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  • Forecast 2013: Unsustainability and Transition

    As we begin a new year, we again indulge ourselves in the annual (if somewhat futile) rite of forecasting the year ahead. This year I want to look out a little further than just one year in order to think about the changes that are soon going to be forced on the developed world. We are all going to have to make a very agile adaptation to a new economic environment (and it is one that I will welcome). The transition will offer both crisis and loss for those mired in the current system, which must evolve or perish, and opportunity for those who can see the necessity for change and take advantage of the evolution.

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  • Waving the White Flag

    For quite some time in this letter I have been making the case that for the eurozone to survive, the European Central Bank would have to print more money than any of us can now imagine. That the sentiment among European leaders was that they were prepared for such a move was clear – except for Germany, which is haunted by fears of a return to the days of the Weimar Republic and hyperinflation.

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  • Staring into the Abyss

    Choices, Debt, and the Endgame
    Staring into the Abyss
    An Unintended (and Very Negative) Consequence
    A Preview of Coming Attractions
    Hallucinogenic Data and Other Fun Activities
    Gentlemen, Choose Your Disaster
    What Europe Should Do
    South Africa and Sweden

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  • Can “It” Happen Here?

    Can “It” Happen Here?
    How Could This All Happen?
    Currencies, Culture, and Chaos
    What Causes Hyperinflation?
    A Very Frank Idea
    But What About the $70 Trillion in Off-Balance-Sheet Debt?
    New York, London, South Africa, and the Future

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  • Kicking the Can Down the Road One More Time

    In This Issue:

    Kicking the Can Yet Again
    It’s Not Just Greece
    Who is Going to Buy that Debt?
    You Have to Admire the Commitment
    The Problem with US Employment
    Washington DC, Vancouver, NYC, Maine, and now Europe

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  • Kicking the Can Down the Road

    How often did we as young kids go down the street kicking a can? 'Kicking the can down the road' is a universally understood metaphor that has come to mean not dealing with the problem but putting a band-aid on it, knowing we will have to deal with something maybe even worse in the future.

    While the US Congress is certainly an adept player at that game, I think the world champions at the present time have to be the political and economic leaders of Europe. Today we look at the extent of the problem and how it could affect every corner of the world, if not played to perfection. Everything must go mostly right or the recent credit crisis will look like a walk in the Jardin des Tuileries in Paris in April compared to what could ensue.

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  • Unintended Consequences

    Correct me if I'm wrong, but I seem to remember that one of the reasons for QE2 was to lower rates on the longer end of the US yield curve. Clearly, that has not happened? Today we look at come of the unintended consequences of monetary policy, turn our eyes briefly to consumer debt, and wonder about deflating incomes. There are a lot of very interesting things to cover. (This letter will print long, but there are a lot of graphs. Usual amount of copy.)

    But first, the are some changes and upgrades being made to the database that houses the list of my 1.5 million closest friends. That means that some of you will be reading this on the website this week, rather than having the letter sent directly to you. If this letter doesn't show up for some reason, you can always go to www.investorsinsight.com and get it directly from the website. We should be back on track by next week. Sorry for any inconvenience.

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  • Texas, Ireland and Ten Little Indians

    Why is it that the Irish must take upon themselves the debts of their banks, which in reality are debts owed to German and French banks? Why should the Germans bail out the Greeks and the Spanish? Is the spread of 'contagion' starting to taint the debt of Italy and even Belgium, the home of the EU? This week we look over the pond (of the Atlantic) and wonder how all these things will end. As I noted last week, we are getting a string of not so bad news out of the US, so now there are really just two things in the short term to worry about (at least in terms of a positive US GDP): will Congress extend the Bush tax cuts and will Europe sort itself out?

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  • First, Let's Lower the Bar

    China's currency is rising ever so slowly against the dollar. But is that hurting China? We will look at a very interesting chart and some research. And then we'll gain some more insight into why the employment numbers seemed to surprise. I guess if you lower the bar, it's easier to jump over. I also deal with the pushback from last week's Outside the Box! And Ireland is on my radar. There is a lot to cover, so let's jump in.

    I start this week's letter on a flight from Cleveland (where I was at the Cleveland Clinic meeting with my good friend and doctor Mike Roizen (of Oprah and the various 'YOU' books with Mehmet Oz) on some non-health-related business, and we talked last night about the state of health care. Mike keeps pointing out that much of our health-care cost comes from chronic diseases that are either directly or partially lifestyle choices. And he is right. The data shows it. Smoking, overeating, lack of exercise - all contribute to our health-care bills. And health care was on my mind.

