The Mess That Greenspan Made - Part 21

Wednesday Morning Links

MUST READS
EU charges Gazprom with market abuse – BBC
Greece and lenders try to avoid ‘brinkmanship’ – euobserver
Europe’s debt mountain just got bigger – Telegraph
ECB to fund Greek banks as long as they stay solvent – Reuters
This Is Nuts – $5.3T Of Government Bonds Have Negative Yields – Contra Corner
Mystery Trader Armed With Algorithms Rewrites Flash Crash Story – Bloomberg
U.K. speed trader arrested over role in 2010 U.S. ‘flash crash’ – Reuters
Donald Trump responds to his conservative critics with tweetstorm – Vox
Lopsided Bureaucratic Rationing Won’t Cure California’s Water Crisis – reason.com
Millennials Are Feeling Better About Their Finances – Fiscal Times
The Founding Fathers Fought Against Inequality – Washington’s Blog
The Upwardly Mobile Barista – Atlantic
Is Government Debt Too Low? – WSJ

MARKETS/INVESTING
Nikkei rises above 20,000, Europe stocks down – AP
Is the Death of the US Bull Market Imminent? – FSO
Value vs. Growth Stocks in Normal and Crisis Times – voxeu
Japan’s Nikkei closes above 20,000 for first time in 15 years – CNN/Money
Kass Identifies 12 Big-Picture Factors That May Weigh on Markets – The Street
Mom-and-Pop Traders Went on a Buying Binge During Last Friday Plunge – Bloomberg
10 reasons why the bears could be right about this market – MarketWatch
Gold steadies on weak dollar, shares; investors watch Greece – Reuters
Better to be in gold than in the stock markets – Griffiths – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
Inequality Is a Bipartisan Issue – Bloomberg
Economists discover how bad the economy really is – Washington Post
Japan logs first monthly trade surplus in almost three years – CNA
Silk Road Fund makes first investment – China Daily
South Korea seeks bigger role in global arms bazaar – Reuters
‘Noflation’ helps squeeze on household finances ease to six-year low – Telegraph
These Charts Will Tell You Where the Housing Market Is Headed This Year – Bloomberg
Why Higher Interest Rates Will Worsen the Housing Market – Daily Finance
Bank of England policymakers unanimous on holding rates – AP
Monetary Stimulus Creates Only Pseudo Wealth – IBD

 

Economic Surprise

Indicators like Bloomberg’s Economic Surprise Index are much like economists who, it is sometimes said, have predicted eleven of the last two recessions (or something like that).

Nonetheless, it’s worth noting that the recent string of disappointments have exceeded the level of the many false positives (or, in this case, false negatives) since the recession.

Of course, all other sharp downturns in the index have proven to be cases of “bad news is good news for stocks”, a meme that will, perhaps, be tested this time around.

Tuesday Morning Links

MUST READS
US Warship Sent to Block Iran Weapons off Yemen – AP
Yemen Brings US, Iran Closer to Naval Face-off – Voice of America
Greek bonds and shares slide as ECB ‘mulls reining in support’ – Guardian
Euro-Area Debt Levels Surge to Record, Led by Greece – Bloomberg
Fed’s Dudley alert to global liquidity storm, yet signals 3.5pc rates – Telegraph
JPMorganChase Begins to Prohibit the Storage of Cash in Its Safety Deposit Boxes – EPJ
Woman Fights for Custody of Son After He Defended Medical Marijuana in School – Vice
Does the Collapse of a Chinese Developer Signal the Start of More Defaults? – Bloomberg
BNP: China Economic Outlook “Skewed Heavily To The Downside – Zero Hedge
China cracks down on golf, the ’sport for millionaires’ – CNBC
Report: The Koch brothers want Scott Walker to be president – Vox
Google Joins the Search for the Loch Ness Monster – Atlantic

MARKETS/INVESTING
Futures up as weak earnings worries fade – Reuters
Greece Makes It Expensive to Hedge European Stocks – Bloomberg
Economic Surprise Indices: Bad News May Be Good News for Stocks – Disciplined Investor
Mobius thinks it’s time to bail on U.S. stocks, but should you listen? – MarketWatch
Turnover explosion at Shanghai stock exchange has too many zeros for software – Reuters
NYC Apartments, Art Top Gold as Stores of Wealth, Says Fink – Bloomberg
Gold languishes below $1,200/oz as stocks, dollar rise – Reuters
Russian central bank gold buying back with a vengeance – Mineweb
The Mystery of China’s Gold Stash May Soon Be Solved – Bloomberg
Short-Sellers Return To Gold Market After Three Weeks Of Buying – Kitco

ECONOMY/WORLD/HOUSING/BANKING
Why Americans Don’t Want to Soak the Rich – NY Times
Economic Activity Brakes Hard As Manufacturing Weighs – IBD
How long does it take to buy basic goods in Venezuela? – BBC
The Other U.K. Deficit Is Starting to Concern Economists – Bloomberg
Canada’s Aboriginal Population: Growing, but Troubled – WSJ
By 2020, South Koreans to have better standard of living than the French – Quartz
America’s Lack Of a Middle-class and Housing Recovery – Confounded Interest
Fannie and Freddie Restart Risky ‘Affordable Housing’ Programs – Fox Business
Monetary policy: It’s all relative – Pensions & Investments
Rethinking macroeconomic policy – voxeu
The Fed Still Wants Easy Money – Bloomberg

 

The Student Loan Hockey Sticks

Via this Bloomberg story on Friday by Noah Smith come the two charts below that help to explain why the nation’s student loan mess (that continues to slowly spiral out of control despite pleas from indebted students) will not likely see any substantive reform efforts.

Granted, the lower chart is a bit misleading because it doesn’t include Federal Reserve assets (another even more impressive hockey stick) or land owned by the federal government. Nonetheless, this is the sort of thing where it is sure to end very badly and whoever touches it between now and then is likely to be blamed for that outcome.

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