post-great-recession world finds itself in. The crux of the matter, that will come as no surprise to any of our readers, is credit and “its central role to understanding the business cycle”. Oscar Jorda then concludes, in a refreshingly honest and shocking manner that “Any forecast that [...]
by Dr. Engali
1)Average weekly hours (manufacturing) – Adjustments to the working hours of existing employees are usually made in advance of new hires or layoffs, which is why the measure of average weekly hours is a leading indicator for changes in unemployment.
2)Average weekly jobless claims for unemployment insurance – The CB reverses the value of this component from positive to negative because a positive reading indicates a loss in jobs. The [...]
It has only been a week since we discussed the San Francisco Fed’s research group admitted thatwater was wet Fed policy will be unable to impact unemployment since the cyclical changes are more structural leading to jobless recoveries as fat is removed from the system. The powerless Fed now has another well-researched problem. As Daniel Wilson of the FRBSF sheepishly admits (having spent several thousands in taxpayer cash to fund the latest Fed ‘white paper’) with regard [...]
How does the current recovery compare to those of the past? The following charts from the Council on Foreign Relations puts the current (un)recovery in context and despite some apparently bright news recently, the pictures underline the economy’s weakness since the NBER’s recovery began in June 2009.
The x-axis shows the number of months since the end of the recession. The dotted lines are composites of prior recoveries representing the weakest and strongest experiences [...]
Bob “The Bear” Janjuah may appear a little greyer than his previous appearance on Bloomberg TV but his thoughts on the ‘weaker-for-longer’ recovery are as clarifying as ever as he sees Q2 as payback time for the misunderstanding of a mini US business cycle as a real sustainable recovery. Noting that the LTRO does not fix Europe, he sees the worst still ahead for the ‘Eurozone mess’. Discussing expectations for Fed [...]
“Layoffs too often became permanent, not part of the business cycle. And these changes didn’t just affect blue collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs and the internet,” President Obama said at a campaign event in Kansas. – RCP
Doug Casey, who in the 1980′s predicted that the Soviet Union would collapse within 10 years, is interviewed by James Turk below. The video is embedded at the bottom of this post and covers more than what is contained in the following notes.
Doug Casey’s 3 Definitions of Economic Depression:
Definition 1: A period of time during which most people’s standard of living drops significantly. We entered into a Greater Depression in 2008. The way [...]
by: Dr. Duru November 9, 2011
November 7, 2011, Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) appeared on CNBC again to talk about recession. Achuthan was very adamant in his insistence that the business cycle simply could not be reversed from its downward course. The talking points almost sounded like a campaign. It included precious gems like “divergence from [the ECRI] is resolved by the consensus coming around to [...]
by FMX Connect
Too Big to Fail: Championing The Slow Decline
The recent implosion of MF Global has reignited the debate over Too Big to Fail (TBTF) and the adequacy of U.S. regulatory safeguards. It has also contributed to a broader decline in investor sentiment, many of whom believe the market structure does not afford them sufficient protection and fair competition. Many MF Global clients still have assets frozen and even if they [...]