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If I could strike one word from Wall Street’s dictionary, it would be “Bubble”. It is too often used in place of actual research and now seems to simply denote any asset that rises quickly in value, gets broader attention, and then rises some more. Even worse, since the Financial Crisis the word only seems more popular. Calling bubbles has reached its own bubble…

But since the word’s usage in finance is too entrenched to wipe it away, we should at least differentiate between systemically harmful bubbles and simple curiosities. For example:

Harmful: the NASDAQ bubble in 1999/2000 caused $2 trillion of value destruction when it burst in late 2000 – 2002. It had a hand in slowing US growth and damaged a whole generation of investors’ confidence in equity markets.

Nearly deadly: the 2007 US housing bubble set up the Financial Crisis and Great Recession, with global effects running to the tens of trillions of dollars.

Curiosity: by contrast, this year’s bursting of the crypto currency bubble was much less meaningful both in terms of size ($620 billion lost from January 7th peak to now) and impact on the broader global economy (essentially zero).

Curiosity: legal marijuana stocks – the latest group stuck with the “bubble” moniker, are even smaller than crypto currencies. The largest one by market cap – Canopy Growth – has a market cap of $15 billion. Tilray’s market cap is $13.5 billion. Aurora Cannabis’ market cap is $9.0 billion, and Cronos Group is $2.4 billion.
If they all got cut in half tomorrow, it wouldn’t matter to anyone other than current holders.

To our thinking, the more interesting question about bubbles is “Why do they form in the first place and how can I be early in finding them?” As far as we can see, every investment mania of the modern era is the same and has varying degrees of these 5 features:

…click on the above link to read the rest of the article…

Yellen Wants Fed to Commit to Future Booms to Make Up for Busts

September 15, 2018

Yellen Wants Fed to Commit to Future Booms to Make Up for Busts

Former Fed Chair Yellen promotes “Lower for Longer”, a policy in which the Fed knowingly keeps interest rates too low.

Here’s the asinine policy proposal of the day: Fed Should Commit to Future ‘Booms’ to Make Up for Major Busts.

The U.S. Federal Reserve should commit to letting economic booms run on enough to fully offset collapses like the 2007 to 2009 Great Recession, former Fed chair Janet Yellen said on Friday, urging the central bank to make “lower-for-longer” its official motto for interest rates following serious downturns.

Elaborating on how the central bank should think about what to do if rates have to be cut to zero again in the future and can’t go any lower, she said the Fed should promise now that it will keep rates low enough to let a hot economy make up for lost time.

“By keeping interest rates unusually low after the zero lower bound no longer binds, the lower-for-longer approach promises, in effect, to allow the economy to boom,” Yellen said in remarks delivered at a Brookings Institution conference. “The (Federal Open Market Committee) needs to make a credible statement endorsing such an approach, ideally before the next downturn.”

What We Are Doing Already

The official policy is what we are doing already. May as well make a policy out of it.

The caveat, of course, is the Fed does not realize what it’s already doing.

Ass Backward

There is one more major flaw. It’s ass Backward. We have major busts because the Fed blew major bubbles.

The dotcom bubble arose when Fed Chairman Alan Greenspan held interest rates too low, too long with irrational fears of a Y2K disaster.

The housing bubble was a direct result of Greenspan holding rates too low, too long in the wake of dotcom and 911 disaster.

…click on the above link to read the rest of the article…

Warren Buffett Explains Bubbles: But He Doesn’t Know We Are In One

September 13, 2018

Warren Buffett Explains Bubbles: But He Doesn’t Know We Are In One

Buffet explains bubbles: “People see neighbors ‘dumber than they are’ getting rich.”

Warren Buffett explains Why Bubbles Happen

Buffett was asked by CNBC’s Andrew Ross Sorkin if he is worried another crisis will happen again.

“Well there will be one sometime,” Buffett said in an interview for CNBC’s “Crisis on Wall Street: The Week That Shook the World” documentary. The documentary airs Wednesday night at 10 p.m. ET/PT.

“People start being interested in something because it’s going up, not because they understand it or anything else. But the guy next door, who they know is dumber than they are, is getting rich and they aren’t,” he said. “And their spouse is saying can’t you figure it out, too? It is so contagious. So that’s a permanent part of the system.”

That last paragraph perfectly explains Bitcoin. Most of those investing in cryptos have little idea how they work, or what they are even buying.

