Tag Archive: bust

A perfect storm in the making 

2024-02-15

by

2024-02-15

The New Year is usually associated with a new beginning, a fresh start, or a “clean slate”. Unfortunately, for millions of Americans, these are wishes that are bound to remain unfulfilled – for them, the New Year has nothing “new” to offer at all: it will only perpetuate all the same burdens, obligations and worries of the past year and of the ones that came before.

Read More »

Debt and Profit in Russell 2000 Firms

2019-04-12

by

2019-04-12

U.S. small-cap debt builds up
This week, the Supply and Demand Report featured a graph of debt vs profitability in the Russell 2000. Here’s the graph again: This graph shows a theme that we, and practically no one else(!) have been discussing for years. It is the diminishing marginal utility of debt. In this case, more and more debt is required to add what looks like less and less profit (we don’t have the raw data, only the graphic).

Read More »

What Happens When Credit Is Mispriced?

prices down
Keith Weiner explains what happens when credit is mispriced. The rich are privileged because they can profit on the volatility and the bubbles the cheap credit createes.

Read More »

Why Can’t The Fed Spot Bubbles?

The topic of whether the Federal Reserve can see bubbles in advance, and what they can do about them, is hotly debated. The price of an earning asset depends directly on the interest rate. This is because of time preference. It is better to have your cash today than tomorrow. The Fed’s problem is that the calculation depends on a rate of interest that it heavily influences. Its analysis is therefore circular and self-fulfilling. It’s like taking a...

Read More »

Quantitative Easing, its Indicators and the Swiss Franc

bernanke gold chf, dollar
The main drivers of demand for Swiss francs are the euro crisis and, even more, the behavior of American investors, who go out of the dollar in the fear of bad US economic data and/or Quantitative Easing (QE). Risk-friendly investors move into risky assets like stocks or currencies of emerging markets, while risk-averse investors fear inflation and buy inflation-resistant assets like Swiss francs.

Read More »

Let Cyprus go Iceland! or Make Russians Believe it Were

2013-01-27

by

2013-01-27

Iceland success story
While UBS  and a certain Mr Draghi are still warning that a bankruptcy would...

Read More »

Quantitative Easing, Gold and the Swiss Franc

2012-12-27

by

2012-12-27

Quantitative Easing Mechanisms
The main drivers of demand for Swiss francs are the euro crisis, but even more, the behavior of American investors, who go out of the dollar in the fear of further bad US economic data and of Quantitative Easing. This will push down the dollar, and safe-havens like the CHF, gold or the Japanese Yen up. … Continue reading »

Read More »