The Mess That Greenspan Made - Part 19

Friday Morning Links

Swedish Bank Move Creates a Global Shudder – NY Times
What’s behind the global stock market selloff? – Reuters
This is a global stock market rout worth celebrating – Telegraph
Oil prices jump but weekly losses and physical excess loom – CNBC
The Oil Industry Thinks Things May Never Get Better – Bloomberg
Is this the week central banks lost their market credibility? – MarketWatch
Yellen and ‘negative interest rates’: The last nail in a saver’s coffin – Fox News
This Is What Central Bank Failure Looks Like (Part 4) – Zero Hedge
Dimon Just Spent a Year’s Pay on JPMorgan Stock After Bank Rout – Bloomberg
Syria plan: Cessation of hostilities, humanitarian airdrops, peace talks – RT News
Saudi decision to send troops to Syria ‘final’ – Saudi Gazette
Bloomberg vs. Trump? – Pat Buchanan

Japan stocks fall nearly 5% – CNN/Money
What we’re telling clients today – Reformed Broker
The Dow’s downtrend is now official – MarketWatch
Asian shares slide as bank fears add to global gloom – Reuters
Here are 5 signs we might already be in a bear market – MarketWatch
Investors flee health, bank and tech funds in search of safety: Lipper – Reuters
Investors fall prey to ‘death spiral’ as faith in central banks wavers – Telegraph
Gold eyes best week in 4 years as stock market turmoil lifts haven appeal – Reuters
London Bleeds 184t Of Gold as China Imports At Least 217t – BullionStar
Gold stocks rocket as investors seek safe haven –

JPM: Upcoming Recession Could Be Comparable To 2008 – Zero Hedge
Why Amazon May Want Hundreds of Brick-and-Mortar Stores – Fiscal Times
Euro zone GDP grows as expected, December industrial output falls – Reuters
Families of Americans killed by Mexican cartels sue HSBC – Guardian
Seoul, US to open talks on missile defense aimed at N. Korea – AP
Rajan on the chaos in India’s state-owned banks: Keep calm and carry on – Quartz
What Fewer Vacant Homes Say About the Housing Market –
Why NIRP (Negative Interest Rates) Will Fail Miserably – of two minds
Takeaways from Janet Yellen’s visit to Capitol Hill – CBS News
Yellen’s dilemma: A downturn with no easy response – Reuters


Debt: The First Five Thousand Years

Long-time favorite of this blog former BIS head William White (see William White Channels His Inner-Austrian along with the embedded links) shares some thoughts about central bank policies in a financial world that increasingly looks like it’s about to become unhinged.

At about the 2:20 mark, the discussion turns to a subject that few other economists ever mention in public – that combating economic difficulties that were fueled by a reckless expansion of debt with even more debt might not be a good approach:

As debts become too large to be serviced, then they have to be restructured or forgiven because the alternative … the longer you put this whole thing off, the smaller the proportion of the money you’re going to recover.

So, the question is, do you want 50 cents on the dollar or do you want nothing, because one dollar on the dollar is not on the table.

White has similarly grim news for anyone thinking negative interest rates will save us.

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Thursday Morning Links

The crash of 2016? – Washington Post
The Fed is making a huge mistake – Quartz
Negative rates in US? Why it could happen – CNBC
Sweden cuts interest rates further below zero – Marketwatch
Hyperinflation Paranoia Continues to Guides the Fed – Bloomberg
Dow futures sink more than 200 points as global rout gains pace – MarketWatch
Gold Surges Most in a Year as Global Turmoil Boosts Haven Demand – Bloomberg
William White on the Failure of QE, Danger of Negative Rates – Naked Capitalism
Here’s Why Our National Parks Are Billions of Dollars in the Hole – Fiscal Times
Here’s Donald Trump’s best strategy for winning the White House – Vox
It Gets Harder From Here For Bernie Sanders – Five Thirty Eight
Priebus on Bloomberg run: ‘We’ll take it’ – Politico