Buffet made no mention of the corporate bond bubble, the equities bubble, or even the crypto bubble. He does not see any bubbles now, at least that he mentioned.

Symptom or Cause?

Buffett confuses a symptom (rampant speculation) with the true cause

The Fed (central banks in general), keep interest rates too low, too long
Fractional reserve lending
Moral hazards like bank bailouts
Poor fiscal policies and massive government debt

In short, there is no free market in anything and thus no valid price discovery. There would always be speculation, but Fed policies and fractional reserve lending are the root cause of bubbles.

Not Just Fangs: Manias and Echo Bubbles Abound

August 5, 2018

Not Just Fangs: Manias and Echo Bubbles Abound

It’s not just the FANGs investors should be worried about. A Tweet and an article explain.

✔

“With the FANG stocks faltering lately investors are starting to become concerned about their impact on the broader market. And there is certainly something to this.”https://app.hedgeye.com/insights/69386-it-s-more-than-just-fang-stocks-investors-should-be-worried-about?type=guest-contributors …

6:17 PM – Aug 3, 2018

It’s More Than Just FANG Stocks Investors Should Be Worried About

What investors really should be worried about then is the possibility that the reappraisal of the FANG stocks is representative of a much wider reappraisal that began back in February.

app.hedgeye.com

Echo Bubbles Abound

Pater Tenebrarum at Acting Man discusses Stock Market Manias of the Past vs the Echo Bubble.

The Big Picture

The diverging performance of major US stock market indexes which has been in place since the late January peak in DJIA and SPX has become even more extreme in recent months. In terms of duration and extent, it is one of the most pronounced such divergences in history. It also happens to be accompanied by weakening market internals, some of the most extreme sentiment and positioning readings ever seen and an ever more hostile monetary backdrop.

The above combination is consistent with a market close to a major peak – although one must always keep in mind that divergences can become even more pronounced – as was for instance demonstrated on occasion of the technology sector blow-off in late 1999 – 2000.

Along similar lines, extremes in valuations can persist for a very long time as well and reach previously unimaginable levels. The Nikkei of the late 1980s is a pertinent example for this. Incidentally, the current stock buyback craze is highly reminiscent of the 1980s Japanese financial engineering method known as keiretsu or zaibatsu, as it invites the very same rationalizations.

…click on the above link to read the rest of the article…

Weekly Commentary: Q1 2018 Z.1 Flow of Funds

June 9, 2018

Weekly Commentary: Q1 2018 Z.1 Flow of Funds

The first-quarter 2018 Z.1 “flow of funds” report can be viewed in two ways. From one perspective, key conventional data are un-extraordinary. Household debt expanded at a 3.3% rate during the quarter, down from Q4’s 4.6%. Home Mortgage borrowings slowed from 3.4% to 2.9%. Total Business debt grew at a 4.4% pace, unchanged from Q4 and down from Q1 ’17’s 6.1%. Financial sector borrowings were little changed, after expanding 1.6% during Q4. Bank lending was, as well, unremarkable.

From another perspective, extraordinary Credit growth runs unabated. Total System (non-financial, financial and foreign) Credit expanded at a (record) seasonally-adjusted and annualized rate (SAAR) of $3.513 TN during 2018’s first quarter, compared to Q4’s SAAR $1.411 TN and Q1 ’17’s SAAR $860 billion. This booming Credit expansion was fueled by an SAAR $2.519 TN increase of federal borrowings. Granted, this was partially a makeup from Q4’s slight contraction in federal debt growth.

In nominal dollars, Total U.S. System Credit expanded a blazing $962 billion during Q1 to a record $69.717 TN (349% of GDP). Non-financial Debt (NFD) expanded a record (nominal) $874 billion, with one-year growth of $2.413 TN. One must return to booming 2007 for a larger ($2.508 TN) four quarter-period of Credit expansion. NFD ended Q1 at a record $49.831 TN, matching a record 250% of GDP. NFD expanded $4.086 TN over the past two years, the strongest expansion since ’07/’08.

Outstanding Treasury Securities ended Q1 at a record $17.046 TN, increasing a nominal $615 billion during the quarter. Treasury Securities jumped $1.172 TN during the past four quarters and $1.669 TN over two years. Outstanding Treasury Securities has increased $10.995 TN, or 182%, since the end of 2007. Treasury debt-to-GDP ended Q1 at 85%, more than double 2007’s 41%. It’s worth adding that total Treasury and Agency Securities ended Q1 at a record $25.920 TN, or 130% of GDP.

