The Mess That Greenspan Made - Part 18

It Didn’t Have to Be This Way

Stephen Roach talks to Kelly Evans of CNBC about how the Federal Reserve is currently making the same mistake it made during the last two asset bubble inflations.

Coming up on the 10-year anniversary of this blog in March, it’s worth pointing out that Roach graced the very first post (on the old blog), noting the following:

“It didn’t have to be this way. The big mistake, in my view, came when the Fed condoned the equity bubble in the late 1990s. It has been playing post-bubble defense ever since, fostering an unusually low real interest rate climate that has led to one bubble after another. And that has given rise to the real monster — the asset-dependent American consumer and a co-dependent global economy that can’t live without excess US consumption. The real test was always the exit strategy.”

Not much has really changed at the Fed, or so it seems…

Friday Morning Links

MUST READS
Dow soars 323 points – CNN/Money
Euro sinks to fresh nine-year low – BBC
The shale oil revolution is in danger – Fortune
U.S. Oil Producers Cut Rigs as Price Declines – NY Times
‘Ex-energy’ to be investor catch-phrase as earnings season begins – MarketWatch
Is Fracking Causing Hundreds of Earthquakes Across the Country? – Vice News
Record Global Oil Demand Even As The Price Of Oil Declined – SRSrocco Report
Don’t Believe the Hype: Why Germany Needs Greece to Stay in Euro – Bloomberg
WSJ Praises the “Triumph of Austerity” in Greece – The Real News
Obama Wants to Make Community College Free – reason.com
Why Elizabeth Warren Trumps Obama’s Economic Messsage – Fiscal Times
After Conquering Asia, The Selfie Stick Does Las Vegas – WSJ

MARKETS/INVESTING
Global stocks lower as investors await US jobs report – AP
And The Biggest Buyer Of Stocks In 2015 Will Be… – Zero Hedge
China bulls refuse to back down as market skyrockets – CNN/Money
The 35-year boom in asset prices is coming to an end – Telegraph
What Returns Can Investors Expect in Long-Term Treasuries? – AWOCS
Treasuries Rise as U.S. Seen Dragged Down by Overseas Weakness – Bloomberg
Gold firms on lower dollar before U.S. data, set for weekly gain – Reuters
Gold Broke Out But Will It Hold? – GoldSilverWorlds
Expect some big mining cost falls in Q1 – Mineweb
Dueling Views on Gold as ETF’s Assets Wilt – Barron’s

ECONOMY/WORLD/HOUSING/BANKING
Is the Skills Gap Real? – WSJ
Most of America’s rich think the poor have it easy – WaPo
German exports and production fall in November – BBC
Swiss inflation rate tumbles as economic worries worsen – National Monitor
Economists React: China’s 2014 Inflation Lowest in 5 Years – WSJ
Canada Housing Market Is 63% Overvalued: Deutsche Bank – Bloomberg
The (Actual) State of the U.S. Housing Market – Town Hall
Fed’s JPMorgan Oversight Marked by Turf Battles – Bloomberg
Kocherlakota: Fed Taking Risk On Credibility of 2% Inflation Target – WSJ
Volatile Week Ahead of Employment Report – Fed Watch

 

Trouble in the Oil (and Debt) Patch

This WSJ story ($) detailing the sharp increase in U.S. shale oil related debt along with Texas energy company WBH Energy LP going belly-up prompted this item from Russia Today.

The funny thing is that, absent any coordinated action, oil producers around the world are likely to cause an even bigger glut (and even lower prices) over the short-term as they attempt to compensate for prices that have already tumbled more than 50 percent.

Thursday Morning Links

MUST READS
Global Inflation Rates Fall as Oil Prices Drop – WSJ
Greece Jolts QE Juggernaut as ECB Eyes Deflation – Bloomberg
Fed Sees Economy Getting Back to Normal. Market’s Not Sure. – Time
Did Mitch McConnell Just Take Credit for the Economic Recovery? – NY Times
The Republican Strategy To Repeal Dodd-Frank – Baseline Scenario
Deep Debt Keeps Oil Firms Pumping – WSJ
Headwinds From The Oil Price Collapse Gather – Contra Corner
The First Shale Casualty: WBH Energy Files For Bankruptcy – Zero Hedge
IMF: Fed Bond Purchases Had Larger Overseas Effects than Rates – WSJ
12 powerful political cartoons responding to the Charlie Hebdo attack – Vox
Behind the rise of Germany’s anti-Islamic street movement – Quartz
Oregon Trail returns, dysentery included – CNN/Money

MARKETS/INVESTING
Europe leads stocks higher as oil steadies – AP
Why Emerging-Market Debt Could Balloon in a Flash – WSJ
Market Tracing Familiar Pattern as S&P500 Plunge Stops at 4% – Bloomberg
Strongest contrarian trade in years as bulls draw up another V-shape – MarketWatch
Treasuries Fall as Global Bond Rally Pauses Before Jobs Report – Bloomberg
Gold retreats as dollar strengthens, Fed lifts stocks – Reuters
Why Gold May Finally Be Turning Higher – Market Anthropology
Indian Gov’t Not Planning To Impose New Gold Import Restrictions – Kitco
Jeffrey Christian – Next Gold Bull Market to Begin in 2015 – GoldSilver.com
The Turkish Gold Standard, Part 1 – BullionStar

ECONOMY/WORLD/HOUSING/BANKING
Understanding recent US inflation – voxeu
Call Off the Deflation Warning – E-piphany
Political Crimes Make a Comeback Under Xi Jinping – WSJ
China’s Xi woos Latin America with $250 billion investments – Reuters
German Factory Orders Fell Amid Uncertain Outlook – Bloomberg
How will cheap oil affect the housing market? – Forbes
Fed officials say oil price drop will boost U.S. growth – Washington Post
Evans Says Fed Shouldn’t Rush Rate Rise as Inflation Undershoots – Bloomberg
Highlights From the December Fed Minutes – WSJ
Monetary Death by Proxy – Alhambra Partners

 
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