Source: Vanguard Over the weekend, I set the Closer Look at Mythology graphic to post early this morning. By sheer coincidence, Meb Faber pointed us to the above chart from Vanguard looking at the correlation between traditional valuation metrics and subsequent investment returns. Given the serendipity of how similar the messages were in both, I thought it was worth exploring further. … Read more
In his column Paul Krugman pretty much nails the MMT approach to interest rates on sovereign government debt: http://krugman.blogs.nytimes.com/2012/11/25/incredible-credibility/?smid=tw-NytimesKrugman&seid=auto. Forget the Bond Vigilantes; they have no perceptible impact on those rates. The short rates have to compete with the Central Bank’s overnight policy rate (fed funds in the US). Since very short maturity treasuries are … Read more
The new delay in the disbursement of the tranche of 44 billion from the “troika” (ECB, EU, IMF ) to Greece poses serious problems of economic and political nature to Greece, the entire Euro zone, but also to the International Monetary Fund. it threatens the solvency of the Greek banking system, for whose recapitalization about … Read more
Just a quick note before I run out this morning: Today’s must read is a brutal takedown of the CNBC driven narrative of the fiscal cliff. Its written by Ryan Chittum of The Audit, which is the Columbia Journalism Review’s site that focuses on the financial press. Here is a quick excerpt: “Any time you see … Read more
By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness. I note that we still haven’t heard from the Euro group meeting about what the exact plan is for Greece. As I said, my expectations are that a ‘deal’ will be stitched … Read more
Sometimes the eurozone feels like a Horizon holiday brochure from the 1970s: last week Spain, this week Greece. Horizon went bust, and the question is whether one or more eurozone members will suffer a similar fate.I shall come to Greece in a moment. First, let me offer my take on Thursday’s Mansion House announcements by … Read more
This weekend is a big one in the eurozone saga, with both the second round of the French presidential election and Greece’s parliamentary elections. In both we are likely to see a vote against austerity and, by implication, eurozone bailout plans. It could be make or break. And yet the markets have been eerily and … Read more
On Wednesday we will get figures for gross domestic product in the second quarter. Everybody is braced for a third successive decline and a fresh outbreak of gloom. The National Institute of Economic and Social Research and RBS, both of which track the components that make up GDP, predict a 0.2% fall, following drops of … Read more
The world is focused on the fiscal cliff, a term referring to the scheduled reductions in the US budget deficit, by way of expiring tax cuts and mandatory spending cuts. The fiscal cliff may ironically improve public finances, reducing the deficit and slowing the increase in debt levels –America’s debt mountain. But going over the fiscal cliff will not of … Read more
In the past two weeks we have been treated with a mostly positive but nonetheless mixed bag of economic data from China. There has been good news, bad news, good news with worrying underlying trends, and bad news with silver linings. Analysts have announced that things are getting worse and that things are getting better. … Read more