The Mess That Greenspan Made - Part 5

On Root Cause

My engineering background is no doubt responsible for the discomfort that is experienced when listening to others talk about root cause (i.e., in the peer reviewed world of hard sciences, you can’t just say you’ve found the root cause) and the latest example of this comes from the White House via this Friday Funny at reason.com.

Other examples in the world of economics and finance involve “the lack of aggregate demand” being the proximate cause of our recent malaise and you can take your pick of many root causes (which are highly dependent upon your world view and who signs your paycheck) for the worst financial crisis since the Great Depression that, almost uniformly, reject the view that, as so eloquently noted by Pavlina Tcherneva in this item at New Economic Perspectives, “We live in a casino economy driven by serial asset bubbles”.

Friday Morning Links

MUST READS
Germany softens tone ahead of crunch Greek debt talks – Reuters
Scicluna: German-Led Bloc Willing to Let Greece Leave Euro – Bloomberg
Inequality Has Actually Not Risen Since the Financial Crisis – NY Times
What’s Wrong with David Leonhardt’s NYT Piece on Inequality? – NEP
Expert: Oil Price Wars Fatally Wounded the Petrodollar – Russia Insider
For the First Time, Americans Support Ground Troops Against ISIS – Atlantic
Guardian: Telegraph’s HSBC Coverage Biased Due To Owners’ Bank Loan – Zero Hedge
Banks Tighten Grip on Media as Journalist Rebels Against HSBC-Run Telegraph – Wolf Street
Climbers Can No Longer Scale Part of Mount Everest Due to Climate Change – Vice News
There’s a Muslim baby boom in the UK and it’s going to hit the ballot box – Quartz
The bizarre war against AP U.S. history courses – Washington Post
What to do before you see your tax preparer – MarketWatch

MARKETS/INVESTING
Stocks quiet as most Asian markets closed for holiday – AP
Nasdaq nears all-time highs as exuberance yields to reason – Reuters
Robert Shiller’s Bubble Vision – Bloomberg
European stocks hover at 7-year high – MarketWatch
US Stock Market is Most Overvalued in History – Contra Corner
The Myth of Black Swan Market Events – NY Times
Gold set for fourth weekly drop ahead of Greece talks – Reuters
Long-term Charts: Have Gold and Crude Oil bottomed? – Peter Brandt
Gold Price Not As Sensitive To ‘Calendar Events’ As Many Believe – Kitco
Newmont cheers gold mining investors – Mining.com

ECONOMY/WORLD/HOUSING/BANKING
Deflation: Feeling down – Economist
Why Walmart Raised Its Wages – Atlantic
Japan January inflation seen easing, BOJ sits tight – Reuters
U.K. posts biggest budget surplus since 2008 – MarketWatch
Euro Region Economy Strengthens Amid Wrangling on Greece – Bloomberg
Hong Kong marks new year with a surge of rage against mainland shoppers – Quartz
Currency War Feeds Denmark’s Housing Boom Amid Extreme Rates – Bloomberg
How Many More “Saves” Are Left in the Central Bank Bazookas? – of two minds
Looking at Student Loan Defaults through a Larger Window – NY Fed
Yellen Confronts Economists’ Ignorance – Bloomberg

 

Big Data Missing Big

Via this story at CBS MoneyWatch come the latest readings for the Citigroup surprise index showing how things may not be so hunky-dory in the U.S. economy.

Granted, prior episodes of this index moving sharply higher or lower have failed to provide any meaningful information about where both the U.S. economy and stock market were headed – and, lately, economic difficulties overseas and the plunge in energy prices have complicated things a bit – but sometimes it works…

Thursday Morning Links

MUST READS
Germany rejects Greek loan request – BBC
Ka-ching: Euro exit would cost Greece dear, shake eurozone – AP
ECB risks crippling political damage if Greece forced to default – Telegraph
Varoufakis: ‘Austerity Has Done Nothing to Solve Greece’s Problems’ – Spiegel
Fed officials worried about hiking rates too soon – Reuters
Did the Fed Just Enter the Currency Wars? – Bloomberg
Negative Rates: A New Economic Mystery – Real Clear Markets
Rand Paul Draws Liberal Fire As Left Discovers Its Love Of The Fed – Forbes
Has the trend toward later retirements played out? – MarketWatch
Not Everyone Is Happy That RadioShack Ran on Derivatives – Bloomberg
A Whistleblower’s Horror Story – Taibbi, Rolling Stone
No Gatekeepers – reason.com

MARKETS/INVESTING
U.S. stocks: Futures squeezed by oil slide – MarketWatch
Japan’s Nikkei closes at 15-year high – BBC
Oil falls sharply after U.S. crude inventories rise – Reuters
Despite massive divestments, Buffett stays in the energy game – FP
Where to put your money with looming disinflation – MarketWatch
Treasury Yields Too Low? Check Out Citi Surprise Index – Bloomberg
Gold gains as Fed’s softer stance hurts dollar – Reuters
BofA: Investor Demand For Gold Is Key Ingredient For Bull Market – Kitco
Gold a Safe Haven Due to Greece, Ukraine, Lehman and “Bad Stuff” – Gold Core
Gold erases 2015 gains – miners not so much – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
Average used car price hits record high in 2014 – USA Today
Auto loans surge, but who’s buying may surprise you – CNBC
French inflation turns negative – BBC
Dagong downgrades sovereign credit ratings for France – xinhuanet
France’s Socialist rebellion puts focus on economic reform – Bloomberg
U.K. house prices: The last hot spot in London – Telegraph
Housing market starts 2015 on several weak notes – Housing Wire
House Prices Keep Rising in Los Angeles as Number of Sales Drops – Curbed
FOMC Worries About The End Instead of the Beginning… – Alhambra Partners
January FOMC Minutes – Fed Watch

 
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