The Mess That Greenspan Made - Part 9

Young Traders, Fed Rate Hikes, Oh My!

Another reminder of how far removed the financial world now is from what might have been considered normal comes via this Bloomberg story that asks the question of how those new to Wall Street – who only know zero percent interest rates – might react to the first Federal Reserve tightening cycle in a decade, starting sometime later this year (if all goes well).

I never grow tired of looking at former Fed Chief Alan Greenspan’s 2004-2006 “baby steps” normalization campaign that simultaneously restored interest rates to normal levels while fostering the biggest asset bubble(s) known to Man.

The fact that one-third of Wall Street traders only know ZIRP will probably be the least of the financial world’s problems if rates ever do rise significantly since “too low for too long”, while never being acknowledge by central bankers as playing any role in asset bubbles, will surely  lead to all kinds of new and interesting developments.

Wednesday Morning Links

MUST READS
Greek PM Tsipras set for Brussels talks – BBC
Does Greece Have a Diabolical Plan B? – Bloomberg
Greece will not pay IMF on Friday without prospect of a deal – Reuters
Jamie Dimon Becomes Billionaire Ushering in Era of the Megabank – Bloomberg
Auto Sales at 10 Year Highs On Record Credit, Loan Terms, and Ignorance – Zero Hedge
From Whence Wealth Cometh – People’s Labor Or The Fed’s Printing Press? – Contra Corner
San Francisco office space so scarce that startups are fighting to work at the mall – Quartz
Wall St. Banker Deaths Continue – Where Are the Investigations? – Wall St. On Parade
Sorkin on the Street’s Surge of Suicides: Ignoring the Obvious – NEP
Velocity of Money Below Great Depression Levels – Armstrong Economics
Rubio rise on collision course with Bush – Politico
The Bernie Sanders surge – The Hill

MARKETS/INVESTING
Stock futures climb, ADP data awaited – MarketWatch
Share prices in China: Flying too high – Economist
Euro Bond Rout Wipes Out 2015 Profit as Inflation Returns – Bloomberg
The one thing that could help you ride out any stock correction – MarketWatch
Companies’ Borrowing Spree Darkens Stock Market Future – Bloomberg
Gold under pressure on stronger dollar, rising shares – Reuters
Here’s What the Next Gold Bull Market Will Look Like – Casey Research
US Government Lost 7 Fort Knox Gold Audit Reports – BullionStar
Texas wants its gold back! Wait, what? – Washington Post
Gold tumbles out of favour – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
The Inflationista Puzzle – Krugman, NY Times
John Nash Hated Keynesians – Dollar Vigilante
Hilsenrath’s Take: A Letter to Stingy American Consumers – WSJ
OECD calls US dip a blip, but chops world growth forecast – Economic Times
The Secret Money Behind Vladimir Putin’s War Machine – Bloomberg
China May services PMI rises to 53.5, new business up most since 2012 – Reuters
Turkey Annual Inflation Climbs to Highest Level This Year – Bloomberg
CoreLogic: House Prices up 6.8% Year-over-year in April – Calculated Risk
The Fed did a clumsy job fighting inequality in the Great Recession – The Week
Fed’s QE policy helped most in regions that didn’t need it, study finds – MarketWatch

 

China Stock Market Boom Explained

From this story at Quartz comes a rather simple explanation for why China’s stock market has been on a tear, now commonly referred to as perhaps the most obvious asset bubble in a world that has become increasingly full of and disturbingly dependent upon asset bubbles.

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Tuesday Morning Links

MUST READS
That 1914 Feeling – Krugman, NY Times
Greece submits draft plan, creditors say not enough – AP
The bell tolls for Greece, too, Mr Tsipras – ekathimerini
Islamic State advance failure of world – Iraqi PM – BBC
US preparing to face down China in the South China Sea – Independent
Obama: land reclamation in South China Sea ‘counterproductive’ – Reuters
Rand Paul is getting way too much credit for killing 3 Patriot Act powers – Vox
Ex-Nazis Received $20.2M in US Social Security Benefits, Report Finds – Vice News
How Wall Street Helps US Oil Producers Extend-And-Pretend – Zero Hedge
New-car loans keep getting longer – USA Today
When Paper Wealth Vanishes – Hussman Funds
A gold rush in Texas? – Star-Telegram

MARKETS/INVESTING
Greek uncertainty weighs on markets – AP
Ignore the Margin Debt Alarm – EconomPicData
Bulls and Bears Clash On This Market – Barron’s
There are as many stocks rising to highs as falling to low – MarketWatch
Chinese ETF Buyers Whipsawed Amid Widest Price Swings Since 2010 – Bloomberg
Behind the Chinese government’s brazen bid to pump up its stock market – Quartz
Everyone’s Worried About Liquidity in the Wrong Bond Market – Bloomberg
Gold higher as dollar softens, eyes on Greece – Reuters
Money Managers Take Profits In Gold After Short Rally – Kitco
7 things to consider when buying precious metals – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
Monetary policy and inequality – Ben Bernanke’s Blog
Bernanke: Fed Can’t Get Caught Up in Inequality Debate – NY Times
Eurozone back in inflation territory as oil prices rise – AP
Glut of Chinese Goods Pinches Global Economy – WSJ
If China’s economy stumbles, the world falls – Telegraph
Rajan: Under no illusion that the economy is up and running – Times of India
Hong Kong’s Incredible Shrinking Apartments: The Numbers – WSJ
Justices Curb Ability to Have Second Mortgages Canceled – NY Times
Why The Housing Market Collapse Is Set To Resume – ValueWalk
Why the Fed will change its exit strategy – substantiated – Bawerk

 
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