The Bowtie Economist's Daily Dose of 70-Word Wisdom


Quantitative Easing 3?

08/24/2011

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…

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Here a Credit, There a Credit

08/23/2011

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…

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Weak. Very Weak.

08/22/2011

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…

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There’s a Tear in my Beer…

08/19/2011

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),…

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LIBOR Losing Relevance

08/18/2011

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…

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Europeans in Denial

08/17/2011

Euro leaders continue to deny the debt crisis they face. Rather than boosting the size of the Euro Stability Fund, which would give investors in Italian and Spanish bonds confidence, they ban short selling for a few weeks, get the…

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Debate’s Effect on Sentiment

08/16/2011

The University of Michigan consumer sentiment index fell to 54.9 (the lowest level since the recession of ‘81)! This reading is, I think, a result of the corrosive debt ceiling debate; not due to chronic problems like high unemployment and…

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Undervalued Yuan

08/15/2011

Chinese exchange rate and monetary policy is little more than a huge a transfer of income from poor households to wealthy corporations. An undervalued Yuan makes imports expensive but helps exporters. Similarly, very low interest rates on savings accounts and…

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Labels and Quality

08/12/2011

The Friday File: Designers of fancy clothes believe their clothes lend an air of status and prestige to the wearer. And they do! Research shows that it is not the design itself that counts but the label! Why? Same reason…

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Currency Wars?

08/11/2011

Declaring the Yen’s rise to be a threat to the economy the Bank of Japan massively intervened in the foreign exchange market to drive down its value. The Swiss did the same thing and now so are the Turks! I…

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