The Mess That Greenspan Made - Part 30

Tuesday Morning Links

MUST READS
A Modern Day ‘Harvest of Shame’ – ProPublica
As Global Debt Soars, Where’s The Big Recovery? – IBD
Colorado gets $2 million from marijuana taxes – CNN/Money
Beyond Ukraine: Russia’s Latest Imperial Mess – Spiegel
Poverty drives people to sell internal organs on the black market – Sunday Post
Real Numbers On ‘The Obamacare Effect’ Are In – Let The Crow Eating Begin – Forbes
The Glorious Jump In Wealth And How It Will Blow Up Again? – Testosterone Pit
Long-held money beliefs may no longer be true – USA Today
Oops: The Texas Miracle That Isn’t – Washington Monthly
Rand Paul slams Ted Cruz in op-ed – Politico
Bitcoin is Not a Currency – Naked Capitalism
Bitcoin Miner Earning $8 Million a Month – IBT
Bitcoin’s body count is rising – MarketWatch

MARKETS/INVESTING
World stock markets steady after sell-off – AP
Subtle Shifts in the Investment World – Alhambra Partners
How Many Stock Market Top Boxes Have Been Checked? – Short Takes
Raging Bull: Will the Rally Make It to a Sixth Year? – Fiscal Times
Celebrating bulls lose sight of bearish picture – MarketWatch
Treasury Volatility Declines to 10-Month Low on Weather Effect – Bloomberg
Gold firm on fund inflows; China, Ukraine worries support – Reuters
Chinese Demand For Gold, Silver Exploded In 2013 – FIA – Kitco
Morgan Stanley lowers gold price forecast for 2014, 2015 – Economic Times
Goldman Sachs Says Gold’s Unexpected Rally will Fizzle Out – IBT
Gold fix not manipulated – Norman – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
How Aid to the Poor Is Also an Investment – NY Times
Inflation Is Tame Unless You Eat Bacon or Smoke Cigarettes – WSJ
BOJ keeps stimulus in place, cuts view on exports – Reuters
BOJ in Wait and See Mode; Here is Why – Marc to Market
ECB Homes In on Risky Assets as Inspectors Visit Banks – Bloomberg
Why China’s economy is in trouble in one chart – MarketWatch
China to open interest rate in one or two years – China Daily
China to experiment with private banks – Channel News Asia
Winter’s chill can’t freeze condo boom – Globe & Mail
Clock ticks on HAMP, homeowners wonder what’s ahead – Washington Post
Central banks can’t even predict the interest rates they control – Quartz
Dick Bove sees recession, 7% rate…in a few years – CNBC

 

A Perfect Storm for Inflation?

It should be pretty interesting to see how everyone reacts if and when sharply higher inflation finally does show up here in the U.S. The economic statistic that, since 2008, has been like the boy who cried wolf will probably have many more doubters than believers right up until the point when it’s too late to do anything about it (that was pretty much the story with the boy and the wolf and, of course, the sheep).

Anyway, they talk about the possibility of a tightening labor market playing a role in higher inflation (a key factor to really get broad-based inflation going) in this clip from CNBC.

That surge in agricultural goods last week took a lot of people by surprise and it’s shown in table form below from a data set that is maintained for the investment website.

Like most commodities, there’s a lot of ground to make up from last year’s drubbing for such products as corn, wheat, and soybeans, but they’re off to a great start this year so far.

It might be a good idea to cut out that extra cup of Joe in the morning as coffee prices just reached a two-year high. Now this is interesting … according to my data, the coffee price surged 77 % in 2010 but then fell 6%, 37%, and 23% in 2011, 2012, and 2013, respectively. Now it’s up 78% so far in 2014.

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Headlines drove the gold price through multiple up and down cycles last week, first from geopolitical concerns in Ukraine and then from U.S. economic data, but the metal ended higher for the fifth straight week after notching a four-month high over $1,350 an ounce. A weaker U.S. dollar has played a key role in the recent strength in precious metals, however, mixed messages from the Fed last week cast doubt on whether that trend will continue.

Gold BarsGold, and to a lesser extent silver, has attracted a good deal of attention from investors in the West so far in 2014, as steady price gains have resulted in positive chart patterns that have turned some bears into bulls, a change that is confirmed by ETF flows. Meanwhile, in Asia, higher prices have led to less demand, however, that could soon change if India, now the world’s number two gold buyer, relaxes its import curbs.

For the week, the gold price rose 0.9 percent, from $1,328.60 an ounce to $1,340.30, and silver fell 1.6 percent, from $21.23 an ounce to $20.89. The gold price is now up 11.2 percent for the year, still 30 percent below its record high of over $1,920 an ounce in late 2011, and silver is now up 7.5 percent in 2014, almost 60 percent below its all-time high near $50 an ounce three years ago.

As shown in the graphic below from Sharelynx via this item last week at GoldSilverWorlds, this year’s gold market rally has put the gold price on a course to re-enter the long-term ascending channel from which it abruptly departed during the course of last year…

[To continue reading this article, please visit Seeking Alpha and to access precious metals commentary that Tim only shares with subscribers, join Iacono Research.]

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$100 Trillion in Debt – A Big Round Number

The Bloomberg headline reads:

Global Debt Exceeds $100 Trillion as Governments Binge, BIS Says

and, along with the graphic below from the associated BIS report(.pdf), that should serve as the latest warning to financial markets around the world that things aren’t as rosy as the recent rise in virtually all asset prices might imply.

Writes the BIS:

Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers (Graph C, left-hand panel). They mostly issue debt in domestic markets, where amounts outstanding reached $43 trillion in June 2013, about 80% higher than in mid-2007 (as indicated by the yellow area in Graph C, left-hand panel).

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