Tag Archive: credit

The Failure of a Gold Refinery, Report 12 Nov 2018

So this happened: Republic Metals, a gold refiner, filed bankruptcy on November 2. The company had found a discrepancy in its inventory of around $90 million, while preparing its financial statements. We are not going to point the Finger of Blame at Republic or its management, as we do not know if this was honest error or theft.

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In Next Crisis, Gold Won’t Drop Like 2008, Report 19 August 2018

Last week, we discussed the tension between forces pushing the dollar up and down (measured in gold—you cannot measure the dollar in terms of its derivatives such as euro, pound, yen, and yuan). And we gave short shrift to the forces pushing the dollar down. We said only that to own a dollar is to be a creditor. And if the debtors seem in imminent danger of default, then creditors should want to escape this risk.

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Currency Risk That Isn’t About Exchange Values (Eurodollar University)

This week the Bureau of Economic Analysis will release updated estimates for Q2 GDP as well as Personal Consumption Expenditures (PCE) and Personal Incomes for July. Accompanying those latter two accounts is the currently preferred inflation standard for the US economy. The PCE Deflator finally hit 2% and in two consecutive months, after revisions, earlier this year.

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More Noise Than Signal

A number of people have forwarded this Bloomberg article – Wall Street Banks Warn Downturn Is Coming – to me over the last couple of days. That fact alone is probably a good argument to ignore it but I can’t help but read articles like this if for no other reason than to know what the crowd is thinking.

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Global Asset Allocation Update: No Upside To Credit

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are other changes to the portfolio though so please read on. As I write this the stock market is in the process of taking a dive (well if 1.4% is a “dive”) and one can’t help but wonder if the long awaited and anticipated correction is finally at hand.

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Do Record Debt And Loan Balances Matter? Not Even Slightly

We live in a non-linear world that is almost always described in linear terms. Though Einstein supposedly said compound interest is the most powerful force in the universe, it rarely is appreciated for what the statement really means. And so the idea of record highs or even just positive numbers have been equated with positive outcomes, even though record highs and positive growth rates can be at times still associated with some of the worst. It...

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No Paradox, Economy to Debt to Assets

It is surely one of the primary reasons why many if not most people have so much trouble accepting the trouble the economy is in. With record high stock prices leading to record levels of household net worth, it seems utterly inconsistent to claim those facts against a US economic depression.

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Not Recession, Systemic Rupture – Again

For the very few in the mainstream of economics who venture further back in history than October 1929, they typically still don’t go much last April 1925. And when they do, it is only to further bash the gold standard for its presumed role in creating the conditions for 1929. The Brits under guidance of Winston Churchill made a grave mistake, one from which gold advocates could never recover given what followed.

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Jobless Claims Look Great, Until We Examine The Further Potential For What We Really, Really Don’t Want

Initial jobless claims fell to just 234k for the week of February 4, nearly matching the 233k multi-decade low in mid-November. That brought the 4-week moving average down to just 244k, which was a new low going all the way back to the early 1970’s. Jobless claims seemingly stand in sharp contrast to other labor market figures which have been suggesting an economic slowdown for nearly two years.

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The Fed and the Cotton Candy Market

For Keith Weiner the Federal Reserve operates like a Cotton Candy Machine for the housing market. It creates a massive bubble, financed with debt. It spins the price of a house, with the help of credit and debt, into something many times its original size.

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Pros and Cons of the Swiss Countercyclical Capital Buffer

Switzerland is currently living in a big real estate boom. The bubble bursting would imply that banks' collateral in the form of real estate falls in value. Therefore the banks' assets might fall because many home buyers might not be able to repay their mortgage.  If a real estate bubble pops, then banks should be better capitalized to absorb such a shock. Therefore the Swiss National Bank introduced macro-prudential measures, like the so-called...

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