Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Thursday, May 24, 2007
Misery Spread Widely, The Destruction of the Middle Class! / Economics / Social Issues
By: Ty_Andros
Just as vast new middle classes are being born around the globe, some are being buried. They are being buried by the people they elected to steward their economies, these public servants are more interested in their next reelection then coming up with practical solutions that meet today's challenges while preserving the economic futures of their current constituents and future generations.
Today's middle classes in the western world have been taught a belief in two things: that you can have “something for nothing”, and that government can “protect and provide for you”. They now vote regularly for these chimeras/illusions. The growth cycle and bull markets in these ways of thinking are a self fulfilling vicious circle, which will culminate in the middle classes demise. This broad social trend is in the United States and in central Europe , and is as destructive a PRIMARY character flaw as I have ever seen, it is an investment theme for the next ten years or more as it plays out.
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Thursday, May 24, 2007
Spain Sells Its Foreign Reserves, Savings Spent? / Economics / Spain
By: Julian_DW_Phillips
The Banco de Espana's holdings of foreign currencies and gold have fallen to €13.2bn (£9.02bn), equivalent to 12 days of imports, according to their website. Last week saw a continuation of their sales of gold of, possibly, in the region of 10 to 15 tonnes more.
Over the past two months the Banco de España has sold off 80 tonnes of gold.
Thursday, May 24, 2007
Paper, Rock, Gold : Why does Money have Value? / Economics / Money Supply
By: Mike_Hewitt
There are two commonly held views as to why money has value:
1. People are willing to accept it as payment (social convention)
2. The government says so (government decree)
The first reason, that being that money has value because people are willing to accept it as payment is nothing more than a circular argument. It states that money has value because it is accepted. Why is it accepted? …because it has value!
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Wednesday, May 23, 2007
How is Money Created? / Economics / Money Supply
By: Mike_Hewitt
The Federal Reserve Bank of Chicago used to publish a pamphlet entitled Modern Money Mechanics , which explains M1, M2, and M3. It is a truly fascinating read. That pamphlet is no longer in print, and the Chicago Fed has no plans to re-issue it. However, electronic copies are available (see link ).
In it, the process by which the Fed creates money “out of thin air” is detailed. Consider the opening paragraph:
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Wednesday, May 23, 2007
US Dollar Bills, Construction Employment And Undocumented Workers / Economics / US Economy
By: Paul_L_Kasriel
Housing is in a relatively deep recession, yet the decline in residential construction employment (not including specialty contractors) has been relatively mild (see Chart 1).Read full article... Read full article...
Tuesday, May 22, 2007
Hyperinflation in China, 1937 - 1949 / Economics / China Economy
By: Mike_Hewitt
Till 1927, China had a free banking system through the interaction of private banks operating in various regions of the country. Privately held banks operated like any other Chinese business and competed with one another to obtain customers. Most banks issued their own notes which were redeemable in silver, the traditional medium of exchange in China. The notes from each bank circulated freely with the notes from other banks.
These Chinese banks operated largely without state regulation. A free banking system has inherent checks against inflation - primarily because customers will flee from depreciating currencies - and instances of banks' inflating their currencies were rare.
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Tuesday, May 22, 2007
The US Trade Deficit - Cause for Concern? / Economics / US Economy
By: Mike_Hewitt
Can the US trade deficit continue forever? Will there come a time when foreigners will become less likely to hold US denominated assets? Should such a time arrive, the US Federal Reserve will be forced to increase interests rates to prevent a collapse of the US dollar. This would be catastrophic to the US housing market and US economy as a whole.
Imagine an American counterfeiter who uses the fraudulent dollars to purchase Chinese goods. What would you say of such a scenario? Now imagine a US Central Bank that creates money “out of thin air”, places that money into a bank, where upon the bank lends it to an American importer who then uses them to purchase Chinese goods.
