Archive for August 2011
A Yen for your Thoughts
Despite a perpetually lousy economy, the Yen continues to rise; Three reasons. First, deflation makes the Yen worth more tomorrow than today encouraging investors to hold it despite microscopic interest rates. Second, Japan’s large trade surplus ensures continued demand for the Yen from US importers. Third, despite dismal growth, high debt and profoundly dysfunctional politics,…
Read MoreBad Debt
Total debt is the sum of all IOUs ever issued by the Treasury and is (egad) 98% of GDP. Total debt is the sum of the public debt–which is held by individuals, foreign gov’ts and financial institutions–and is 61% of GDP, and the intra-governmental debt, which consists of gov’t IOUs held by the gov’t (the…
Read MoreInflation? What inflation
Researchers at the Federal Reserve Bank of San Francisco find that 2.7% of consumer spending went to Chinese made items. Moreover, for every $1 spent on Chinese made goods, fully 55 cents goes to US businesses for services like shipping, marketing, sales and advertising. So, even if inflation in China heats up, US consumers are…
Read MoreGimmie Shelter
The Friday File: The US Tax Court just ruled that under the Parsonage Allowance of 1921 an ordained clergy member may now live tax-free in an UNLIMITED number of homes owned by his or her religious organization, or receive a tax-free annual payment to buy or rent an UNLIMITED number of homes if the congregation…
Read MoreSell Phone Patents for Sale
Google’s $12.5 billion purchase of Motorola Mobility, and its 17K patents, will get FTC and Justice Department approval. After all, it’s a big company picking up a small one in a very different space. The big concern is that Google will give MM access to new versions of the Android operating system before Nokia, LG,…
Read MoreQuantitative Easing 3?
QE worked miracles by injecting massive liquidity into the economy in ’08 and ’09, and staved off a depression. While smaller, QE2 boosted equity prices and weakened the $US which boosted exports, raised commodity prices and headline inflation. If we get QE3, which is likely to be less successful than QE2, it’s because inflation’s receding,…
Read MoreHere a Credit, There a Credit
House prices are currently weak in the UK, France, Germany Ireland, Italy and the US. But they are way up in Canada, China, Hong Kong, Israel, Singapore, S. Africa and Sweden. Why? The former countries had a housing bubble that burst. To avoid a depression they cut rates to microscopic levels. That flood of easy…
Read MoreWeak. Very Weak.
Weak in review: 10-yr Treasury rates fell to their lowest level since 4/50 and the stock market plummeted! This was due to the unfolding Euro disaster, a benign fear of long-term US inflation and a dismal Philly Fed number, a measure of mid-Atlantic factory activity, that fell to a 2.5 year low, suggesting anemic US…
Read MoreThere’s a Tear in my Beer…
The Friday File: Due to costly raw materials and slow growth, a wave of consolidation is pouring over the beer industry. The 4 biggest breweries; Anheuser-Busch-InBev, SABMiller, Heinekin and Carlsberg all foreign (the biggest US owned brewery is Sam Adams), have increased their market share from 20% in the late ’90s to about 50% today.…
Read MoreLIBOR Losing Relevance
The London Interbank Offered Rate (LIBOR) is losing relevance. Outstanding LIBOR borrowings have fallen 63% in the past 3 years and it has failed to capture turmoil in the banking sector due to the Euro crisis. Why? Central banks around the world have given banks cheap access to cash, banks have increased customer deposits and…
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