Financial Bubbles |

This Bloomberg story details the boom-turned-bust known as the surrounding communities to the shale oil fields in North Dakota, the “empty campers everywhere” comment above coming from one Tom Novak of TJ’s Autobody & Salvage who wakes up “and RVs are in my driveway”, that is, along with souped-up pickup trucks, presumably purchased by young men fresh out of high school who once drove a truck and made $100,000 a year.

There’s lots of fascinating (if unsurprising) detail in the report about the impact the boom-bust has had on the local economy (man-camp vacancy rates now as high as 70 percent) and the local government struggling to cope with it all (two-thirds of the $226 million of new debt issued by shale boom epicenter Williston, ND is outstanding).

Adding insult to injury, you have the recent debut of ABC’s “Blood and Oil”, set in North Dakota, that prompted this comment at IMDB:


27 September 2015 | by rickmtbslag

Who ever wrote and produced this horrid show has never, ever been to North Dakota, spoke to a person from North Dakota or looked at a map to find out where North Dakota is located. They could have watched the movie “Fargo”, at the very least, in order to get an idea of the landscape and dialect of the region if they did not want to travel to find out for themselves. Here is a hint; There are no snow capped mountains in North Dakota. Its highest point is White Butte at 3508 feet. Not a single jagged peaked mountain in sight. A white moose? Really? All they had to do is a web search to find out that North Dakota is not part of the moose habitat. Takes less than a second.The producers should be embarrassed that this show made it to air. And fired.

Carl Icahn is Not Optimistic

Activist billionaire investor (and potential Treasury Secretary under a potential President Trump) Carl Icahn shares some thoughts on the current state of financial markets now seven years into emergency policies by the Federal Reserve.

Favorite prediction:

It’s like a movie theater and somebody yells fire. There is only one little exit door. The exit door is fine when things are OK but when they yell fire, they can’t get through the exit door … and there’s nobody to buy those junk bonds.

Inflation and the Fed

They’ll probably be writing about this in the next update to the Federal Reserve policy manual as it has become increasingly clear that current Fed policies that have strengthened the dollar (i.e., talking about raising interest rates) have caused the government’s measure of inflation to move lower as shown below via this story at Bloomberg, all of which makes the case for actually raising rates (in the minds of economists) much more difficult.

Recall that there is a strong inverse correlation between the trade weighted dollar and both import prices and oil prices, so, the more the Fed talks about higher rates, the stronger the dollar gets, and the more difficult it becomes for the central bank to hit its inflation target of 2 percent, a target for which there is virtually no justification.

Yellen: Agonizing to Watch

In a speech at the University of Massachesetts last night, Federal Reserve Chair Janet Yellen said that the prospects for the U.S. economy “generally remain solid” and that the central bank is “on track” to raise interest rates in the months ahead.

Then dehydration is said to have caught up with her and she cut her speech short:

She received medical attention then resumed her schedule as the stock market ripped higher, traders concluding that she was just fake vomiting, something that Stephen Colbert popularized on his Comedy Central show and brought to CBS with Emily Blunt the other day.

Fed opens Pandora’s box

There’s been lots of discussion about monetary policy since last Thursday’s no-decision by the Fed on interest rates and Mike Baele, senior portfolio manager at US Bank Private Client Reserve, wonders what the central bank is thinking with its new focus on the global economy and foreign stock markets, all of which seems to have confused investors.

See also Bill Gross’ latest commentary in which he urges the Fed to move:

Near term pain? Yes. Long term gain? Almost certainly. Get off zero now!

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