Daily Tweets

August 22, 2012

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“A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." ~ Ralph Waldo Emerson

“There are decades when nothing happens and there are weeks when decades happen.” ~ Vladimir Lenin

"Never Memorize What You Can Look Up in a Book" ~ Albert Einstein

Research:

IMF finds Chicago plan would eliminate inflation, reduce private debt, reduce public debt and eliminate banking crises ~ IMF

  • separated monetary and credit in the banking system, by requiring 100% backing for deposits. – I do not know enough to endorse, but worth a read

Roll Yield and Returns ~ hardassetinvestor $study

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"High Frequency Trading strategies provide liquidity when it is scarce and consume liquidity when plentiful" ~ SSRN

Jordà, Schularick, and Taylor (2011) find that more leverage results in deeper recessions and slower recoveries.

Credit: A Starring Role in the Downturn ~ Big Picture

Credit grew at twice the rate of output After World War II

· Post WWII, the correlation of inflation between OECD countries is ~ .70. The universal praise for higher inflation all but ensures a problem

How Volcker Launched His Attack on Inflation ~ Bloomberg

  • When they met, Volker asked Carter why he suddenly cared about inflation. It was because of the polls, and too late.

US:

Corporate Profit Margins chart ~ Morally Bankrupt

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Austin-area home sales up 20% in July for 14th straight month, Median sales price up 9%. ~ statesman - but there’s no inflation

Warren Buffet cancels CDS $8 Billion bet that States will pay bills ~ 4-Traders $$

The Republicans to control the Senate after 2012 Congressional Elections = 50.0% Intrade

"Consider keeping Bernanke, top Romney adviser, Glen Hubbard" ~ Reuters - this is stunning given previous party comments

Muni bonds default 36 times more than investors believe, says Fed, citing unrated bonds $MUB ~ Bloomberg

Long term impact of sequestration on defense spending is nil ~ Mercatus

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World:

What Happened After Europe’s Last Three Currency "Unions" Collapsed ~ ZeroHedge - hyperinflation. The same is said for Argentina following its dollar depegging, devaluation, and default from the dollar.

"Spiking Food Price Is Just The Beginning" ~ EconMattersunsure, but a negative for global peace

Market Volatility Indices VIX vs VSTOXX vs CHIX ~ The Economist $VIX

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Robotics plays in the Operating Room, Brain Surgery ~ bloomberg, yahoo finance

Finland’s elites fear Russia, preventing Euro exit ~ Telegraph

‘macro crisis risk is occurring in precisely those markets and economies that did not face a terrible adjustment during the recession’ ~CSFB

Canada: household debt-to-income ratios hit an average of 154.3% on mortgage credit expansion and frothy housing market ~ Reuters

‘Sweden’s banks have been hiding mortgage asset risk" ~ Bloomberg

Norwegian home prices are up 37% since 2008, Swedish banks 9%. Sweden has about a 20% public debt to gdp + budget surplus – next bubble?

Brazil: Cruzeiro bondholders crucified ~ beyondbricsBrazil has a housing bubble. Wonder how liquid CDS prices are

Goldman Sachs dissects Japan’s horrifying debt situation ~ ZH

BOJ has more sovereign bonds than all the cash in the country – 80.96T Yen vs 80.78. Fed is 1.65T in Treasuries vs 1.12T in cash ~ Bloomberg

Japan tells China their bubble is worse, risk crisis – Telegraph

China:

CBRC warns banks over growing foreign exchange risks as amid increasing devaluation expectations of the RMB ~ China Daily $USDCNY

Chinese corporate bond spreads offshore have hit post crisis lows diverging from equities – odd, not safe, lots of debt/accounting issues

China’s Banks Risk Credit Crunch – NPLs are sitting around 1%, which no one believes and damaging credibility ~ WSJ

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~95% of Fortune 500 companies operating in China will have collective wage bargaining by the end of 2013 ~ China Daily

Chinese universities graduate 7 million bachelor degree-holders, but the party admits only 1 million of these – T-Square was led by students

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