…click on the above link to read the rest of the article…

All US Homes Are Overvalued

June 9, 2018

All US Homes Are Overvalued

Dorothea Lange Children and home of cotton workers at migratory camp in southern San Joaquin Valley, CA 1936

My long time pal Jesse Colombo, now at Real Investment Advice, recently linked on Twitter to a Zero Hedge article, which quoted CoreLogic as saying more than half of American homes are overvalued. CoreLogic calls itself “a leading provider of consumer, financial and property data, analytics and services to business and government.”

Well, CoreLogic is way off. All American homes are overvalued. How can we tell? It’s easy. It’s so easy it’s perhaps no wonder that people overlook the reasons why. But we all know them: The Fed has pushed some $20 trillion down the throats of the financial system. It has also lowered interest rates to near zero Kelvin. Then the government added a “relaxation” of lending standards and an upward tweak of credit scores. And Bob’s your uncle.

These measures haven’t influenced just half of US homes, they’ve hit every single one of them. Some more than others, not every bubble is as big as San Francisco’s, but the suggestion that nearly half of homes are not overvalued is simply misleading. It falsely suggests that if you buy a home in the ‘right’ place, you’ll be fine. You won’t be. The Washington-induced bubble will and must pop, and precious few homes will be ‘worth’ what they are ‘worth’ today.

Here’s what Jesse tweeted along with his link to the Zero Hedge article:

“Almost half of the US housing market is overvalued” – this is why U.S. household wealth is also overvalued/in an unsustainable bubble.

He followed up with:

U.S. household wealth is in a bubble thanks to Fed-inflated asset prices. This is creating a “wealth effect” that is helping to drive our spurious economic recovery. This economy is nothing but a sham. It’s smoke and mirrors. Wake the F up, everyone!!!

…click on the above link to read the rest of the article…

Weekly Commentary: Old Roach Motel

May 8, 2018

Weekly Commentary: Old Roach Motel

One hundred and six months. The current expansion, having emerged in the aftermath of the collapse of the mortgage finance Bubble, is now the second-longest on record (lagging only the 120-month 1990’s Bubble period). The unemployment rate dropped to 3.9% last month, the lowest level since the 3.8% print in April 2000. Corporate earnings are at unprecedented levels and stock prices only somewhat below records. Home prices in most markets are at all-time highs. U.S. GDP is forecast to expand 2.8% this year, just below 2015’s (2.9%) 12-year high.

We should be leery of prolonged expansions. The longer a boom, the greater the opportunity for deep-rooted structural impairment. Back in 2013, I proposed the concept of “Government Finance Quasi-Capitalism.” This was updating previously updated Hyman Minsky analysis. Minsky’s “Stages of Development of Capitalist Finance” seems especially relevant these days:

Minsky: “In both Keynes and Schumpeter the in-place financial structure is a central determinant of the behaviour of a capitalist economy. But among the players in financial markets are entrepreneurial profit-seekers who innovate. As a result these markets evolve in response to profit opportunities which emerge as the productive apparatus changes. The evolutionary properties of market economies are evident in the changing structure of financial institutions as well as in the productive structure… To understand the short-term dynamics of business cycles and the longer-term evolution of economies it is necessary to understand the financing relations that rule, and how the profit-seeking activities of businessmen, bankers and portfolio managers lead to the evolution of financial structures.”

Minsky saw the evolution of capitalist finance as having developed in four stages: Commercial Capitalism, Finance Capitalism, Managerial Capitalism and Money Manager Capitalism. “These stages are related to what is financed and who does the proximate financing – the structure of relations among businesses, households, the government and finance.” (CBB 12/28/2001 “Financial Arbitrage Capitalism”)

…click on the above link to read the rest of the article…

Subprime Auto Implosion In Full Effect As Lenders Start Dropping Like Flies

April 8, 2018

Subprime Auto Implosion In Full Effect As Lenders Start Dropping Like Flies

We are in the midst of watching the subprime auto lending bubble burst in its entirety. Smaller subprime auto lenders are starting to implode, and we all know what comes next: the larger companies go bust, inciting real capitulation.

