FIRE Economy | timiacono.com

As the world’s smartest and most influential economists scratch their collective heads amidst the growing realization by investors that once omnipotent, omniscient central bankers don’t really understand what it is that they are doing (presumably, if they did understand how this all works, they would have fixed things by now) … gold just sits there.

The British seem keen on exiting the European Union as bund yields in Germany go negative and, to the surprise of many, Fed Chief Janet Yellen, unarguably the world’s most important economist, gives the clear impression that she’s quite baffled by it all … it’s not all good.

(Not So) Golden Years

Breaking down the chart below (found in this Economic Policy Institute report) by age would be helpful as there is surely a big difference between a 30-something and a 55-year old when it comes to retirement savings, however, it still shows the rather bleak outlook for many Americans while in their golden years, save for the top 10 percent who will likely be disappointed to find out how far a couple hundred thousand dollars will go.

The data for the top one percent would likely be pretty shocking to the rest of us, a situation that is not likely to change absent a rebound in the political fortunes of Bernie Sanders.

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Much Ado About the Fed’s LMCI

After Friday’s disastrous labor report, financial scribes are poring over other economic data (that is, when they’re not marveling at levitating stock prices) in an attempt to figure out what the heck is going on in the nation’s labor market and a few of them (see here and here) have homed in on the startling decline in the Federal Reserve’s all-encompassing Labor Market Conditions Index, reproduced below courtesy of the St. Louis Fed.

After this many months below zero on the y-axis, history shows that interest rate cuts are more likely than rate hikes, meaning that, absent a significant change to the slope of that curve, it’ll be “one and done” for this rate hike cycle.

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Black Swans Anyone?

Michala Marcussen, chief economist at Societe Generale, talks about what could go wrong this summer and, of course, in the fall with a little election scheduled here in the U.S.

Yeah, black swan is a term that has been over-used and mis-used in recent years.

As Donald Rumsfeld noted, “there are also unknown unknowns – the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones”.

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Credit Cards Reanimated

From last week, the WSJ reports that the number and popularity of credit cards has experienced something of a resurgence after the near-death experience Americans had with debt (that is, excluding student loans) during and after the Great Recession.

I dont’ know about you, but we regularly get offers for new credit cards with introductory rewards of anywhere between $100 and $500 each. You’d think they’d stop sending them to us since we just make the minimum purchases to get the reward and then go back to using our Costco Amex which morphs into an even better Costco Visa next month.

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