The Mess That Greenspan Made - Part 8

“Smooth Exit”

I couldn’t help but get a good chuckle at the couple of paragraphs below that appeared midway through this Bloomberg story that sung the praises of Federal Reserve Chair Janet Yellen who is rapidly approaching her one-year anniversary as central bank chief.

Granted, the phrase “smooth exit” is not Ms. Yellen’s and it only appear in bold type above as a result of Bloomberg’s slightly annoying practice of not allowing readers to take in more than a Twitter-size chunk of small text before getting to a few simple words in big text again (in itself, kind of a sad commentary on how things are evolving).

Nonetheless,  given the history of the nation’s central bank over the last couple decades, a history that has been replete with bursting asset bubbles (and Yellen is clearly cut from the same Greenspan/Bernanke cloth), it seems a “smooth exit” is setting the bar far too high.

Perhaps “No Calamity” or “No Apocalypse” would have been better.

Monday Morning Links

MUST READS
Oil extends fall; Goldman slashes forecast – Reuters
Saudi prince: $100-a-barrel oil ‘never’ again – USA Today
Demand factors in the collapse of oil prices – Econbrowser
How OPEC Weaponized the Price of Oil Against U.S. Drillers – Bloomberg
US Drilling Rig Count Fell by Largest Total in 23 Years – 24/7 Wall Street
Oil glut spurs top traders to book supertankers for storage at sea – Reuters
This Is Just the Beginning of the Great American Oil Bust – Wolf Street
China has just banned the burqa in its biggest Muslim city – Quartz
How Americans’ refusal to talk about death hurts the elderly – Vox
A Better Lesson than “This Time is Different” – Hussman Funds
Imagining the next big surprise for markets – MarketWatch
Can Wonks Save Finance From Itself? – Bloomberg
Pimco Plans a Push Into Stocks – WSJ

MARKETS/INVESTING
Europe stocks gain, Asia falls as oil slides – AP
Euro slips amid further QE speculation – MarketWatch
Earnings, Oil and Volatility Will All Be Center Stage – CNBC
Seven golden rules of investing as markets defy gravity – Telegraph
Paulson Event-Driven Fund Said to End Last Year Down 36% – Bloomberg
This Guy Called Bonds in ’14. You Listening This Time? – Bloomberg
Gold dips below one-month high on dollar, European shares – Reuters
Large Speculators returning to Gold – but with this Caveat – Trader Dan
Chinese Lunar Year Gold Buying Frenzy Started – BullionStar
India no longer worried about gold imports – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
For Want of ‘Booming’ Expansion – Alhambra Partners
Rising deflationary risks in the United States – Sober Look
Why US Inflation Stays Ultra-Low While Job Growth Is Surging – AP
The Slow Strategy That Might Rebuild Middle-Class Wealth – Atlantic
Household credit and employment in the Great Recession – voxeu
Russia faces wave of bankruptcies if interest rates don’t fall – CNN/Money
Paying Rent To Blackstone: This Is Where Wall St. Is America’s Landlord – Zero Hedge
Yellen Proves Master of Math Forecasting U.S. Economy – Bloomberg
The Profitable Federal Reserve? – TownHall

 

It Didn’t Have to Be This Way

Stephen Roach talks to Kelly Evans of CNBC about how the Federal Reserve is currently making the same mistake it made during the last two asset bubble inflations.

Coming up on the 10-year anniversary of this blog in March, it’s worth pointing out that Roach graced the very first post (on the old blog), noting the following:

“It didn’t have to be this way. The big mistake, in my view, came when the Fed condoned the equity bubble in the late 1990s. It has been playing post-bubble defense ever since, fostering an unusually low real interest rate climate that has led to one bubble after another. And that has given rise to the real monster — the asset-dependent American consumer and a co-dependent global economy that can’t live without excess US consumption. The real test was always the exit strategy.”

Not much has really changed at the Fed, or so it seems…

Friday Morning Links

MUST READS
Dow soars 323 points – CNN/Money
Euro sinks to fresh nine-year low – BBC
The shale oil revolution is in danger – Fortune
U.S. Oil Producers Cut Rigs as Price Declines – NY Times
‘Ex-energy’ to be investor catch-phrase as earnings season begins – MarketWatch
Is Fracking Causing Hundreds of Earthquakes Across the Country? – Vice News
Record Global Oil Demand Even As The Price Of Oil Declined – SRSrocco Report
Don’t Believe the Hype: Why Germany Needs Greece to Stay in Euro – Bloomberg
WSJ Praises the “Triumph of Austerity” in Greece – The Real News
Obama Wants to Make Community College Free – reason.com
Why Elizabeth Warren Trumps Obama’s Economic Messsage – Fiscal Times
After Conquering Asia, The Selfie Stick Does Las Vegas – WSJ

MARKETS/INVESTING
Global stocks lower as investors await US jobs report – AP
And The Biggest Buyer Of Stocks In 2015 Will Be… – Zero Hedge
China bulls refuse to back down as market skyrockets – CNN/Money
The 35-year boom in asset prices is coming to an end – Telegraph
What Returns Can Investors Expect in Long-Term Treasuries? – AWOCS
Treasuries Rise as U.S. Seen Dragged Down by Overseas Weakness – Bloomberg
Gold firms on lower dollar before U.S. data, set for weekly gain – Reuters
Gold Broke Out But Will It Hold? – GoldSilverWorlds
Expect some big mining cost falls in Q1 – Mineweb
Dueling Views on Gold as ETF’s Assets Wilt – Barron’s

ECONOMY/WORLD/HOUSING/BANKING
Is the Skills Gap Real? – WSJ
Most of America’s rich think the poor have it easy – WaPo
German exports and production fall in November – BBC
Swiss inflation rate tumbles as economic worries worsen – National Monitor
Economists React: China’s 2014 Inflation Lowest in 5 Years – WSJ
Canada Housing Market Is 63% Overvalued: Deutsche Bank – Bloomberg
The (Actual) State of the U.S. Housing Market – Town Hall
Fed’s JPMorgan Oversight Marked by Turf Battles – Bloomberg
Kocherlakota: Fed Taking Risk On Credibility of 2% Inflation Target – WSJ
Volatile Week Ahead of Employment Report – Fed Watch

 
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