In addition to our coverage out just days ago talking about how the subprime bubble has burst and, since then since has been crunched even further, additional reports today are showing that smaller subprime lenders are starting to simply implode after being faced with losses and defaults. In addition to losses and defaults, Bloomberg reported this morning that there have been allegations of fraud and under reporting losses, tactics that are clearly reminiscent of <throw a dart at any financial crisis/bubble burst over the last 30 years>:

Growing numbers of small subprime auto lenders are closing or shutting down after loan losses and slim margins spur banks and private equity owners to cut off funding.

Summit Financial Corp., a Plantation, Florida-based subprime car finance company, filed for bankruptcy late last month after lenders including Bank of America Corp. said it had misreported losses from soured loans. And a creditor to Spring Tree Lending, an Atlanta-based subprime auto lender, filed to force the company into bankruptcy last week, after a separate group of investors accused the company of fraud. Private equity-backed Pelican Auto Finance, which specialized in “deep subprime” borrowers, finished winding down last month after seeing its profit margins shrink.

The article continues:

The pain among smaller lenders has parallels with the subprime mortgage crisis last decade, when the demise of finance companies like Ownit Mortgage and Sebring Capital Partners were a harbinger that bigger losses for the financial system were coming. In both cases, rising interest rates helped trigger more loan losses.

…click on the above link to read the rest of the article…

Subprime Auto Bubble Bursts As “Buyers Are Suddenly Missing From Showrooms”

April 3, 2018

Subprime Auto Bubble Bursts As “Buyers Are Suddenly Missing From Showrooms”

It was less than a month ago when we showed a series of “10 charts revealing an auto bubble on the brink“, and which laid out several very troubling trends, including i) the average new vehicle loan hit a record high $31,099; ii) the average loan for a used auto climbed to a record high $19,589…

… iii) the average monthly payment for a new and used vehicle hitting an all-time high of $515…

… iv) the average auto loan hit a duration of 69 months, while the average used vehicle loan has a term of just over 64 months, both rising to new record highs for yet another quarter.

… v) the average price paid for a new vehicle also hitting an all-time high of $35,176, according to Edmunds.com, almost entirely as a result of a massive expansion in consumer credit and record amounts of auto loans.

Summarizing the above is simple: cheap credit leads to easy lending conditions, and record prices as everyone floods into the market with lenders hardly discriminating who they give money to.

But, as we said in March, the key data which seems to suggest that the auto bubble may have run its course came from the following charts which showed that traditional banks and finance companies are starting to aggressively slash their share of new auto originations while OEM captives are being forced to pick up the slack in an effort to keep their ponzi schemes going just a little longer.

Commenting on these trends, Melinda Zabritski, Experian’s senior director of automotive finance solutions warned that “we’re certainly at a point where affordability is a question. When you look at how much income you need to support that payment, it certainly is higher than your average individual income.” And nowhere was this more obvious than the auto sector’s overreliance on stretched subprime borrowers, who remained the marginal source of auto demand as long as rates remained low.

…click on the above link to read the rest of the article…

The Future Ain’t What It Used To Be

March 31, 2018

The Future Ain’t What It Used To Be

Looks like we’re in for a much rockier ride than many expect

This marks our our 10th year of doing this. And by “this”, we mean using data, logic and reason to support the very basic conclusion that infinite growth on a finite planet is impossible.

Surprisingly, this simple, rational idea — despite its huge and fast-growing pile of corroborating evidence — still encounters tremendous pushback from society. Why? Because it runs afoul of most people’s deep-seated belief systems.

Our decade of experience delivering this message has hammered home what behavioral scientists have been telling us for years — that, with rare exceptions, we humans are not rational. We’re rationalizers. We try to force our perception of reality to fit our beliefs; rather than the other way around.

Which is why the vast amount of grief, angst and encroaching dread that most people feel in western cultures today is likely due to the fact that, deep down, whether we’re willing to admit it to ourselves or not, everybody already knows the truth: Our way of life is unsustainable.

In our hearts, we fear that someday, possibly soon, our comfy way of life will be ripped away; like a warm blanket snatched off of our sleeping bodies on a cold night.

The simple reality is that society’s hopes for a “modern consumer-class lifestyle for all” are incompatible with the accelerating imbalance between the (still growing) human population and the (increasingly depleting) planet’s natural resources. Basic math and physics tell us that the Earth’s ecosystems can’t handle the load for much longer.

The only remaining question concerns how fast the adjustment happens. Will the future be defined by a “slow burn”, one that steadily degrades our living standards over generations? Or will we experience a sudden series of sharp shocks that plunge the world into chaos and conflict?

