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    • Hot Summer Economic Weirdness

      As I wrote last month, the protected/unprotected schism increasingly drives both politics and economics. Maybe it has always driven them, and we’re just now recognizing it. In either case, we find ourselves in increasingly weird circumstances. I certainly see parallels with the 1930s. And a number of those circumstances will collide with one another over the next few months.

      My intention this week had been to revisit some of the powerful ideas that were discussed at my Strategic Investment Conference two weeks ago. But events are looming in Europe that absolutely demand our attention. The powerful macroeconomic and investing ideas will still be there next week – and at the end of today’s letter I will discuss an informal poll I’ve conducted on the timing of the next recession.

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    • Recession Watch

      I think it’s pretty much a given that we’re in for a cyclical bear market in the coming quarters. The question is, will it be 1998 or 2001/2007? Will the recovery look V-shaped, or will it drag out? Remember, there is always a recovery. But at the same time, there is always a recession out in front of us; and that fact of life is what makes for long and difficult recoveries, not to mention very deep bear markets.

      The problem is that our most reliable indicator for a recession is no longer available to us. The Federal Reserve did a study, which has been replicated. They looked at 26 indicators with regard to their reliability in predicting a recession. There was only one that was accurate all the time, and that was an inverted yield curve of a particular length and depth. Interestingly, it worked almost a year in advance. The inverted yield curve indicator worked very well the last two recessions; but now, with the Federal Reserve holding interest rates at the zero bound, it is simply impossible to get a negative yield curve.

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    • The Flat Debt Society

      Since at least the beginning of 2006, the most asked question I get after a speech is “Do you think we will have inflation or deflation?” In an attempt at humor, my answer has been “Yes.” I go on to try to explain that we are in a deflationary environment, but eventually we will see inflation. When QE1 was announced, there were many pundits (none of the Keynesian variety) who immediately said the risk was for significant inflation, and there were even those (like Peter Schiff) who talked of hyperinflation and the demise of the dollar. Interest rates would rise, and US government bonds would collapse.

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    • Assume a Perfect World

      An engineer, a chemist, and an economist are stranded on a deserted island. They are starving, when miraculously they find a box filled with canned food. What to do? They consider the problem, bringing their collective lifetimes of study and discipline to the task.

      Being the practical, straightforward sort, the engineer suggests that they simply find a rock and hit the cans until they break open. “No, no!” cry the chemist and economist, “we would spill too much food and the birds would get it!”

    • Meanwhile, Back at the Ranch

      It is simply hard to tear your eyes away from the slow-motion train wreck that is Europe. Historians will be writing about this moment in time for centuries, and with an ever-present media we see it unfold before our eyes. And yes, we need to tear our gaze away from Europe and look around at what is happening in the rest of the world. There is about to be an eerily near-simultaneous ending to the quantitative easing by the four major central banks while global growth is slowing down. And so, while the future of Europe is up for grabs, the true danger to global markets and growth may be elsewhere. But, let’s do start with the seemingly obligatory tour of Europe.

    • Preparing for a Credit Crisis

      The Consequences of Austerity
      Euro Break-Up – The Consequences
      Welcome to the Hotel California
      The Slow March to Recession in the US
      Preparing for a Credit Crisis
      What Can You Do About the Weather?
      Europe, Houston, New York, and South Africa

    • 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

    • The Beginning of the Endgame

      The Big Bang Moment
      Bang, Indeed!
      “It’s the Economy, Dummkopf!”
      The Long and Winding Road to Crisis
      Are We Already in Recession?
      So What Can We Do?
      Home and then Ireland, London, and Geneva

    • 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

    • What Happened to the Jobs?

      In This Issue:

      So How’s That Stimulus Thing Working Out?
      This Time Is Different
      Vancouver, New York, and Maine

    • Time to Get Outraged

      Is It Time to Buy a House?
      Time to Get Outraged by the Banks
      We Need a Mulligan
      A Congressional Investigation Is Needed
      How We Get Out of This
      20 Policies to Implement to Create Jobs
      Tuscany, Kiev, Geneva, and London

    • Economic Whiplash

      In This Issue:

      Non-Farm Payrolls Even Worse than the Headline
      Velocity Rolls Over
      Intolerable Choices for the Eurozone
      And It Just Gets Worse

    • Recessions are on the Margin

      And the data out over the last few weeks tells us it is getting better. Does this take us out of the double-dip woods, even as the Fed is lowering its forecast? And what is a recession? Yes, we all know it's when the economy doesn't grow, but we are in a rather unique economic environment, this time. Maybe things are getting better, but is it enough to get us back on the road to full employment?

      Let's start off with what is going right. We had a slate of news over the past few weeks that was good. The ECRI weekly Leading Index, after some ugly downtrends, is showing signs of turning around. We have had small increases each week since October 15, and the annualized growth rate of the index is now only -3.1%, having increased for 12 weeks. Its recent low was in July. Yes, I know that a large part of that growth is in the financial sector, as the stock market is up and interest rates are low, but it does suggest that 2011 should not be a recession year.

    • The Chances of a Double Dip

      I am on a plane (yet again) from Zurich to Mallorca, where I will meet with my European and South American partners, have some fun, and relax before heading to Denmark and London. With the mad rush to finish my book (more on that later) and a hectic schedule this week, I have not had time to write a letter. But never fear, I leave you in the best of hands. Dr. Gary Shilling graciously agreed to condense his September letter, where he looks at the risk of another recession in the US.

      I look forward at the beginning of each month to getting Gary's latest letter. I often print it out and walk away from my desk to spend some quality time reading his thoughts. He is one of my "must-read" analysts. I always learn something quite useful and insightful. I am grateful that he has let me share this with you.

    • How We Get Through This Mess

      The group was a Vistage group in which my daughter Tiffani participates. This is an organization of 12 businesspeople (in this case all CEOs of small businesses) who meet once a month to share and learn about better business practices, accountability, planning, and all the aspects of running a business. Every person I have ever met who has been involved in Vistage has had good things to say about it. I have watched it help Tiffani a lot. She truly runs our business now, allowing me to read and write and travel and speak. I am a very lucky man and proud Dad.

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