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Free-Riding Investors Set up Markets for a Major Collapse
Free-Riding Investors Set up Markets for a Major Collapse Free riding is one of the oldest problems in economics and in society in general. Simply put, free riding describes a situation where one party takes the benefits of an economic condition without contributing anything to sustain that condition. The best example is a parasite on […]
10 Years Later, a Debt Crisis Is Building Again
10 Years Later, a Debt Crisis Is Building Again Though it seems like only yesterday, it’s been a decade since my former employer, Lehman Brothers went bankrupt, and in the process, helped instigate a massive global financial crisis. That collapse catapulted the Federal Reserve on a mission to, in its own narrative, save the economy […]
Don’t Miss the Signs of Another Slow-Motion Meltdown
Don’t Miss the Signs of Another Slow-Motion Meltdown If you’ve ever lived through a life-threatening emergency — whether a car crash, train wreck or a steep fall (hopefully not) — you have noticed that time seems to slow down. You witness your personal jeopardy in slow motion. A memorable example of this is the film […]
You Should Fear the Emerging Market Debt Bubble
You Should Fear the Emerging Market Debt Bubble Global debt has ballooned since the financial crisis as central banks have distorted markets and fueled debt bubbles in particular. A lot of the increase in global debt has come from emerging market (EM) economies, especially China. In fact, a record amount of EM debt has accumulated […]
Prepare for a Chinese Maxi-devaluation
Prepare for a Chinese Maxi-devaluation The news is being dominated by breathless headlines about the new trade war between the U.S. and China. But this trade war has been brewing for years and came as no surprise to readers of my newsletter, Project Prophesy. In fact, the new trade war is simply a continuation of […]
The Fed Is on a Collision Course
The Fed Is on a Collision Course Is the Trump economic boom a mirage? The data say yes, but the Fed models say no. The Fed has a long track record of sticking to its model-based approach and missing major turns in the U.S. economy. Current Fed policy will push the U.S. economy to the […]
A New Global Debt Crisis Has Begun
A New Global Debt Crisis Has Begun Emerging-market debt crises are as predictable as spring rain. They happen every 15–20 years, with a few variations and exceptions. In recent decades, the first crisis in this series was the Latin American debt crisis of 1982–85. The combination of inflation and a commodity price boom in the […]
The “Axis of Gold” Just Got Stronger
The “Axis of Gold” Just Got Stronger As you probably know by now, President Trump backed out of the nuclear deal with Iran and is re-imposing harsh sanctions. And just this morning, Trump announced that he’s canceling the much-anticipated nuclear summit with North Korean leader Kim Jong Un because of Kim’s recent belligerent comments. What […]
“Ice Nine” Comes to China
“Ice Nine” Comes to China The war on cash has been going on for decades. The U.S. abolished the $500 bill in late 1969. (The old $500 bill featured a portrait of President William McKinley, by the way. I remember seeing a few when I was a kid.) Today’s $100 bill is only worth 10 […]
Four Flashpoints of Volatility
Four Flashpoints of Volatility 1 – Trade Wars Flashpoints, From China to Canada and Mexico Wall Street has knee-jerk reactions to any trade war related headlines. There are legitimate reasons to be concerned about trade wars. The world is increasingly more connected than ever. Many major American companies that are household names such as Starbucks […]
Why Trade Wars Will Unleash Central Banks
Why Trade Wars Will Unleash Central Banks There’s been an abundance of coverage surrounding the recent steel and aluminum tariffs. Those measures could hurt more sectors than they help within the U.S. In particular, it could damage businesses that require metals because they’ll have to pay more for raw materials. Trade wars also escalate geopolitical […]
Russia’s Real Endgame
Russia’s Real Endgame Russia’s Putin has never taken his eye off the ball. His ambition is not global hegemony or European conquest. Putin seeks what Russia has always sought: regional hegemony and a set of buffer states in eastern Europe and central Asia that can add to Russia’s strategic depth. In Syria, Russia has the […]
Is This the Moment of Truth?
Is This the Moment of Truth? One of the most famous passages in American literature occurs in Chapter 13 of Ernest Hemingway’s The Sun Also Rises. It takes place in a café in Pamplona, Spain during the running of the bulls. Bill Gorton, a friend of the protagonist, Jake Barnes, has just arrived from New […]
Central Bank Money Rules the World
Central Bank Money Rules the World Central bank credit that supports markets — is not just creation of the Fed, but by central banks and institutions around the world colluding together. Global markets are too deeply connected these days to consider the Fed in isolation. Since last month’s correction, the world has been watching the […]
Central Banks Have Killed Free Trade
Central Banks Have Killed Free Trade Defenders and critics of “free trade” and globalization tend to present the issue as either/or: It’s inherently good or bad. In the real world, it’s not that simple. The confusion starts with defining free trade (and by extension, globalization). In the classical definition of free trade espoused by 18th […]
