The Mess That Greenspan Made - Part 20

Shiller on Bubbly Markets, Investor Psychology

Yale Economist, Nobel Laureate, and Bubble-Spotter Extraordinaire Robert Shiller comments on how, even after the late-August correction, the stock market remains kind of bubbly and that investor psychology could play a big role in exacerbating any renewed decline (perhaps prompted by the Fed) now that everyone’s back from their summer vacations.

Also at CNBC, see Robert Shiller: THIS is the sign we’re in a bubble – apparently being super-confident in the market while ignoring valuations can be a bad thing.

Wednesday Morning Links

OECD trims growth outlook, urges Fed action – Reuters
For the Fed, Markets May Be Flashing a Wait Sign – WSJ
Former Yellen Aide: Rate Hike Would Be a Serious Error – Bloomberg
The missing factor from the Fed debate: The 99 percent – The Week
ECB’s Weidmann – cheap money cannot spur sustained growth – Reuters
Could An Interest Rate Hike Be The Straw For War? – Mark St. Cyr
Congress Fiddles While the Economy Burns – Ron Paul
Republican Candidates Prepare to Hit Trump at Second Debate – Time
Donald Trump’s explanation for why cable news is obsessed with him – Vox
Ronald Reagan’s sons discuss Donald Trump and 2016 – Politico
Wildfires threaten California’s treasured Sequoias – AFP
Sierra Nevada Snowpack Lowest In 500 Years – DOTE

China stocks lead markets higher, Fed decision looms – AP
Why Donald Trump terrifies Wall Street – CNN/Money
How to Lose Money: Copy China Bailout Fund – Bloomberg
Volatility seen lingering no matter what the Fed does – Reuters
China Stocks Jump in Last Hour of Trading on State Support Signs – Bloomberg
Gold firmer, but stuck near 1-month lows ahead of Fed meeting – Reuters
Gold Market Freezes With Tightest Trading Range in Eight Years – Bloomberg
In August alone India bought 6 months worth of ETF sold gold –
JP Morgan Loses 45% Of Registered Gold Stock In One Day – SRSrocco Report
India imported 138t Gold In August. YTD 998t – BullionStar

Keynesianism Explained – Krugman, NY Times
Retail Sales: Observation And Fantasy – Alhambra Partners
HP to cut up to 30,000 more jobs in enterprise business – Reuters
Eurozone inflation revised down to 0.1 percent, falling prices feared – US News
Standard & Poor’s downgrades Japan’s sovereign credit rating from AA- to A+ – ET
Angela Merkel defends Germany’s handling of refugee influx – Guardian
Chinese retreat from Australian property as capital controls bite – Bloomberg
Young people dip into the housing market – NPR Marketplace
Don’t Worry Too Much About A Fed Interest Rate Hike – FiveThirtyEight
5 reasons for the Fed to raise rates (and 5 reasons not to) – MarketWatch


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.

Thursday Morning Links

Fed Wavers on September Rate Rise – WSJ
Fed Official: More US debt could help monetary policy – Reuters
Bank of England indicates they are in no hurry to raise rates – AP
Japanese Stocks Tumble After Nikkei 225 Posts Historic Rally – Bloomberg
China deflation fears grow as producer prices sink most in six years – Reuters
A hypocritical U.S. tells China how to run its economy – MarketWatch
Alliance Bernstein On Bond ETFs: Mom And Pop “Will Probably Get Trampled” – Zero Hedge
175 Days: Treasury Says Debt Has Been Frozen at $18,112,975,000,000 – CNS News
Exclusive: Russian troops join combat in Syria – sources – Reuters
The 2016 campaign is a reminder that elections are unpredictable – The Week
Palin attacks Iran deal with confusing metaphors – Politico
Stop Comparing Donald Trump And Bernie Sanders – FiveThirtyEight

Global stocks sink on Fed rate hike expectations – AP
The Stock Market’s Wake Up Call – Servo Wealth Management
A Market Update for Real Investors – Motley Fool
China’s Response to Stock Plunge Rattles Traders – NY Times
China jitters are at an all-time high, this chart shows – MarketWatch
ustice Department pledges to focus on Wall Street crime – CNN
Gold off four-week low as stocks decline, Fed in focus – Reuters
India PM Import Explosive – August Gold 126t, Silver 1,400t – BullionStar
India’s gold monetization schemes met with skepticism –
It’s virtually impossible to get physical gold in London – BullionStar

The Dangers of Visible Inequality – Atlantic
Global Economy Nearing a “Structural Recession” – Wolf Street
U.S. Economy Taps Into a New Source of Dry Powder – Bloomberg
Brazil’s credit rating downgraded to junk – CNN/Money
Krugman `Really, Really’ Worried Abenomics Might Fail – Bloomberg
What Japan’s Next Stimulus May Look Like as Abe Runs on Fumes – Bloomberg
Mapping Affordability in the Epicenter of Canada’s Housing Bubble – Visual Capitalist
Fed Policies And Mortgage Rates: What Will Happen Next? – Confounded Interest
Seven Reasons the Fed Won’t Raise Rates Next Week: Deutsche Bank – Bloomberg
Inside of QE Is Apparently No Better – Alhambra Partners


Disability Insurance Trust Fund R.I.P

Veronique de Rugy at the Mercatus Center put together the chart below depicting the dire state of the Social Security Disability Trust Fund, said fund functioning lately as a bridge to social security payments for those who, for whatever reason, aren’t able to work.

It should be interesting to see how this is handled next year when the fund is depleted since, apparently, this fund can’t just borrow money from the general social security trust fund which has a much longer life expectancy.

On a related note, a couple of articles at the New York Times:

Tagged with:  
© 2010-2011 The Mess That Greenspan Made