Debt | timiacono.com - Part 3

Global QE on a Grand Scale

Among the many other interesting (and, to varying degrees, alarming) graphics in Jeff Gundlach’s monthly commentary at Doubleline Capital is the chart below depicting the global, multi-year money printing extravaganza offered up by the world’s central banks.

Of course, the headlines this report is generating involve the predicted “real carnage” in junk bonds per Reuters and a holiday metaphor for the Fed getting cold feet next week, “It’s possible the Fed pulls another Lucy and the football,” Gundlach said, referring to Peanuts character Lucy yanking a football away from Charlie Brown (as shown below).

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Ahead of today’s big Federal Reserve meeting minutes that will, absent a major market temper tantrum between now and then, seal the deal for a December rate hike, David Stockman shares some thoughts on this and related subjects at CNBC.

The former Reagan budget director, current proprietor of the Contra Corner website, and author of The Great Deformation: The Corruption of Capitalism in America was busy yesterday as evidenced by the six segments appearing after a quick CNBC video search.

More evidence that the giant student loan bubble will someday wreak havoc on the U.S. economy in one enormous delayed reaction comes from two charts that go a long way in explaining why and how the labor force participation rate is so low.

First, it’s not retirees that are causing more people to not work or look for work – the 16-24 age group accounts for all of the net decline in participation rate per the St. Louis Fed.

What are these 16-24 year-olds doing if they’re not working or looking for work?

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David Stockman Does Not ♥ the Fed

David Stockman on Bloomberg on the impact of low interest rates:

To summarize:

You shouldn’t be pegging the money market rate. That is a false function. It doesn’t work in a world that’s drowning in debt. The only reason to peg the interest rate below the market is if you’re trying to encourage businesses and households to borrow. Businesses in America have all the debt they’ll ever need and they’re spending it to buy back their own stock. Households are at peak debt. Ninety percent of households can’t borrow more if they wanted to. So the only thing that zero interest rates do is create a tremendous subsidy, a tremendous incentive for Wall Street to gamble more and more recklessly.

Barro and Schiff on Gold and Inflation

Josh Barro of the New York Times and Peter Schiff of Schiff Gold talk about the yellow metal and how fast consumer prices are rising. The result of the discussion is pretty predictable.

Also see fellow NYT scribe Paul Krugman’s take on the subject here.

For some time now, I’ve thought that it will be instability (and probably much worse) in the global monetary system that eventually pushes the gold price higher, an idea that is not mentioned in any of the above discussion, but which should have been.

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