The Mess That Greenspan Made - Part 2

“I Don’t See a Downside”

We filled up the tank the other day and were again amazed at the numbers we saw while doing so. Consumer confidence in the U.S. is skyrocketing as we ‘Mericans are getting a nice little bonus every time we gas up the family car and, for those of modest means, saving $20 at the gas station can be a pretty big deal.

But there’s a downside…

As noted above, oil exporting countries around the world (most of whom we ‘Mericans dislike) are feeling a good deal of pain and that pain is likely to persist for some time.

But, what is not stated in the video is that there will be pain here in the U.S. too as the shale oil industry slowly comes to grips with the idea that $50 oil might not be so transitory. As noted in this report at The Atlantic, shale oil has been responsible for a good deal of the jobs growth in recent years and there are already reports of layoffs by shale oil producers, a trend that is likely to accelerate as long as oil prices are low.

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Wednesday Morning Links

MUST READS
What to Watch at This Week’s Fed Meeting – WSJ
Fed to remain patient amid global turmoil – Reuters
Sadly, cheap money is here to stay. Get used to it – Telegraph
Greek stocks slide to lowest since 2012 – MarketWatch
How Greece Could Change the Future of Europe – Vice News
In Singapore, Central Bank Eases Currency Policy – NY Times
Apple Has China to Thank For Its Blockbuster Earnings – WSJ
How Apple sold more phones than anyone in China – at twice the price – Quartz
Davos Man Fears Social Instability Due to Inequality and Injustice – Jesse’s Cafe
In the US, people are paid more to care for pets than young children – Quartz
Bread and Circuses (Not All Inflation Is about Footballs) – Money Metals
Super Bowl XLIX Is Already Setting Records – Fiscal Times

MARKETS/INVESTING
Stocks drift as weak earnings fuel growth concerns – AP
Too late: We’re already in a bear market – MarketWatch
Looks like we got us  a ballgame – Reformed Broker
Why Jim Rogers is Wrong – Capitalist Exploits
What the oldest stock market index is telling us – MarketWatch
China’s yuan joins top 5 most-used global currencies – AP
Treasuries Advance With Fed Seen Holding Rates – Bloomberg
Gold eases on steadier dollar; focus on timing of Fed rate move – Reuters
US Gold Exports to Hong Kong & China Doubled in October – SRSrocco Report
Netherlands Did Not Increase Gold Holdings In December – BullionStar

ECONOMY/WORLD/HOUSING/BANKING
How Obama Could Champion a Real Middle-Class Agenda – reason.com
How Much More GDP “Growth” Will Be Due To Obamacare? – Zero Hedge
Why Stupid Politics Is the Cause of Our Economic Problems – Huff Post
China plans to set 2015 growth target at ‘around 7 percent’ – sources – Reuters
Putin Throws $2.5 Billion at ‘Anti-Crisis’ Plan – Fiscal Times
Putin Goes All In as Ukraine Fights for Funding – Bloomberg
New mortgage rules help millennial home buyers – MarketWatch
10 Signs the Housing Market Will Keep Booming in 2015 – Investor Place
Beware of Woolly-Minded Attacks on the Fed – WSJ
While We Wait For Yet Another FOMC Statement… – Fed Watch

 

Can You Spot the Trend?

From The Increasingly Unequal States of America(.pdf) at the Economic Policy Institute (via this item at The Nation) comes the graphic below that helps explain why so many Americans feel so strongly that the economic recovery hasn’t yet reached them, despite news that U.S. job creation in 2014 reached a 15-year high and that the unemployment rate has tumbled.

The report notes this is “not just a story of those in the financial sector in the greater New York City metropolitan area reaping outsized rewards from speculation in financial markets”. These are broad-based trends that have occurred nationwide since the 1970s following many decades when, for example, there “was a cultural and political environment in which it was unthinkable for executives to receive outsized bonuses while laying off workers”.

That’s progress, I suppose.

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Tuesday Morning Links

MUST READS
How did the blizzard forecasts go so wrong? – NJ 101.5
S&P downgrades Russia’s credit to junk status – Guardian
Russia announces anti-crisis plan after rating downgrade – AP
Greece debt repayment in full is ‘unrealistic’, says Syriza – BBC
Greece’s Odd-Couple Only Agrees About Ending Austerity – Bloomberg
Greek bailout critic says he will be new finance minister – AP
Goldman’s Cohn: Oil Price May Hit $30 in Extended Slump – Bloomberg
U.S. oil well shut-ins start as crude rout batters small producers – Reuters
CBO: Deficit to shrink to lowest level of Obama presidency – AP
IRS commissioner: ‘It’s a challenging year’ – USA Today
A Staggeringly Lopsided Economic Recovery – The Nation
The Texas Miracle – The Atlantic

MARKETS/INVESTING
Asia stocks rise, Europe drifts as Greek nerves ease – AP
Why iron ore won’t rebound any time soon – CNBC
What Clampdown? China Margin Traders Boost Debt to Record – Bloomberg
How betting on the Super Bowl is similar to buying mutual funds – MarketWatch
U.S. 30-Year Yield Verges on Record Low as Fed Seen Holding Rate – Bloomberg
Gold steadies on soft dollar ahead of Fed rate meeting – Reuters
Gold Prices Look Toppy As Spec Longs Rise To Two-Year High – Kitco
Russia and Dutch Central Banks Buy 30.34 Tonnes Gold In December – GoldCore
BofAML: Hedge Funds Buy Gold – FINalternatives
Barclays: Gold rally to burn out – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
The dark side of ‘sharing economy’ jobs – Washington Post
Only a Third of the Oldest Baby Boomers in U.S. Still Working – Gallup
UK economy records fastest growth rate since 2007 – BBC
EU Renews Push for Russian Sanctions; Putin Blames Ukraine – Bloomberg
Venezuela tops list (again) of most miserable countries: Cato Institute – CNBC
Canadians don’t just love home ownership, they like income properties too – FP
Why the housing market fell to Earth – San Diego Union Tribune
7.3 Million Boomerang Buyers Could Be Homeowners in Next 8 Years – RealtyTrac
IRAs, not lower rates, would ease Obama’s housing market fears – NY Post
Why the Fed won’t blink on rate hike timing – MarketWatch

 
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