The Mess That Greenspan Made - Part 10

Friday Morning Links

MUST READS
The Secret Goldman Sachs Tapes – Bloomberg
Hungary suspends gas supplies to Ukraine – BBC
Ukraine prime minister says Russians ‘want us to freeze’ – Reuters
After selloff, stock market in search of stability – USA Today
Winners and losers from the dollar’s recent rally – CNBC
Alibaba options set for strong demand on market debut – Reuters
The solution to Italy’s woes is quite simple – leave the euro – Telegraph
Draghi’s Trillion-Euro Pump Finds Blockage in Spain – Bloomberg
US public pension gap at least $2 trillion: Moody’s – Reuters
Gas prices headed below $3 a gallon – USA Today
Bad loans pose worsening risk – China Daily
The Show-Off Society – Krugman, NY Times
Being Wrong – Alhambra Partners

MARKETS/INVESTING
Stock markets turn higher after Wall Street drop – AP
First take: Did Alibaba IPO mark a top for stocks? – USA Today
This stock selloff has everyone talking about ‘divergence’ – MarketWatch
Correlations Revive as China’s Slowdown Beats Rates – Bloomberg
Bonds Worldwide Pull Out of Tailspin on Growth Concern – Bloomberg
Gold down on strong dollar, but set to snap 3-week losing streak – Reuters
The Workings Of The Shanghai International Gold Exchange, Part One – BullionStar
Junior miners ‘starting to disappear’ as grim market reality takes hold – FP
Gold markets waiting for the Asian festive demand – BullionStreet
Death Of ‘Safe Haven’ Gold Greatly Exaggerated – GoldCore
Falling Out of Love With Gold – Bloomberg

ECONOMY/WORLD/HOUSING/BANKING
Decelerating Money Supply Increases Risk of a Bust – Forbes
China official PMI seen steady at 51.2 in September but pressures remain – Reuters
China’s slower GDP growth worthwhile for long-term sustainability: IMF – xinhuanet
UK cuts to last five more years, ex-civil service boss says – BBC
Conflicts weighing on German consumer confidence – AP
Japan consumer inflation up 3.1% on-year in August – CNA
Singapore is top foreign investor in Australian commercial properties – CNA
London Home Prices Post First Fall Since 2012 on Demand Drop – Bloomberg
House prices have finally started to fall after two years – Telegraph
2015 Prediction: California Housing Markets Will Post Biggest Gains – HBI
PBOC official sees bright side of shadow banks – China Daily
Low inflation fuels caution at Fed over rate rises – Reuters

 

Income Inequality Chart of the Year

Via this item from Pavlina Tcherneva comes the graphic below that goes a long way in explaining why there’s been so much fuss about growing income inequality.

Anyone with a good sense for statistics surely realizes the reason this data is so compelling is because it represents incremental change rather income data in absolute terms. It’d be interesting to see this same data broken down by the 1 percent versus the 99 percent.

While both fiscal policy and monetary policy are key drivers behind the trends shown above, one need look no further than this chart to understand just about everything there is to understand about the role of the Federal Reserve in all of this.

Thursday Morning Links

MUST READS
Big price swings return to Dow – USA Today
The Dollar Rally May Have a Long Way to Run – Barron’s
The Dollar Short, What and Where Now? – Alhambra Partners
US Dollar Breaks Through Overhead Resistance; Euro Sinks – Trader Dan
Forget The “Alibaba Top” – This Is The Chart Everyone Is Watching – Zero Hedge
Islamic State Oil Refineries in Syria Hit in Airstrikes – Bloomberg
The forgotten financial crisis of 1914 has parallels 100 years on – Telegraph
German Central Bank Head Weidmann: ‘The Euro Crisis Is Not Yet Behind Us’ – Spiegel
Standard & Poor’s Warns on Germany Triggering the Next Debt Crisis, – Wolf Street
Household Net Worth Just Hit A Record High: Here Is Who Benefited – Zero Hedge
Zero Hedge: Wall Street’s daily dose of doom and gloom – CNN/Money
Why Fears of a Subprime Auto Bubble Are Overblown—For Now – WSJ
Student loan default rate drops to 13.7% – CNN/Money

MARKETS/INVESTING
Global stocks track US higher; dollar marches on – AP
Occupational Hazards of Working on Wall Street – Bloomberg
Japanese stocks turn positive for the year as yen drops – MarketWatch
With China Set to Open Stock Trading, Investors Lay Groundwork – NY Times
Get ready for rising interest rates — and stocks – MarketWatch
Gold drops to 9-month low as dollar hits 4-year peak – Reuters
Gold’s fall to pump up Indian demand – bullion traders – Mineweb
Gold Downside Risk Seen ‘Significant’ to Goldman Sachs – Businessweek
Shanghai Silver Stocks Fall As Silver Eagle Sales Explode Higher – SRSrocco Report
Gold price seen near tipping point for mine cuts, closures – Reuters
Is This A Triple Bottom In Gold? – GoldSilverWorlds

ECONOMY/WORLD/HOUSING/BANKING
Watch US inflation expectations – Sober Look
Where macroeconomics went wrong – mainly macro
Rich Gain More Ground in Every US Expansion – Naked Capitalism
Housing Prices, “Real” Interest Rates, and the “Real” CPI – Mish
Weak euro zone lending data underscores need for ECB stimulus – Reuters
Putin leaves Germany’s factories in a worse state than anyone imagined – Telegraph
China steel demand shrinks for first time in 14 years as slowdown stings – Reuters
House prices: Londoners threaten to flee the capital over housing costs – Telegraph
Last Time this Happened, the Housing Market Crashed – Wolf Street
Fed’s Fisher says rates may rise ’sooner rather than later’ – Reuters
Federal Reserve Policies Cause Booms and Busts – Mises
Connecting “the Dots”: Disagreement in the FOMC – NY Fed

 

Keynesian vs. Austrian Economics

Here’s a pretty neat infographic from the Austrian Insider detailing the key differences between two very different schools of thought on economics – Keynesian and Austrian.

After working as an engineer for many years before even looking closely at this, I never understood the fixation on supporting aggregate demand regardless of how you got to the position where aggregate demand needed to be supported (i.e., reckless credit expansion leading to asset bubbles), which is why I’d guess that most engineering-types who look at this sort of thing favor the Austrian view.

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