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Tuesday, May 22, 2007
US Economy May Wake Up Without Consumers' Prodding? / Economics / US Economy
By: Paul_L_Kasriel
In Mondays Wall Street Journal , reporter Christopher Conkey wrote a piece suggesting that with 75% of the economy faltering, the other 25% was going to accelerate, preventing the 100% from stalling out. Let's start with business investment. Historically, business fixed investment is a lagging indicator.
That is, after residential investment (housing) and consumer spending head for the deck, then business investment follows household spending down. This pattern of business fixed investment spending lagging household spending is shown in Chart 1. On a contemporaneous basis, the correlation between the two series is 0.47. The highest correlation between the series, 0.69, occurs when household spending is advanced (leads) by two quarters.
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Tuesday, May 22, 2007
When will the Bush Credit Driven Boom Crack? / Economics / Money Supply
By: Gerard_Jackson
Unfortunately every credit fuelled boom ends in recession. Although no one can really predict the actual timing of a recession one can look out for certain danger signals, the major one being manufacturing. Once manufacturing finds itself in a profits squeeze rising costs start to bite into profit margins it will have no choice but to discharge labour, cut back on investment and reduce output.
After a while the manufacturing contraction will reach down into the consumption stages of production, at which point it will be officially declared that the economy has tanked.
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Monday, May 21, 2007
Central Bankers Playing A Global Game of Chicken with Inflation / Economics / Liquidity Bubble
By: Michael_Pento
Central banks across the globe have succeeded in creating a worldwide bull market in most asset classes and we now approach a watershed moment in international markets. Will central bankers keep fueling this rally by lowering interest rates and increasing the money supply, or will they opt to fight the inflationary spiral they created and cause this liquidity boom to dry up—sending asset prices correcting across the globe?Read full article... Read full article...
Saturday, May 19, 2007
The Dark Side of the Credit Boom / Economics / Liquidity Bubble
By: mises.org
"The bright side of the credit boom is an apparently expanding economy. Sooner or later, however, the boom is going to show its dark side. The gap between the credit and money induced increase in demand for and supply of resources becomes obvious."
by Thorsten Polleit
I. Introduction
Under today's government-controlled paper-money standards, the world's major economies have embarked upon an unprecedented expansion of credit, starting in the early 1980s. As credit growth has been outstripping economies' rise in output, total debt levels in percent of gross domestic product (GDP) have increased strongly.
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Saturday, May 19, 2007
Thoughts from the Frontline - Core Inflation vs. Headline Inflation and Real GDP vs. Nominal / Economics / US Economy
By: John_Mauldin
In this issue:
Are We There Yet?
Core Inflation vs. Headline Inflation
Real vs. Nominal
A Crack in the Consumer Armor?
Ethanol Madness
Los Angeles and Europe
Summer driving season is almost upon us. I remember more than a few long road trips with young kids, who would eventually get bored and tired and lulled into sleep, and with a stop for gas would wake up and ask, "Are we there yet?" or "Where are we?" They would be impatient to get "there" (ok, so was Dad), and the journey was something to be endured rather than enjoyed for its own sake. Today, traveling with the older kids (6 of them 18-30, with just one still at 13) is a lot different, as we look forward to the time together, with great conversation and lots of laughs.
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Friday, May 18, 2007
Henry Paulson Putting Lipstick on a Pig / Economics / US Economy
By: Peter_Schiff
As Treasury Secretary Henry Paulson continues to drum up interest in direct investment in the United States , he will rely on a set of skills that only a long-time Wall Street pro can truly master. It is part of the investment banker's playbook to perform financial makeovers on questionable companies that they are engaged to sell, a process commonly known as "putting lipstick on a pig."Read full article... Read full article...
Friday, May 18, 2007
US Has The Worst Performing Economy / Economics / US Economy
By: Money_and_Markets
I just got back from The Las Vegas Money Show, where I had a fantastic time speaking with subscribers and catching up on all the latest financial trends.