U.S. stocks poised for sharp sell-off – CNN/Money
Markets Don’t Work as Well as We Thought – Bloomberg
Oil falls on U.S. supply record, weak demand outlook – Reuters
Stock Rout Deepens, Bonds Surge as Faith in Central Banks Fails – Bloomberg
Just one thing can cushion investors as markets hit bottom – MarketWatch
Another financial crash could destroy capitalism as we know it – Telegraph
The simple rule at the heart of finance is being broken – Quartz
Gold jumps 2.6 percent on U.S. interest rate outlook – Reuters
Gold Above $1,200 As Yellen Waffles During Testimony – Kitco
China is on a massive gold buying spree – CNN/Money

So this is what ‘full employment’ looks like? – CNBC
Real Jobless Rate Is 42%? Trump Has a Point, Sort Of – NY Times
What Slowdown? Chinese Consumer Confidence Still Strong – WSJ
It’s Italy’s Turn – George Friedman Soundss the Alarm on European Banking Crisis – FSO
Canada Wants to Legalize Weed, But First It Needs to Deal With the UN – Vice News
This Is Why China’s Housing Market Is Such a Mess – Fortune
Home-Price Growth Sped Up Last Year, Realtors Say – WSJ
These Renters Were Hit Hardest by the Financial Crisis – Bloomberg
4 takeaways from Janet Yellen’s testimony – CNN/Money
ECB Gets Ready for More Easy Money – Value Walk


They’ll Probably Ask About This…

Federal Reserve Chair Janet Yellen just released her semi-annual Monetary Policy Report to Congress and will soon trudge up to Capitol Hill where, based on the chart below, she’ll have some ’splainin’ to do.

Question number one for those elected officials who aren’t otherwise preoccupied with such things as auditing the Fed will likely be, “Do you regret raising interest rates two months ago?”, for which Yellen will surely have an eloquent prepared response.

Wednesday Morning Links

Yellen’s task: Soothe market’s frayed nerves – USA Today
Five questions Janet Yellen must answer – MarketWatch
Yellen faces tough sell on Fed rate hikes in Congress – Reuters
Deutsche Bank shares soar 11% on bond buyback speculation – BBC
How the Bank Debt That Everyone Is Talking About Works: Q&A – Bloomberg
Stung by Low Oil Prices, Companies Face a Reckoning on Debts – NY Times
Cheap oil may trigger a new era of OPEC dominance, warns IEA – MarketWatch
The rise of Donald Trump is a terrifying moment in American politics – Vox
Republicans Need To Treat Donald Trump As The Front-runner – Five Thirty Eight
Why the Working Class Is Choosing Trump and Sanders – Fiscal Times
Sanders Scorches Clinton in New Hampshire – Real Clear Politics
Who’s Winning the Presidential Delegate Count? – Bloomberg

Dow futures up 100 points, Yellen to speak – MarketWatch
Bull Markets vs. Bear Markets – A Wealth of Common Sense
Japan stocks close at lowest level since 2014 – MarketWatch
Banks lead Europe shares higher, oil up before Yellen – Reuters
Why investors are freaking out over European banks – CNN/Money
Emerging-Market Currencies Rebound With Oil Before Yellen Speech – Bloomberg
Stock market rout intensifies amid fears central banks are ‘out of ammunition’ – Guardian
Gold retreats from 7-1/2-month high on shares, eyes US rate guidance – Reuters
Gold Hits a Wall at $1,200 With First Two-Day Slide in a Month – Bloomberg
Something Has Changed in Gold Stocks – GoldSilverWorlds

The Great Economic Task Ahead – Alhambra Partners
Fiscal Policy Has Failed the US Economy – Pragmatic Capitalism
Five Wacky Notions Believed By Many Economists – Cafe Hayek
Founding members say European Union is in bad shape – Reuters
Lagarde Says Ukraine Must Reform or Risk IMF Program Failing – Bloomberg
Germans buy everything with cash, and the government thinks that’s a problem – Quartz
Jingle mail rears its ugly head in Alberta again – CBC News
No One Wants to Be Fed Chair Janet Yellen This Week – Wall Street on Parade
Central banks can cut rates well below zero, says JP Morgan – Reuters
This Is What Central Bank Failure Looks Like (Part 2) – Zero Hedge

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