The Mess That Greenspan Made - Part 3

Tuesday Morning Links

MUST READS
Japan’s Warning to the World – Bloomberg
Japan’s Abe calls snap election, puts off tax hike – AP
‘Godfather’ of Abenomics: Japan’s sales tax hike must be delayed – Telegraph
As Japan Falls Into Recession, Europe Looks to Avoid It – NY Times
NATO sees ’serious military buildup’ in Ukraine – Reuters
The Fed Needs Governors Who Aren’t Wall Street Insiders – WSJ
Democracts Alienate Millennials: Young Liberals Look Longingly at Rand Paul – reason.com
Stockman And Stiglitz On Crony Capitalism: Agreements & Disagreements. – Contra Corner
Americans Still Have NO CLUE About How Much Inequality We Have – Washington’s Blog
When Piketty Argued for Income Redistribution, He Changed Economics – Fiscal Times
The Bloody History of Money, From Ancient Rome to ISIS – The Atlantic
Obamacare’s Approval at Lowest Rating on Record – Fiscal Times

MARKETS/INVESTING
Japan leads world markets higher on stimulus hopes – AP
Greenspan Conundrum Risk Rising for Fed as BOJ, ECB Add Stimulus – Bloomberg
Hong Kong, China stocks ease on profit-taking after stock connect launch – Reuters
Five charts show how stock repurchases boost prices – MarketWatch
Flash Boys Raising Volatility in Wild New Treasury Market – Bloomberg
Gold gains 1.5 pct to 2-1/2 week high as dollar softens – Reuters
India Precious Metals Import Explodes In October – BullionStar
Gold bounces back above $1 200 – will it jump higher? – Mineweb
How Much Earmarked Gold Holds The Federal Reserve? – GoldSilverWorlds
Swiss yes vote won’t really boost gold price – Mining.com

ECONOMY/WORLD/HOUSING/BANKING
More aging parents move in with their kids – MarketWatch
Long-term Unemployment a Sign of Slack, NY Fed Economists Say – WSJ
The US doesn’t have any debatable recessions. That’s about to change – Money Illusion
‘Red Warning Lights’ Are Flashing On Global Economy, David Cameron Says – WSJ
UK inflation rate rises to 1.3% in October – BBC
Reforming China’s Commanding Heights – Project Syndicate
Old foreclosure debt coming back to haunt former homeowners – CNN/Money
Fed Dual Mandates Clash as Jobless Drop Vies With Inflation – Bloomberg
Fed Inflation Barometer Tumbles To Lowest Since 2008 – Zero Hedge
The Risks to the Inflation Outlook – San Francisco Fed

 

The Japanese are Turning Japanese

In case you hadn’t heard about Japan’s horrific third quarter GDP numbers, the chart below via this BBC report should aid in understanding why the financial world is again baffled by the failure of central bank largess to impact the real economy in the desired fashion.

Analysts were expecting a growth rate of +2 percent and what they got was -2 percent, surprisingly fitting the widely accepted definition of a recession (two consecutive quarters of contraction). This sort of thing seems to happen a lot in Japan.

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Monday Morning Links

MUST READS
Japan falls into recession – BBC
Five Takeaways on Japan’s GDP Numbers – WSJ
Dismal quarter pushes Japan into recession – CNN/Money
Japan Q3 GDP shrinks, Abe likely to delay tax hike – Reuters
What Japan’s recession means for country, world – AP
Finally, the US admits it: AP classes are way too white – Quartz
Obama defends healthcare law after adviser criticism – Reuters
Gruber and “Stupid Voters”: It Couldn’t Happen to a Nicer Shill – NC
What the Fed has wrought – Burning Platform
Bubble Behavior? – Alhambra Investment Partners
Financial Sphere Bubbles – Prudent Bear
These Go to Eleven – Hussman Funds

MARKETS/INVESTING
Futures lower after Japan falls into recession – MarketWatch
Time for a ‘melt-up’: the coming global boom – Reuters
Japan Shocks, BOE Warns, Europe Prepares – Marc to Market
Mounting Pressure on OPEC Spurs Wagers on Oil Rally – Bloomberg
Treasuries Rise for Third Day as Japan’s Economy Shrinks – Bloomberg
Gold around two-week high as shares drop on Japan recession – Reuters
Gold miners’ pain could be investors’ gain – MarketWatch
Modi effect on gold market ‘remarkably impressive’ – BullionDesk
Paulson hangs on to gold in 3rd quarter; Soros cuts back – Reuters

ECONOMY/WORLD/HOUSING/BANKING
Are the Long-Term Unemployed Different? – NY Fed
Pay rising sharply for young, low-wage workers – USA Today
Number of foreign students in US hits record high – AP
Australia and China seal bumper trade deal – Channel News Asia
Money flows to Shanghai as landmark stocks link with Hong Kong opens – Reuters
Harper Uses Handshake to Tell Putin to ‘Get Out of Ukraine’ – Bloomberg
A ‘gentle cooling’ in Canada’s housing market – Globe & Mail
What’s keeping the housing market from reaching its full potential? – LA Times
The Cruel Injustice of the Fed’s Bubbles in Housing – oftwominds
Central Banks are Not Innocent Bystanders – Mises
Carney puts bankers’ pay in spotlight – BBC

 

Young and Dumb Again

Via this story by Catherine Rampell at the Washington Post comes the graphic below showing how personal savings rates have changed over the years by age group.

Recall that the personal savings rate is simply disposable income less spending, so, if you’ve got a negative savings rate, it means you’re probably not putting away much (or anything at all) for retirement while subsidizing your spending by going further into debt.

The 0-34 crowd is quickly getting back into the “buy stuff with money you don’t have” mindset as the yellow line has recently diverged sharply from the others. Presumably, some of this is being forced upon them due to wages rising slower than the cost of living.

Also, it’s interesting to note that, at the peak of the financial crisis/deleveraging , we barely got back to the savings rate of the early 1990s which, as compared to prior decades was well below the 12-13 percent norm.

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