The Mess That Greenspan Made - Part 30

Tuesday Morning Links

Bullard: Raise rates or face ‘devastating’ bubbles – FT
Fed’s Bullard says zero U.S. rates no longer appropriate – Reuters
George Soros: Greece is now a lose-lose game – Telegraph
China March flash HSBC PMI contracts to 11-month low – Reuters
Tudor Jones: ‘We’ve Ripped the Humanity Out of Our Companies’ – NewsMax
The world’s next credit crunch could make 2008 look like a hiccup – Telegraph
Liberty U. Students Forced to Attend Ted Cruz Speech, Make Stand for Rand –
Wait… Can Canadian-Born Ted Cruz Actually Become the Next US President? – Vice News
Norway is Caught Between A Housing Bubble And Falling Crude Prices – Zero Hedge
Moscow continues its aggressive policy – Stratfor
Mortgaging the Future? – San Francisco Fed
Hospitals Are Robbing Us Blind – Slate

Stock gains tempered by weak China data – AP
10 companies buy up their own stock – USA Today
The Unbearable Exuberance of China’s Markets – Bloomberg
You won’t know the bull market is over until the bear is here – MarketWatch
Global Bond Yields Do Limbo Dance Again as They Near Record Low – Bloomberg
Gold rally continues on lower dollar and U.S. rate speculation – Reuters
Gold price history in major world currencies vs stock performances –
Mickey Fulp: ‘We Need to Eliminate the Zombie Miners’ – Gold Investing News
An Important Gold Chart Every Investor In The West Needs To See – SRSrocco Report
Will The Shanghai Gold Exchange Facilitate Gold Inclusion Into The SDR? – BullionStar

A Simple Guide to “Secular Stagnation” – Money and Banking
In Our Horrifying Future, Very Few People Will Have Work or Make Money – alternet
This Snookered Isle: Britain’s Terrible, No-Good Economic Discourse – Krugman, NY Times
Growth in eurozone business activity near four-year high – BBC
UK Inflation falls to 0%: what does it mean for the economy? – Guardian
French Output Growth Cools as Manufacturing Weakness Persists – Bloomberg
What Home Sellers Know That Economists Don’t – Alhambra Partners
Fed’s Fischer Says Rate Rise Probably Warranted by End-2015 – Bloomberg
The Fed Runs the Economy, Not Congress or the President – HuffPost
Why Yellen & The Feds Are Bubble Blind – Contra Corner


Shocker! New Tech Bubble Spurs Confidence

A recent Gallup poll indicates that, in a part of the country where stock values and home values are at nosebleed levels with a dovish Federal Reserve just last week providing a green-light for more of the same, the populace is pretty confident about the economy.

About the only thing that might be considered surprising about the data below is just how big the confidence gap is between the Bay Area and the rest of the country.

At the other end of the spectrum are areas in states such as Alabama, Mississippi, Tennessee, Arkansas, and Oklahoma where folks are downright gloomy. In these areas, 60 percent or more of the respondents said that the economy is getting worse, not better, and less than 20 percent said that current conditions were good or excellent.

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Monday Morning Links

Greek bank deposit outflows rose to 3B euros last week – Reuters
Greece Faces Decisive Week as Tsipras Is Set to Meet Merkel – Bloomberg
U.S. Looks to Work With China-Led Infrastructure Fund – WSJ
China’s Asian Infrastructure Investment Bank Upsets U.S., Lures Allies – Forbes
Central Banks, Credit Expansion, and the Importance of Being Impatient -  Zero Hedge
Democrats need Elizabeth Warren’s voice in 2016 presidential race – Boston Globe
Ted Cruz has launched his presidential bid. His model? Ronald Reagan. – Vox
Archaeologists discover secret Nazi hideout in Argentine jungle – The Week
The real reason the American dream is unraveling – The Burning Platform
Monetary Policy: The Case for Rules Versus Discretion – Hussman Funds
True Ultra-Dovishness – Credit Bubble Bulletin
The US Oil Bust Gets Uglier – Wolf Street

Asian stocks up, Europe down after Wall Street gains – AP
Currency hedging takes on new importance for global stock funds – Reuters
Forget the Fundamentals, This Market Is About Just One Thing – Fiscal Times
China stocks near 7-year highs, property jumps on hopes of policy moves – ET
Dollar won’t crash the S&P 500 as long as the Fed stays friendly – MarketWatch
What Constitutes Long-Term in the Stock Market? – A Wealth of Common Sense
Yellen Gives Gold Bulls Biggest Rally on Rates Since January – Bloomberg
Goldman and UBS join new gold pricing, no Chinese banks yet – RT News
Events Impacting Gold And Silver In The Week Of March 23d – GoldSilverWorlds
China gold demand ups when price dips – Mineweb

Q1:2015 US GDP Estimate: +2.1% – Capital Spectator
Texas Landmen Out of Work as Oil Patch Boom Goes Bust – Bloomberg
Modern Singapore’s founding father, Lee Kuan Yew, dies at 91 – Reuters
Draghi Cheerleads for Euro-Area Economy as Greek Threat Looms – Bloomberg
Tourists flocking to Cuba ‘before the Americans come’ – AP
One city in China now tracks stolen manhole covers with GPS – Vox
How Renting Puts a Drag on the Housing Market – US News
Fed’s Mester urges shift in forward guidance role – Reuters
Goldman: “The Path to Exit” – Calculated Risk
Fed moves the markets – Econbrowser


Conundrum 2.0

With the prospect of Federal Reserve rate hikes arriving sometime later this year comes talk of a possible conundrum similar to the one faced by former Fed Chief Alan Greenspan about a decade ago when short-term rates were nudged higher (baby-steps) but long-term rates didn’t budge. Of course, this was prime-time for one of the greatest asset inflation blow off tops in history, so, we might have that to look forward to again in the period ahead.

This topic is discussed in a Wall Street Journal story ($) today that includes the graphic below with another conundrum as indicated in red.

Also see this New York Times 3-D yield curve interactive graphic in which the U.S. public debt market looks rather normal as compared to what’s going on in Japan (length of time for unusually low rates) and Germany (recently negative rates with no end in sight).

© 2010-2011 The Mess That Greenspan Made