Category Archive: 6b.) Acting Man

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Why the Coming Wave of Defaults Will Be Devastating

2016-09-22

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2016-09-22

Total Credit ASTDSL + ASTLL
In an economy based on borrowing, i.e. credit a.k.a. debt, loan defaults and deleveraging (reducing leverage and debt loads) matter. Consider this chart of total credit in the U.S. Note that the relatively tiny decline in total credit in 2008 caused by subprime mortgage defaults (a.k.a. deleveraging) very nearly collapsed not just the U.S. financial system but the entire global financial system.

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Get Ready for a New Crisis – in Corporate Debt

2016-09-18

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2016-09-18

OUZILLY, France – We’re going back to basics here at the Diary. We’re getting everyone on the same page… learning together… connecting the dots… trying to figure out what is going on. We made a breakthrough when we identified the source of so many of today’s bizarre and grotesque trends. It’s the money – the new post-1971 dollar. This new dollar is green. You can buy things with it.

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Janet Yellen’s Shame

2016-09-18

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2016-09-18

wallet
n honest capitalism, you do what you can to get other people to voluntarily give you money. This usually involves providing goods or services they think are worth the price. You may get a little wild and crazy from time to time, but you are always called to order by your customers.

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The Donald Versus Killary: War or Peace?

2016-09-18

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2016-09-18

Wilsonand-Morgan
War: A Warning from the Past. Although history does not exactly repeat itself, it does provide parallels and sometimes quite ominous ones. Such is the case with the current U.S. Presidential election and the one which occurred one hundred years earlier.

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The Strikingly Weak ISM Purchasing Manager Indices

2016-09-17

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2016-09-17

Factory
We are always paying close attention to the manufacturing sector, which is far more important to the US economy than is generally believed. The ISM index shows striking weakness.

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Follow the Money

2016-09-15

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2016-09-15

PARIS – It’s back to Europe. Back to school. Back to work. Let’s begin by bringing new readers into the discussion… and by reminding old readers (and ourselves) where we stand. US economic growth: average annual GDP growth over time spans ranging from 120 to 10 years (left hand side) and the 20 year moving average of annual GDP growth since 1967

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Attack The Fed’s War On Savers, Workers And The Unborn (Taxpayers)

2016-09-13

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2016-09-13

The central banks have gone so far off the deep-end with financial price manipulation that it is only a matter of time before some astute politician comes after them with all barrels blasting. As a matter of fact, that appears to be exactly what Donald Trump unloaded on bubble vision this morning:

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How is Real Wealth Created?

2016-09-08

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2016-09-08

An Abrupt Drop. Let’s turn back to our regular beat: the U.S. economy and its capital markets. We’ve been warning that the Fed would never make any substantial increase to interest rates. Not willingly, at least. Each time Fed chief Janet Yellen opens her mouth, out comes a hint that more rate hikes might be coming.

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US Economy – Curious Pattern in ISM Readings

2016-09-08

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2016-09-08

Head Fake Theory Confirmed? This is a brief update on our last overview of economic data. Although we briefly discussed employment as well, the overview was as usual mainly focused on manufacturing, which is the largest sector of the economy by gross output.

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John Maynard Keynes’ General Theory Eighty Years Later

2016-09-06

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2016-09-06

The “Scientific” Fig Leaf for Statism and Interventionism. To the economic and political detriment of the Western world and those economies beyond which have adopted its precepts, 2016 marks the eightieth anniversary of the publication of one of, if not, the most influential economics books ever penned, John Maynard Keynes’ The General Theory of Employment, Interest and Money.

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Shrewd Financial Analysis in the Year 2016

2016-09-04

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2016-09-04

“Markets make opinions,” says the old Wall Street adage. Perhaps what this means is that when stocks are going up, many consider the economy to be going great. Conversely, when stocks tank it must be because the economic sky is falling.

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How Does It All End? Part II

2016-09-03

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2016-09-03

Low Rates Forever, Nothing much is happening in the money world. The press reports that traders are hanging loose, wondering what dumb thing the Fed will do next. Rumor has it that it may decide to raise rates in September, or maybe November… or maybe not at all.

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How Does It All End?

2016-08-31

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2016-08-31

In 1900, a survey was done. “What do you see coming?” asked the pollsters. All of those people questioned forecast better times ahead. Machines were just making their debut, but already people saw their potential. You can see some of that optimism on display today in the Paris Metro. In the Montparnasse station is an illustration from the late 1800s of what the artist imagined for the next century.

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US Presidential Election – How Reliable are the Polls?

2016-08-30

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2016-08-30

Is Clinton’s Lead Over Trump as Large as Advertised? Once upon a time, political polls tended to be pretty accurate (there were occasional exceptions to this rule, but they were few and far between). Recently there have been a few notable misses though. One that comes to mind is the Brexit referendum.

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Central Banks = Welfare for the Wealthy

2016-08-30

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2016-08-30

The fact that central banks provide welfare for the wealthy is now entering the mainstream. The fact that all central bank policies since 2008 have dramatically increased wealth and income inequality is now grudgingly being accepted as reality by mainstream economists and the financial media. The central banks' PR facade of noble omniscience on behalf of the great unwashed masses has cracked wide open.

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The Idea that Overseas Manufacturing Jobs will Return to the US is Pure Fantasy

2016-08-29

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2016-08-29

As we enter the final lap of the presidential race in the United States, as always, the two candidates will say just about anything to secure your vote. And of course the economy is a major topic of conversation. Loud calls for both higher wages and more jobs dominate the rhetoric. Naturally, Hillary Clinton and Donny Trump claim they can easily solve both of these problems. I can only laugh at their certitude. They are so wrong… and like true...

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Weekend Reading Negative Rates: The Coin Flip Market

2016-08-26

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2016-08-26

As summer begins to fade, and kids return to school, the focus once again turns to the annual event of Central Bankers in Jackson Hole, Wyoming. However, if you only looked at the market as a gauge as to the excitement of the event, well it must have been one pretty boring after-party.

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Party Like It’s 1999

2016-08-24

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2016-08-24

OUZILLY, France – The farther you get from the big city, or the international press… the closer you get to reality. The myth and claptrap disappears as distance shortens. Imagination gives way to fact. Gone is global warming, for instance. Instead, you find – as we did when we drove to Nova Scotia for a summer holiday in the 1990s – that it will be “75 degrees in Halifax again today… No relief in sight.”

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Yarns, Mysteries, and the CPI

2016-08-22

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2016-08-22

Several ill-defined economic data points were unveiled this week. Namely, the Labor Department’s July consumer price index report. According to the government data, on whole, consumer prices for the month didn’t change one iota. In reality, the CPI is so distorted and disfigured it doesn’t really tell us much that’s useful. Empirical experience and common sense are much better indicators of inflation and deflation. What’s more, you don’t have...

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Should we Be Concerned About the Fall in Money Velocity?

2016-08-22

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2016-08-22

A fall in the US velocity of money M2 to 1.44 in June from 1.51 in June last year and 2.2 in May 1997 has alarmed many experts. Note that the June figure is the lowest since January 1959.

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