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  • The Last Half

    There are a number of economic forces in play in today's world, not all of them working in the same direction, which makes choosing policies particularly difficult. Today we finish what we started last week, the last half of the last chapter I have to write to get a rough draft of my forthcoming book, The End Game. (Right now, though, it appears this will actually be the third chapter.) We will start with a few paragraphs to help you remember where we were (or you can go to www.investorsinsight.com to read the first part of the chapter).

    But first, I recorded two Conversations yesterday, with the CEOs of two biotech firms that are working on some of the most exciting new technologies I have come across. I found them very informative, and we will post them as soon as we get them transcribed.

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  • The Debt Supercycle

    I have been writing about The End Game for some time now. And writing a book of the same title. Consequently, I have been thinking a lot about how the credit crisis evolved into the sovereign debt crisis, and how it all ends. Today we explore a few musings I have had of late, while we look at some very interesting research. What will a world look like as a variety of nations have to deal with the end of their Debt Supercycle. We'll jump right in with no 'but first's' this week.

    Part of this week's writing is colored by my next conference. Next week I go to Vancouver to speak at the Agora Investment Symposium. I have a number of very good friends who will be there, both speaking and attending. This is generally a 'hard money,' gold-bug-type crowd (and a very large conference). Some (but not all) of the speakers believe that all fiat currencies, including the US dollar, will default in one way or another, either outright or through inflation, as mounting debts and out-of-control entitlement obligations force large-scale monetization, leading to high inflation if not hyperinflation.

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  • Europe Throws a Hail Mary Pass

    In a 1975 playoff game, the Dallas Cowboys were nearly out of time and facing elimination from the playoffs, down 14-10 against a very good Minnesota Vikings team. The Cowboys future Hall of Fame quarterback Roger Staubach had no very good options. He later said he dropped back to pass, closed his eyes and, as a good Catholic, said a Hail Mary and threw the ball as far as he could. Wide receiver Drew Pearson had to come back for the ball and, in a very controversial play, managed to catch the ball on his hip and stumble into the end zone. Angry Vikings fans threw trash onto the field, and one threw a whiskey bottle that knocked a referee out. After that play, all last-minute desperation passes became known as Hail Mary passes. (That was a very thrilling game to watch!)

    And that is what Europe did last weekend. They threw a Hail Mary pass in an attempt to avoid the loss of the eurozone. Jean-Claude Trichet blinked. Merkel capitulated. Today we consider what the consequences of this new European-styled TARP will be for Europe and the world. We do live in interesting times.

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  • What Does Greece Mean to You?

    How does an event like a problem in Greece (or elsewhere) affect you, gentle reader? That is the question I was posed this week. I mean, down where the rubber hits your road. Not some formula or writing about the velocity of money or the effect of taxes on GDP. 'I want to understand why you think this is so important.' So that is what I will attempt to do in this week's missive, as I write a letter to my kids trying to explain the almost inexplicable.

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  • Between Dire and Disastrous

    The news is somewhat 'All Greece, All the Time,' but most of the pieces miss the more critical elements, and in today's letter we will look at what I think those are, as well as at the important point that Greece is a precursor of a new era of sovereign risk. Plus, we glance at a few rather silly recent comments from economists. It will make for a very interesting discussion.

    A few weeks ago I mentioned my friend Sir Walt Ratterman, who was in Haiti at the time of the earthquake. Long-time readers know that every Christmas I ask you to make a donation to Knightsbridge and projects that Walt runs. You have been very generous over the years. Tragically, they have found Walt's body. For those interested, I will provide a few details about this true hero, toward the conclusion of the letter.

    Before we get into the meat of the letter, I want to give you a chance to register for my 6th (where do the years go?!) annual Strategic Investment Conference, cosponsored with my friends at Altegris Investments. The conference will be held April 22-24 and, as always, in La Jolla, California. The speaker lineup is powerful. Already committed are Dr. Gary Shilling, David Rosenberg, Dr. Lacy Hunt, Dr. Niall Ferguson, and George Friedman, as well as your humble analyst. We are talking with several other equally exciting speakers and expect those to firm up shortly.

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  • This Time is Different

    When does a potential crisis become an actual crisis, and how and why does it happen? Why did most everyone believe that there were no problems in the US (or Japanese or European or British) economies in 2006 and now we are mired in a very difficult situation. 'The subprime problem will be contained,' said now controversially confirmed Fed Chairman Bernanke, just months before the implosion and significant Fed intervention. I have just returned from Europe, and the discussion often turned to the potential of a crisis in the Eurozone if Greece defaults. Plus we take a look at the very positive US GDP numbers released this morning. Are we finally back to the Old Normal? There's just so much to talk about.

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