It’s hard to say. As Yogi Berra famously quipped, “It’s tough to make predictions, especially about the future.” So, it’s left to us to remain open-minded and flexible as we draw up our plans for how we’ll personally persevere through the coming years of change.

But even while the specifics about the future elude us today, “predicting” the macro trends most likely to influence the coming decades is very doable:

…click on the above link to read the rest of the article…

Japanese Bubble Bursting Playbook

March 10, 2018

JAPANESE BUBBLE BURSTING PLAYBOOK

Every now and then I stumble across a new source of information that I can’t wait to share with my readers. Today is one of those days. If you have even the tiniest shred of interest in commodities, then head over to the Goerhring & Rozencwajg website immediately. It’s just terrific stuff.

I must admit to being partial to their bullish commodity story, but in a recent RealVision TVinterview, Leigh Goehring solved a problem that I have wrestled with for some time.

What if China rolls over?

We all know the China bear story. For the past couple of years, famed China skeptics like Jim Chanos (FT Article – “China:market bulls beat the short sellers – for now”) and Kyle Bass (Reuters Article – “China credit bubble ‘metastasizing’”) have been warning about a China credit bubble implosion. Although I am hopeful that China will avoid the apocalyptic scenario they paint, there is a little part of me that worries when I am betting against Chanos.

Chanos might have lost the Tom Selleck mustache (and in the process, given away a fair amount of his hipster cred), but I hate being on the other side of his trade. I am pretty sure God has an account at Kynikos Accociates. They are simply that good.

So I have always struggled with being long commodities in the face of a potential China credit implosion. After all, China is the world’s largest importer and user of commodities, a slowdown would be catastrophic for commodities, right?

Not so fast. As Leigh Goehring so aptly notes, a great analogy for a potential China credit crisis would be the Japanese credit collapse of 1990.

There can be no denying that in the wake of the Japanese bubble bursting, their economy suffered a credit contraction that rivals the world’s greatest slowdowns. Given this horrible setback, it would be logical to conclude that Japan’s commodity usage suffered a similar contraction.

…click on the above link to read the rest of the article…

Chart Predicts Every Market Crash in History

March 1, 2018

Chart Predicts Every Market Crash in History

The Fed blows bubbles. Then it eventually pops them. Where are we in the cycle?

Bill Bonner writes This Has Predicted Every Market Crash in History.

I recreated the chart in Fred and added trendlines. But let’s tune in to Bill Bonner.

“Buy the dip” has worked for the last 38 years. And now, investors are more than 100% convinced that it will work again. But they are wrong. Every major stock market decline and every recession in the last 100 years was preceded by the Federal Reserve raising short-term interest rates by enough to provide the pin to prick the balloon.

Note the emphasis on every. Yes, there have been periods where the Fed raised rates and a recession didn’t ensue. Everyone knows the famous saying about the stock market having predicted nine of the past five recessions! That may be true, that rising rates don’t necessarily cause a recession. But as an investor, you must be aware that every major stock market decline occurred on the heels of a tightening phase by the Fed. More importantly, there have been no substantive Fed tightening phases that did not end with a stock market decline.*

This is an economy built on debt. The whole capital structure – stocks, bonds, and real estate – now depends on excess debt… and more of it.

In a correction, the only way to stop stock prices from falling and the economy from shrinking is to bring in some more debt. But when you do that a few times, you are soon beyond Peak Debt… which is to say, you’re way over the legal limit.

Debt has been growing three to six times faster than income for more than an entire generation. This makes the old 1.5-to-1 ratio of debt to income seem quaint. It is now 3.5-to-1 nationwide.

…click on the above link to read the rest of the article…

Stock Market’s Massive Moves Not Seen Since Great Recession: Many who didn’t see the bubble bursting have fallen

February 18, 2018

Stock Market’s Massive Moves Not Seen Since Great Recession: Many who didn’t see the bubble bursting have fallen

Talk about the market busting a move … and a lot of people! In less than half a month, the Trump Rally lost a third of the height it had developed over a period of sixteen months — the worst two-week drop since February 2009. (The market’s moves are so extreme by many measures that the Great Recession is the closest touchstone one can find to assay the last two weeks of market action.)Most of the plummeting happened in two record-breaking 1,000-point plunges with the total fall taking all indices into the red for 2018. The remaining two-thirds of the Trump Rally remains at peril as the market probes downward to potentially test its 200-day moving average, with the Dow having readily broken through the 50-day and 100-day and now testing its 150-day average:

