We are now over 1400 days after the official end of the Great Recession, and the Federal Reserve is still holding interest rates at historically low levels. Take a look at the chart below which includes the yield curves at the same number of days after the previous three recessions. At this point in the recovery period after the 1982 recession, investors were earning between 5 and 6% on short treasuries, and over 8% on 30 year treasuries. A similar but slightly flatter pattern existed in the recovery following the 1990 recession. During the recovery after the 2001 recession rates were … [Read more...]
Archives for March 2013
Covert Global Currency Wars
“The lessons for the present are clear. Today most advanced industrial economies remain, to varying extents, in the grip of slow recoveries from the Great Recession. With inflation generally contained, central banks in these countries are providing accommodative monetary policies to support growth. Do these policies constitute competitive devaluations? To the contrary, because monetary policy is accommodative in the great majority of advanced industrial economies, one would not expect large and persistent changes in the configuration of exchange rates among these countries.”—Federal Reserve … [Read more...]
Going Broke!
If you feel like you’re spending too much don’t feel so bad. These guys take it to another level. 15 Ways Professional Athletes Go Broke By Tony Manfred | Business Insider – Mon, Mar 11, 2013 9:58 AM EDT Two very different ex-NBA players ran into financial issues in two very different ways recently. Robert Swift — who earned $11 million in three seasons — had his house foreclosed on after prematurely flaming out of the NBA and apparently not doing much else. Allen Iverson — who earned $154 million in salary — found out the hard way what happens when you keep living the good life after the … [Read more...]
Cyprus Depositors Get Robbed
By now you have probably heard that depositors with over 100,000 euros in banks in Cyprus will be involuntarily contributing to bailing out the banks where they have deposited their funds. By taking funds from depositors the banks Cyprus will qualify for bailout funds from the EU. Dutch Finance Minister Jeroen Dijsselbloem gave the market chest pains when he said, "If the bank can't do it, then we'll talk to the shareholders and bondholders, we'll ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders." If you read between the lines what … [Read more...]
What We’re Reading 3-22-13
Sudden Rise in Home Demand Takes Builders by Surprise, Catherine Rampell, New York Times Health Insurers Warn on Premiums, Mathews and Radnofsky, Wall Street Journal One Good Paper: A Stock Market Puzzle, Brendan Greeley, Bloomberg Fed's Crystal Ball Could Use Some Shining, Spencer Jakab, Wall Street Journal The Revenue Deficit From Progressive Tax Rates, Michael Solon, Wall Street Journal … [Read more...]
Stocks you can Trust Today
With the Dow soaring to record highs you have to wonder what you can trust in the stock market. Are gains in the market just an expression of Fed easy money policies, or should you jump in for a quick buck? … [Read more...]
VIDEO: Krugman Can’t Admit He Was Wrong on Austerity: Latvia PM
CNBC: Valdis Dombrovskis, prime minister of Latvia, said Paul Krugman is wrong in his criticism of Latvia's austerity measures and that his country will join the euro on January 1 next year. … [Read more...]
Record-Breaking Munis
These are the kinds of records you don’t want to break. Illinois is the second state in history to be charged with securities fraud for failure to disclose its pension liability. It joins New Jersey. You don’t want anything to do with Illinois municipal bonds. The long-term secular decline in rates started in the early ’80s, and is now over, along with the easy money in bonds. When states like Illinois run out of money, who’s going to pay muni investors back? Why stick around in an investment when its key benefit, tax-free status, is controlled by politicians? It wouldn’t shock me if they … [Read more...]
What We’re Reading 3-15-13
Headwind to Housing Recovery? Foreclosures Flare-Up Again, Diana Olick, CNBC Escape From Spending Hell, Daniel Henninger, Wall Street Journal The wealth effect might be shrinking, Annalyn Kurtz, CNNMoney Yes, We’re Confident, but Who Knows Why, Robert J. Shiller, New York Times Green Cars Have a Dirty Little Secret, Bjorn Lomborg, Wall Street Journal How to Shrink the 'Too-Big-to-Fail' Banks, Fisher and Rosenblum, Wall Street Journal … [Read more...]
VIDEO: Marc Faber: You Have to Look at the Economic Details
CNBC: Wed 13 Mar 13 | 09:05 PM ET Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, says you have to look at the details of the economic numbers because what is published doesn't necessarily reflect reality. The Fed will not increase interest rates, he says, but the market may push them higher. … [Read more...]