The Mess That Greenspan Made - Part 40

Monday Morning Links

The bull market for stocks turns 6 – AP
‘Six-stock candles’: Wall Street bull turns 6 – USA Today
All eyes on Apple’s Cook as Watch launch expected – Reuters
Eurozone prepares to reject Greek reform deal – Telegraph
Greece crisis: Varoufakis says bailout referendum is possible – BBC
European Central Bank launches trillion-euro stimulus – AP
ECB Starts Buying German, Italian Government Bonds Under QE Plan – Bloomberg
China’s international payments system ready, could launch by end-2015 – Reuters
Shale Oil Production Will Fall 600,000 Barrels Per Day By June – SRSrocco Report
Friday’s Market Plunge Shows Us What’s Wrong With the Fed – RCM
Greenspan’s Insulting Admission of Fed Culpability – Solidus Center
What Does That Difference Mean? – Hussman Funds

Global stocks fall after US jobs data sparks rate concern – AP
Apple Watch potential time bomb for investors – USA Today
Why It’s So Hard to Change Your Mind About the Markets – AWOCS
U.S. Investors Apt to “Ride Out” Stock Market Volatility – Gallup
European Stocks Decline Amid Greece, U.S. Interest-Rate Concerns – Bloomberg
GM plans $5B stock buyback, avoids showdown with hedge funds – AP
Gold rises as dollar pauses but further weakness seen – Reuters
Unless you’re Mad Max, gold isn’t an investment for everyone – FP
How The World Is Being Fooled About Chinese Gold Demand – BullionStar

Big Government Is Getting In The Way Of Big Data – Five Thirty Eight
The Texas And North Dakota Oil Busts Through The Eyes Of Henry Hazlitt – Forbes
Tesla shedding jobs in China as sales target missed – Reuters
China trade surplus hits new record as exports grow – BBC
Brazil’s leader urges patience amid scandal, economic woes – AP
Japan Q4 GDP revised down to 1.5 per cent – Economic Times
German trade surplus narrows as exports drop – AP
The Rich Could Fall Out of Love With London – Bloomberg
Obama’s nod to China could bring NYC real estate boom – NY Post
Government hurts housing market more than it helps – mySA
“Patient” is History – Fed Watch


It’s Dry in the West

Ski season is rapidly winding down here in Southwest Montana (my first year as a ski instructor has gone well, for those who may have wondered about the dearth of activity here at the blog in recent months) but, from what I’ve heard, ski season on the entire West Coast never really got started, a point that becomes quite clear when looking at all the brown (i.e., rather than white) in this Bloomberg video about Heavenly Valley Ski Resort at Lake Tahoe.

Also completely unrelated to today’s labor report is this new speed climbing record that, for most of us who have relatively normal strength-to-body-weight ratios, is just unbelievable.

Friday Morning Links

5 Things to Watch in February’s Jobs Report – WSJ
What to Watch for in Friday’s U.S. Jobs Report – Bloomberg
Euro sinks to 11-1/2-year low, bonds gain after ECB – Reuters
ECB’s QE Details Look Desperate – Alhambra Partners
Draghi Declares Victory for Bond-Buying Before It Starts – Bloomberg
Oil Firm That Raised Money last June Just Missed Its First Payment – Bloomberg
Weak Justice for Wall Street: A Double Standard Saved Citigroup Millions – Fiscal Times
The Assassination of Boris Nemtsov: Kremlin’s Biggest Critic – Vice News
Why the Supreme Court should scrap ObamaCare’s federal exchange subsidies – The Week
The Supreme Court cannot hide on Obamacare – Washington Post
Economists’ Biggest Failure – Bloomberg
One Hundred Years of Relativity – Project Syndicate
Children defy Capitol Hill sledding ban – Vox

Asia stocks gain after ECB, ahead of US jobs – AP
Nasdaq Changed in Its Climb to 5,000 – NY Times
Swedroe: Embracing Negative Real Yield –
Why No One Cares About Weaker Economic Data and Earnings … Yet – Pension Partners
Goldman Shareholders’ Hope for Bigger Payout Dashed by Fed – Bloomberg
Why you should be bullish on the Nasdaq, housing and the eurozone – MarketWatch
Gold falls below $1,200 ahead of U.S. jobs data, set for weaker week – Reuters
Gold-market investors I follow are now 100% in cash – MarketWatch
GLD: All the Reasons You Need to Avoid Gold, Gold Stocks – Investor Place

Jobless claims hit highest level since May – Reuters
Why Federal Workers Are Better Off Than the Rest of Us – Fiscal Times
German Industry Output Rises for Fifth Month – Bloomberg
Getting Fuzzier: China Economic Planners Lean on Wiggle Room – WSJ
Mexico Growth Outlook Weakens as Business Confidence Erodes – Bloomberg
U.K. Consumers Expect Inflation to Slip Further – WSJ
0% Down, 100% Chance of Trouble – Rick Sharga
Fed should not be too patient on rate hikes, Williams says – Reuters
No Laughing Matter: Fed Laughed As Bubble Burst – Zero Hedge
Why the Fed Needs Defending – New Yorker


Learning the Wrong Lessons … Again

This New York Times review of the Federal Reserve’s 2009 transcripts provides ample evidence that, as was the case for the Great Depression some 80 years prior, the wrong lessons are being learned from the financial crisis and the Great Recession it spawned.

When Ben S. Bernanke walked into the Federal Reserve’s ornate boardroom in December 2009, the officials who were gathered around the long table gave the Fed’s chairman a standing ovation.

Mr. Bernanke had just been crowned Person of the Year by Time magazine. The recession had ended, unemployment had crested and Mr. Bernanke was widely regarded as singularly responsible.

But the return to normalcy that Mr. Bernanke and his committee began to chart at that end-of-the-year meeting soon proved premature. The Fed had arrested the financial crisis, but the moment would also turn out to be the beginning of a yearslong series of failures to provide a sufficiently large dose of stimulus to restore the battered American economy to its previous health.

Then again, maybe it’s just me…

I’ve always assumed that an economy and financial system that lurched from one central bank enabled asset bubble to another wasn’t “normal” when, in fact, maybe it is.

It appears that the lesson being learned over the last six years is that, unlike the internet stock bubble-to-housing bubble transition, the Fed just didn’t do enough to facilitate the housing bubble-to-whatever we end up calling the next bubble transition.

© 2010-2011 The Mess That Greenspan Made