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  • The Plight of the Working Class

    In This Issue:

    The Plight of the Working Class
    Can You Say Jobless Recovery?
    Drowning in Debt but Getting No Growth
    The Cancer of Debt
    New York, Portland and La Jolla

    Clowns to the left of me, Jokers to the right,
    Here I am, stuck in the Muddle Through Middle with you!
    –With thanks to Stealers Wheel

    ...
  • There’s a Slow Train coming

    The question before the jury is a simple one, but the answer is complex. Is the US in a 'V' shaped recovery? Are we returning to the old normal? A great deal hinges on the answer, and this week we look at some of the evidence before us.

    But first, a follow-up thought to last week's letter. I wrote about why countries can reduce their private debt, reduce their public debt or run a trade deficit, but not all three at the same time. If a country wants to see its government run a fiscal surplus (or small deficit) and at the same time its private citizens want to reduce their leverage (common desires throughout the developed world), it must run a trade surplus. That's a simple accounting statement.

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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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  • The Problem With Deleveraging

    In general, we consider it a good thing to save money and to 'owe no man anything save love.' But what happens when a debt-happy society wakes up and decides that saving is a good thing for everybody? What happens when banks and hedge funds decide (or are forced) to reduce their debt? What happens when businesses of all sizes find it harder to get loans to operate? In this week's letter we discuss 'The Great Unwind,' that process of deleveraging that we are now in the midst of. We also explore some recent economic data on the economy. It's a lot of ground to cover, so let's jump right in....