A break through the 200-day moving average would likely trigger an even larger sell-off as the last major technical support gives way. To give some perspective on the cliff we just leaped off of, look at every move from the cliff-dive into the Great Recession to the present:

Ah, a picture’s worth a thousand words. That’s the plunge so far, but one of the things I said would make the difference between a normal correction of top-heavy prices and an all-out crash would be how much momentum the downdraft developed — enough momentum and the dive will be hard to stop. Well, this just in:

That’s “ever!” Not just worst since we crashed into the Great Recession (which we are still in, as far as I’m concerned, as we have merely existed propped up on life support while all flaws of the Great Recession remained). Clearly, this fall is already equal in steepness and depth to the worst the Great Recession had to offer and greater than any drop since.

…click on the above link to read the rest of the article…

On Closer Inspection, Debt of Bankrupt Spanish Construction Firm Grows Four-Fold

February 18, 2018

On Closer Inspection, Debt of Bankrupt Spanish Construction Firm Grows Four-Fold

What happens if cases like this prove to be the rule rather than the exception?

Spain appears to have a brand-new Abengoa — the imploded energy giant whose fabulous accounting tricks pushed creditors into a black hole — on its hands: Isolux was until recently a fairly large privately owned infrastructure company with operations spanning the globe.

When the group declared bankruptcy last July, its cash flow in Spain was barely enough to cover a month’s operating costs. The group had a a total workforce of 3,884 and 119 infrastructure projects under development of which 39 were still operational and the remaining 90 had been halted.

The company tried to reduce its debt addiction through agreements with investment funds but they fell through. It also made two attempts to go public, in Brazil and Spain. Both failed.

The bankruptcy proceedings affected seven subsidiaries. At the time, the company stated that it owed €405 million to suppliers, that its total financial debt — including those companies not included under the Spanish Insolvency Act filing — was €1.3 billion, of which €557 million was associated with project financing, and that the total deficit on the group’s balance sheet was about €800 million.

Turns out, according to the bankruptcy receivers, the shortfall is actually €3.8 billion — four-and-a-half times the company’s original estimate — and the group’s total debt, at €5.7 billion, is over €4 billion more than the amount stated by the company 10 months ago.

This amount does not include the group’s dual or contingent liabilities. The receiver’s report concludes that the current situation will probably culminate in the liquidation of the entire group.

How did all this come to pass? According to the receiver’s report, the collapse of the real estate bubble in Spain and the drastic reduction in public work tenders during the crisis led Isolux to massively expand its international operations, as many large Spanish companies did in the aftermath of the housing bubble collapse.

…click on the above link to read the rest of the article…

Danielle DiMartino Booth: Don’t Count On The Powell Fed To Rescue The Markets

February 12, 2018

Danielle DiMartino Booth: Don’t Count On The Powell Fed To Rescue The Markets

The new Fed Chair may break from his predecessors

The recent gut-wrenching drop in asset prices began on the first day of the job for new Federal Reserve Chairman Jerome Powell.

How is Mr. Powell likely to react to a suddenly sick-looking market? Will he step in forcefully to reassure investors that there’s a “Powell put” in place as a backstop?

To address these questions, former analyst at the Federal Reserve Bank of Dallas, Danielle DiMartino Booth, returns to the podcast this week. In her opinion, having studied Powell’s previous statements, she thinks those expecting him to continue the market support his predecessors provided will likely be quite disappointed.

Powell appears to be no large fan of continued quantitative easing, and has long been on the record as concerned about the eventual pain its unwind will cause. He very well may resist riding to the market’s rescue at this time, allowing natural market forces to finally have their way:

Look, this is a message that market participants do not want to hear: It is not the Federal Reserves job to put a floor under risky asset prices.

Compare and contrast Jerome Powell’s silence in the wake of the flash crash on his first day at work to Alan Greenspan — who got on an airplane the day after the Black Monday crash of 1987, canceling an appearance he was to have made, and reassuring the markets with a statement on Tuesday morning that the Federal Reserve was standing by and ready and willing and available to satisfy any kind of disruption in the banking and financial systems. That was the day — October 20, 1987 — that the Greenspan put was born.

…click on the above link to read the rest of the article…

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