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  • China’s Minsky Moment?

    In speeches and presentations since the end of last year, I have been saying that I think the biggest macro problem in the world today is China. China has run up a huge debt, and the payments are coming due. They seem to be proactive, but will it be enough? How much risk do they pose for the global system?

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  • Rich City, Poor City

    For the past two weeks we've been exploring the problems of state pension funds. This week we will conclude our look at pension plans for the nonce with a 30,000-foot overview of the states and then take a deeper dive into one city: mine. This will give you at least one version of how to do your own homework about your own hometown. But fair warning, depending on your locale, you may need medical help or significant quantities of an adult beverage after you finish your research. Then again you may be pleasantly surprised and congratulate yourself on choosing a particularly adept hometown. And be on notice that, no matter what your personal conclusion and how well-grounded your analysis is, there will be people who live in your neighborhood who think you are utterly full of, well, let's just say "nonsensical matter" and leave it at that. This is a family letter.

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  • Unrealistic Expectations

    Way back in the Paleozoic era (as far as markets are concerned), circa 2003, I wrote in this letter and in Bull's Eye Investing that the pension liabilities of state and municipal plans would soon top $2 trillion. This was of course far above the stated actuarial claims at the time, and I was seen as such a pessimist. Everyone knew that the market would compound at 9%, so any problems were just a rounding error.

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  • Signs of the Top

    The investment media seems obsessed with the question of whether the Fed will taper. The real question should be not about "tapering" but about credibility. What happens when fundamentals become the narrative as opposed to what the central bank is doing? What happens if the Federal Reserve throws a liquidity party and nobody comes? Today we look at some of the fundamentals. The market is in fact overvalued, but that doesn't mean it can't become more overvalued. Is this August 1987 or August 1999?

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  • The Bang! Moment Shock

    What is it about humans that we fail to see a crisis in advance, yet when we look back, its likelihood or inevitability so often seems blindingly obvious? Rather than a flaw, our under-reliance on foresight as opposed to hindsight is perhaps a necessary evolutionary design feature that has allowed us to make rapid progress as a species (especially over the last few thousand years), but in a complex modern society it can really create quite the crisis for individuals. This week we resume our musings about Cyprus, to see what that tiny island can teach us about our own personal need to engage in ongoing critical analysis of our lives and investment portfolios. Cyprus is not Greece or France or Spain or Japan or the US or … (pick a country). I get that. No two situations are the same, but there may be a rhyme or two here that is instructive.

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  • “This Country Is Different”

    I find myself finishing this letter on an island off the coast of Croatia, on the backside of the middle of nowhere. But it is the perfect place to contemplate my recent experience in Cyprus. Through the efforts of your fellow readers, I was able to meet a wide variety of people and have some in-depth discussions on the crisis that has enveloped Cyprus. And while the details are different, of course, there is a pattern to the weave, so to speak, that calls to mind various aspects of the crisis that began in 2008. And perhaps that pattern will give us a glimpse of what else may be coming our way.

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  • Economic Singularity

    "Concern about politics and the processes of international co-operation is warranted but the best one can hope for from politics in any country is that it will drive rational responses to serious problems. If there is no consensus on the causes or solutions to serious problems, it is unreasonable to ask a political system to implement forceful actions in a sustained way. Unfortunately, this is to an important extent the case with respect to current economic difficulties, especially in the industrial world.

    "While there is agreement on the need for more growth and job creation in the short run and on containing the accumulation of debt in the long run, there are deep differences of opinion both within and across countries as to how this can be accomplished. What might be labelled the 'orthodox view' attributes much of our current difficulty to excess borrowing by the public and private sectors, emphasises the need to contain debt, puts a premium on credibly austere fiscal and monetary policies, and stresses the need for long-term structural measures rather than short-term demand-oriented steps to promote growth.

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  • A Graphic Presentation

    The US employment numbers came out this morning, and they were disappointing. But disappointing does not begin to describe the situation I read about today in Europe. I have just finished up with my conference in Carlsbad, California and am getting back to the room late. I have to get up in a few hours (4 AM is rather obscene) to fly to Tulsa to see my daughter graduate from university, but wanted to drop you a note as I normally do on Friday night. But given the time and the need for some sleep, tonight I will draw your attention to the writing of a few friends and some of the more interesting charts I saw at the conference. It will be a shorter letter than usual, but we will uncover a few real nuggets; and next week I will be back to a more normal writing schedule.

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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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  • European Summit: A Plan with No Details

    A Definite Plan (Minus Those Sticky Details)
    Dear Mario
    When Leverage Is the Kind-of Answer
    Meanwhile Back in Portugal
    Let’s Just Change the Rules
    San Francisco, Kilkenny, Atlanta, DC … and the World Series Loss

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  • Catastrophic Success

    400 Billion Yellow Aspirins
    The US Government Is in the “No-Money-Down” Mortgage Business
    Crash Alert?
    Is Social Security a Ponzi?
    Catastrophic Success
    Europe, and Breaking the Light-Speed Barrier

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  • The Recession of 2011?

    The Recession of 2011?
    The Streettalk/Mauldin Economic Output Index
    Is There a Recession in Our Future?
    The Bright Side of Europe’s Dysfunctionality
    The “Treasonous” Fed
    Some Final Thoughts
    Some Hope and Needed Help, Plus Travels

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  • An Economy at Stall Speed

    In This Issue:

    An Economy at Stall Speed
    Is There a Recession in Our Future?
    What I Told the Senators
    Escalating Eurozone Interbank Liquidity Crisis: Dollar-Euro Impact?
    Time for Friends, Fish, and Wine

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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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  • Back to the Basics

    In This Issue:

    GDP = C + I + G + Net Exports
    Increasing Productivity
    The Trillion Dollar Question
    A Summer of Ultimatums
    Vancouver, New York, and Maine

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