The Mess That Greenspan Made - Part 30

Thursday Morning Links

ECB Quantitative Easing Decision – Live – Telegraph
Draghi’s Gonna Have a Bad Day at the Office – Bloomberg
O Canada! Loonie near 6-year low after BOC surprise cut – MarketWatch
In Fort McMurray, it’s almost business as usual despite oil plunge – Globe & Mail
How Swiss Shock Humbled the King of Leveraged Currency Trading – Bloomberg
Central Bankers Lose The Plot: SNB Move Signals Spectacular Loss Of Nerve – Zero Hedge
Is Dollar Next? Investors Reassess After Swiss Shock: Currencies – Bloomberg
Illinois Schools Have Terrifying Access to Kids’ Social Media Passwords –
The New York Times won’t tell you the real story behind Ukraine – Salon
Obama’s State Of The Union Was Written For A 10th-Grader – Vocativ
Drone Carrying Three Kilos of Meth Crashes in Tijuana – Vice News
Bitcoins, Gold Bugs and Money – Bloomberg
What Is A Dollar? – Alhambra Partners

Asian stock markets meander, await ECB – AP
European shares hit seven-year high – Reuters
What’s Margin Really? – Points and Figures
These unloved stocks may beat the S&P 500 again – MarketWatch
Why Invest In Hedge Funds If They Don’t Outperform The Market? – Forbes
Treasuries Drop With Japan Bonds as Investors Weigh ECB Stimulus – Bloomberg
Gold dips further below 5-month high as shares gain ahead of ECB – Reuters
Expect Some Profit Taking In Gold If ECB Annouces Expanded QE Measures – Kitco
Gold breaches $1,300 – but beware potential headwinds – Mineweb

The Beauty of Deflation – GoldSilverWorlds
Why Falling Prices Are Actually a Really Bad Thing – Bloomberg
The Great Decoupling: Why the U.S. Is Divorcing Global Markets – Fiscal Times
Paris Has a Case Against Fox News – Bloomberg
Perhaps you missed it: We’re at war with Russia – MarketWatch
Macau ranks No. 1 in economic performance among world cities – AP
Why Mortgage Refinancing Is Booming Again – CNBC
Americans Gaining Equity Seen Lifting Housing Market: Mortgages – Bloomberg
As central banks surprise, Fed may have to throw in the towel – MarketWatch
Policy Divergence – Fed Watch


Faber: Short Cental Banks

Purveyor of the newsletter Gloom, Boom, and Doom and frequent CNBC personality Marc Faber hasn’t exactly been firing on all cylinders in recent years as U.S. equity markets have melted up but, like all bears, he’ll eventually be right again.

For one possible reason why, just listen to the awkward silence after he predicts “The central banks will be exposed for what fraud they commit” less than a minute into the clip below.

On a related note from another CNBC video, Pawn Stars star Rick Harrison comments on how it has become difficult to find physical gold from the wholesalers he works with.

It seems that the Swiss Bank move, the prospect of a GREXIT, and ravenous demand for the metal in Asia might finally be manifesting itself in tighter supplies domestically, though we’ve certainly heard that story before.

Wednesday Morning Links

Obama demands spread of wealth – BBC
Obama dares Republicans to live on $15,000 a year – AP
How Come the President Never Talks About My Rent? – Businessweek
People Blame Bad Government Policy for Runaway Inequality – Washington’s Blog
Gold Prices Top $1,300 an Ounce for First Time in Five Months – Bloomberg
Central bankers lurch from ‘whatever it takes’ to ‘whatever next’ – Reuters
QE warfare pushing world financial system out of control – Telegraph
Baker Hughes to lay off 7,000 as oil patch layoffs mount – USA Today
Crude Collapse Has Investors Braced for ’80s-Like Oil Casualties – Bloomberg
As Yemen’s Government Falls, So May a U.S. Strategy for Fighting Terror – Time
Woman spends $164K a year living on a cruise ship – NY Post
10 Worst Places to Live for Obamacare – Kaiser Family News

Asian stocks higher, ECB decision awaits – AP
Albert Edwards – “Markets to Riot” – Advisor Perspectives
The Virtues of Europe and Hated U.S. Stocks – Barron’s
Is Dollar Next? Investors Reassess After Swiss Shock – Bloomberg
Ignoring the Yield Curve May Be Dangerous to Your Health – e21
Treasuries Drop as Nowotny Urges Calm Before ECB Meeting – Bloomberg
Gold tops $1,300 on weak dollar, stimulus hopes – Reuters
U.S MINT Unloads Another Million Silver Eagles – SRSrocco Report
Gold Market Momentum In 7 Great Charts – GoldSilverWorlds
Swiss franc farce may be gold price tipping point –

Is the U.S. really decoupling from the world? – Pension Partners
Will Deflation Make You Naked, Homeless and Hungry? – Bloomberg
A new normal Chinese economy still ballast for world – China Daily
Bank of Japan slashes inflation outlook, boosts growth forecast – CNA
Sea change in investor sentiment as Modi govt restoring confidence – FE
China Boots Up an Internet Banking Industry – Caixin Online
Home prices fall in Calgary as real estate chill deepens – Global News
New Survey Shows U.S. Economists See Housing-Market Pickup – WSJ
‘Lowflation’ worries prompt rate rise retreat by Bank of England – Telegraph
Fed Officials Reassess U.S. Growth Outlook Amid Global Weakness – Bloomberg


The IMF’s latest report on slowing growth in the global economy makes it easy for a skeptical reader to connect a few dots regarding the latest round of central bank sponsored malinvestment in general (a word that clearly doesn’t exist in the modern economists’ lexicon) and the shale oil boom/bust cycle in particular.

From this Reuters story we get the following summary about what’s ailing the world::

“New factors supporting growth, lower oil prices, but also depreciation of euro and yen, are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries,” Olivier Blanchard, the IMF’s chief economist, said in a statement.

The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation.

If policy rates could not be reduced further, the IMF recommended pursuing an accommodative policy “through other means”.

Left unsaid was that cheap money gushing from the Federal Reserve in Washington and big banks on Wall Street was a major factor driving the shale oil boom that played a key role in recently plunging energy prices that, now, are raising the specter of world wide deflation that – you guessed it – should be countered by even more cheap money.

Vicious cycle anyone?

It seems former Bank of England governor Mervyn King is on to something in this report at the Telegraph when he notes the following:

We have had the biggest monetary stimulus that the world has ever seen … The idea that monetary stimulus after six years is the answer doesn’t seem (right) to me.

Why is it that central bankers suddenly seem to make much more sense when they are no longer central bankers? King joins suddenly lucid former Fed Chief Alan Greenspan who has recently been famously fond of a barbarous relic and makes you wonder where the heck central bankers still employed by central banks are steering the ship.

© 2010-2011 The Mess That Greenspan Made