Category Archive: 5) Global Macro

Why Profits Are Faltering

Profits are faltering for structural reasons that are not easily resolved. The bedrock assumption of the Bull market is that corporate profits will keep rising indefinitely. Hiccups are allowed, but current stock market valuations are implicitly based on profits expanding.

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We Can Only Afford One, So Choose Wisely: Social Security/Medicare, Cartel Cronyism or Inflation (a.k.a. Central Banking)

Here's the problem with central banks seeking higher inflation: costs go up but wages don't. It's easy to quantify the annual cost of Social Security/Medicare, and not so easy to calculate the cost of Cartel Cronyism and Central Bank-created inflation.Cartel cronyism is a hidden tax on the entire economy, as is Central Bank-created inflation.

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Prosperity = Abundant Work + Low Cost of Living

If we seek a coherent context for the new year, we would do well to start with the foundations of widespread prosperity. While the economy is a vast, complex machine, the sources of widespread prosperity are not that complicated: abundant work and a low cost of living.

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Fragmentation and the De-Optimization of Centralization

Many observers decry the loss of national coherence and purpose, and the increasing fragmentation of the populace into "tribes" with their own loyalties, value systems and priorities. These observers look back on the national unity of World War II as the ideal social standard: everyone pitching in, with shared purpose and sacrifice. (Never mind the war killed tens of millions of people, including over 400,000 Americans.)

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Debt deficit distinction | The Economist

Countries around the world are grappling with painful national debt. Although it is thought of as a burden, our cartoonist KAL illustrates the benefits of debt. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 The debt deficit distinction. Countries around the world are now grappling with painful debt. The economics A-Z described the …

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Emerging Market: Week Ahead Preview

EM FX was a mixed bag over the past week. Dollar softness vs. the majors allowed some in EM to gain traction, with ZAR and PEN the biggest gainers since Christmas. On the other hand, ARS TRY, and INR were the biggest losers. With markets coming back to life, we expect EM to remain broadly under pressure as the same major investment themes remain in place.

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Modi’s Great Leap Forward

India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI and Part-VII, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.

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Why I’m Hopeful

Readers often ask me to post something hopeful, and I understand why: doom-and-gloom gets tiresome. Human beings need hope just as they need oxygen, and the destruction of the Status Quo via over-reach and internal contradictions doesn't leave much to be happy about.

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Ungovernable Nation, Ungovernable Economy

Wealth distribution since 1917
Yesterday I described the conditions that render the U.S. ungovernable. Here is a chart of why the U.S. economy will also be ungovernable. Longtime readers are acquainted with the S-curve model of expansion, maturity, stagnation and decline.

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What Triggers Collapse?

A variety of forces will disrupt or obsolete existing modes of production and the social order. Though no one can foretell the future, it is self-evident that the status quo—dependent as it is on cheap oil and fast-expanding debt—is unsustainable. So what will trigger the collapse of the status quo, and what lies beyond when the current arrangements break down?  Can we predict how-when-where with any accuracy? All prediction is based on...

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Will Tax Cuts and More Federal Borrowing/Spending Fix What’s Broken?

Charles Hugh Smith combines the best graphs on the declining wage share of GDP in this post. He answers the question if the tax cuts and more federal borrowing and spending can solve what is broken in the U.S. economy.

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When Did Our Elites Become Self-Serving Parasites?

When did our financial and political elites become self-serving parasites? Some will answer that elites have always been self-serving parasites; as tempting as it may be to offer a blanket denunciation of elites, this overlooks the eras in which elites rose to meet existential crises.

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The World in 2017 Top 10 countdown

What will be the top ten stand out moments of 2017? Our countdown of the upcoming year’s major stories. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 For more from Economist Films visit: http://films.economist.com/ Check out The Economist’s full video catalogue: http://econ.st/20IehQk Like The Economist on Facebook: https://www.facebook.com/TheEconomist/ Follow The Economist on Twitter: …

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Fake News, Mass Hysteria and Induced Insanity

We've heard a lot about "fake news" from those whose master narratives are threatened by alternative sources and analyses. We've heard less about the master narratives being threatened.

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India’s Rapid Progression Toward a Police State

India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, and Part-V, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.

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The fall of Islamic State | The Economist

The biggest, boldest attempt by a jihadist regime to defy the whole world order will be smashed in 2017. Islamic State is set to be driven out of its last remaining territories in Iraq and Syria—but its defeat won’t spell the end for terrorism. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 What …

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A Tale of Two Housing Markets: Hot and Not So Hot

If we had to guess which areas will likely experience the smallest declines in prices and recover the soonest, which markets would you bet on?

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Could Marine Le Pen be the next President of France? | The Economist

Populist movements are on the rise all over Europe—one reason why the French presidential election in 2017 may be a nail-biter. We predict that it will be one of the top three moments of the year ahead. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 Daily Watch: mind-stretching short films every day of …

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Grab-Bag of Resolutions for 2017

Here's a grab-bag of resolutions with something for just about every persuasion. I resolve to never utter or write the word "Trump" in 2017. (Good luck with that...)

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Power grab at China’s National Congress | The Economist

In China, the Communist Party’s 19th National Congress in October 2017 determines who will rule the world’s rising superpower for the next five years. Amid bitter political infighting, the changes will be sweeping. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 It only happens once every five years. It’s the biggest event in …

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