In a second, I'm going to give you a quick summary of what I told everyone at the conference. But first, I want to briefly point out something that happened in the few short days that I was gone …
I'm talking about the fact that the underperformance in commercial real estate shares, which I told you about two weeks ago , is getting worse.
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Thursday, May 17, 2007
Trapped in a Government Spending Spree / Economics / US Economy
By: TheDailyReckoning
The Mogambo Guru writes : "I deftly add the $3.7 trillion in spending by the federal government plus the $1.3 trillion by the state governments, and after a few tries I triumphantly announce that we are looking at a cool $5 trillion or more per year! Wow!"
My excuse is that I was driven insane by the incessant noise from the sensitive Mogambo Economic Seismograph System (MESS), the recording pens noisily clicking and clacking, all the time clicking and clacking, clicking and clacking as they bang back and forth, erratically scrawling and scratching a frantic graph of financial desperation and doom across that rolling strip of graph paper.
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Wednesday, May 16, 2007
US Housing Sector is Crashing, False Housing and Jobs statistics to eventually benefit Gold / Economics / US Housing
By: Jim_Willie_CB
The newest deceptions are with jobs and housing. Each is much worse than reported. The housing decline might be as much as 15% worse than reported, which leads to much bigger job loss than is reported. Most of the home construction job loss is under the table, to people not on state jobless insurance programs, and to immigrant workers paid in cash. Both fall through the statistical cracks in those home frames and plywood floors underlayments. A quick preface on the two biggest corrupted statistics first, since of paramount importance.
The US Federal Reserve will likely respond to more rapid job loss, and to more rapid home sector erosion decline. When they do, expect an official rate cut sequence to resemble that of 2001. As in, sharp & sudden. The signals surround us, that the major powers are in the process of permitting the USDollar to fall.
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Wednesday, May 16, 2007
Preparing for Weakness in the U.S Economy / Economics / US Economy
By: Money_and_Markets
I'm something of the resident bull here at Weiss Research. While Martin and Mike often take a more pessimistic view of economic events, I generally look on the sunny side. The vigorous discussions we have are great reality checks for the whole team.
As much as I hate to admit it, some of the things Martin and Mike have been talking about, as well as other recent developments, do look downright bearish to me.
The good news is that there are still reasons to be bullish, and plenty of great places to invest. I'll get to that in a moment.
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Tuesday, May 15, 2007
U.S. Consumer Prices Rising at 5.6% Y/Y in Last Three Months! / Economics / Inflation
By: Mario_Innecco
The U.S. Department of Labor reported today that the Consumer Price Index or the C.P.I. rose 0.4% on a monthly basis in the month of April. Wall Street was expecting a rise of 0.5% so Bloomberg news reported that the C.P.I. came out lower than expected and that this was a sign that inflation is abating as the economy cools!Read full article... Read full article...
Tuesday, May 15, 2007
UK Inflation falls back below 3% to 2.8%, Interest Rates still to rise to 5.75% / Economics / Inflation
By: Nadeem_Walayat
Inflation for April, as measured by the Consumer Price Index (CPI) has as anticipated fallen back below 3% to 2.8%. This follows last months shock rise to 3.1% CPI, which prompted the governor of the Bank of England to write a letter to the Chancellor explaining why inflation had exceeded the upper boundary of 3%, and guaranteed a rise in interest rates to 5.50% at last Thursdays MPC Meeting (May 10th).Read full article... Read full article...
Monday, May 14, 2007
The Rest of the World is going to Rejuvenate the US Economy? / Economics / UK Economy
By: Paul_L_Kasriel
The “core” U.S. economy is doing fine. That is, if you exclude consumer spending, business capital goods spending and housing – almost 85% of U.S. real GDP – the outlook is rosy inasmuch as exports will surely surge because of the strong economic growth in the rest of the world. Other than the fact that exports are only about 11-1/2% of real GDP, a record high, there are other problems with depending on the rest of the world to be America's economic locomotive.Read full article... Read full article...