The Mess That Greenspan Made - Part 3

U.S. Debt and Equities Since 1981

Doug Noland’s weekly commentary that provided some hard numbers to back up Bill Gross’ recent claim that the end may be nigh for the global financial system as we know it seemed to just be crying out for someone to make a stacked bar chart or two, so, voila!

Of course, for data points that span 33 years, you have to somehow adjust this to take into account population growth and inflation. Looking at stocks and bonds as a percentage of GDP seems like the right thing to do here, so, again, voila!

Less dramatic, to be sure, but equally disturbing when you think about it.

I mean, what, aside from the grotesque multi-decade expansion and current size of the global financial system itself, is so different between 1981 and 2014.

Tuesday Morning Links

MUST READS
Greece taps reserves to pay IMF loan – BBC
Eurogroup keeps alive hope of Greek deal – euobserver
Greece Inches Closer to an Accident – Bloomberg
OECD: Signs of US economy flagging, China losing steam – Reuters
Why Would Anyone Want to Restart the Credit Default Swaps Market? – Bloomberg
The New York Times’ Secret Rule Forbidding Its EU Writers from Reading Krugman – NEP
The Fed’s Labor Market Conditions Index Close To 3-Year Low – Capital Spectator
How Government Debt Disinherited the Next Generation…and How To Fix It – Fiscal Times
Drillers Answer Low Oil Prices With Cost-Saving Innovations – NY Times
Picasso Painting Sells At Auction For $179 Million, A Record – NPR
A Tale Of Two Graphs——Why Bubble Finance Will Fail – Contra Corner
Reflation Or Economic Zombie Trading – Alhambra Partners
A Portrait of the Classical Gold Standard – Mises

MARKETS/INVESTING
Global stocks shaken by bond market gyrations – AP
Market building for a breakout — and it may be bad – MarketWatch
Bond yields hit 6-month high, spooking investors – USA Today
Wall Street’s favorite stocks fly below the radar – MarketWatch
Gold Up on Safe-Haven Demand, Sliding U.S. Dollar – Kitco
Precious Metals Should Be Part Of A Diversified Portfolio – GoldSilverWorlds
China’s Silk Road Economic Project Will Include Gold – BullionStar
What’s next for Gold? – Merk Investments
Gold’s day will come – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
ASS Economics – TSI Blog
America’s Vanishing Worker – Zero Hedge
Millennials Become the Biggest Generation in the U.S. Workforce – WSJ
The Average Age Of A Minimum Wage Worker Is 36 – Economic Collapse
France tells shops: No more wildcard sales – The Local
China’s Smartphone Market Contracts For The First Time In 6 Years – Forbes
Who Is Coming to America? Chinese Students and Indian 20-Somethings – WSJ
Owning a home is falling out of fashion around the world – Telegraph
Fed’s Dudley Says Interest Rate Increases Will Mark Regime Shift – Bloomberg
Bank of England Holds Rates Steady – NY Times

 

What a Difference Two Percent Makes?

The chart below from this item at the Wall Street Journal’s Real Time Economics Blog may go a long way in explaining why wages aren’t rising nearly as fast as  they should be, given the tumbling jobless rate and steady rise in non-farm payrolls over the last few years.

While the overall jobless rate is now back to the pre-2008 norm of the low 5 percent range (and, yes, the historically low participation rate has helped push this down), the make-up of that workforce is different enough (i.e., part-time workers for both reasons in the chart above are about one percentage point higher than before the financial crisis) that pressure on wages is much less than it would otherwise be (or so the theory goes).

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Monday Morning Links

MUST READS
China cuts interest rates to boost economy – xinhuanet
More interest rate cuts on the way, say analysts – China Daily
Economists React: China’s Rate Cut Is a Stone Aimed at Many Birds – WSJ
Chinese stocks rally as PBOC cuts interest rates again – MarketWatch
Greece says deal will be ‘difficult’ at Eurogroup meeting – Reuters
Greece’s ‘war cabinet’ prepares to battle EU creditors as anger mounts – Telegraph
I.M.F. and Central Bank Loom Large Over Greece’s Debt Talks – NY Times
States Scramble for ‘Plan B’ Ahead of Court Ruling on Obamacare – Fiscal Times
Sy Hersh: Almost everything we think we know about bin Laden’s death is a lie – Quartz
The decline of baseball — and American character – The Week
Recognizing the Risks to Financial Stability – Hussman Funds
“The End is Near!” – Credit Bubble Bulletin

MARKETS/INVESTING
Markets fall as hopes low for Greece deal – AP
Investing: Time for a no-bond portfolio? – USA Today
What it will take for stocks to go higher – CNN/Money
The $900 Billion Influx That’s Wreaking Havoc in U.S. Bills – Bloomberg
Oil prices have been soaring—now look for them to plunge again – Quartz
Financial Advisers Don’t Care About Millennials, and the Feeling is Mutual – Bloomberg
Wall Street may struggle as investors cash in on gains – MarketWatch
During One Hour Every Day, China’s Stock Rally Falls Apart – Bloomberg
Gold down as dollar rebounds ahead of Greece’s debt talks – Reuters
Gold steady on scattered support, silver cracks – Business Standard
Slipping gold reserves – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
Energy prices and consumer spending – Econbrowser
Rise in higher-paying jobs lighting U.S. economy – USA Today
High Share of Part-Time Workers Helps Explain Weak Wage Growth – WSJ
Russia and China deepen ties with new economic deals – Reuters
Smartphone market falls for first time in six years – China Daily
Policy-makers in a bind over Canada’s two-speed housing market – Globe & Mail
How Soaring Housing Costs Maul the Real Economy – Wolf Street
How Will the Fed Read the Job Market’s Mixed Messages? – Fiscal Times
Janet Yellen’s market remarks go beyond her authority – NY Post

 
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