The Fed is worried, and you should be too.That is the major take-away from yesterday's FOMC statement, combined with its release of updated projections and Bernanke's press conference.Despite the market's cheering of the promise of a near-zero fed funds rate until late 2014 and the prospect of QE3, the Fed is fighting a lonely battle against severe economic headwinds----and they know it.In answering a reporter's question, Bernanke made it crystal-clear that he does not believe that the recently optimistic economic releases are sustainable.He has good reason to think so.
The FOMC reduced its current central tendency 2012 GDP growth projection from 2.5%- 2.9% to 2.2%-2.7% and its 2013 number from 3.0%-3.5% to 2.8%-3.2%.The previous projections were made in November.Although they reduced their unemployment projection slightly, they are still projecting unemployment rates as high as 8.2% to 8.5% for 2012 and 7.4% to 8.1% in 2013.[More]
Although a number of economic indicators have recently improved, the economy is now entering a period of high risk.In their now well-known book, "This Time It's Different", Rogoff and Reinhart showed that once a nation's government debt-to-GDP ratio reached and exceeded 90%, the period ahead was marked by credit crises, exceedingly slow growth and frequent recessions.The latest example, among many, is the experience of Japan in the years following 1989 and continuing until today.As everybody now knows, after going through last year's debt ceiling debate, the U.S.[More]
We live in an age of anxiety, and rightly so: Worries about the global economy are most emphatically not just in our imagination. The question is, who's going to bear the blame, come November?
The Age of Anxiety? With all due apologies to the late W.H.[More]
It's time Stephen Sondheim wrote another carnival song, and, more specifically, a sequel to the hauntingly memorable "Send in the Clowns" from his 1973 musical, A Little Night Music, which has proved so eerily prophetic in describing this year's political scene. As a glance at the crowded roster of Republican wannabe candidates for the presidency in next year's election makes clear, the powers that be in the GOP obviously have taken quite literally Sondheim's injunction that served as the title of the song, while the Democrats already have their very own barker and no shortage of mountebanks ensconced in their big tent.[More]
FEET DON'T FAIL ME NOW Dated, but not out of date 12/10/99 The list of negative factors impacting the stock market has now become so numerous that it is highly likely that a severe bear market has already started
Introduction
The list of negative factors affecting the stock market has now become so numerous that it is highly likely that a severe bear market has already started. We begin with the fact that, as measured by earnings and dividends, this is by far the most overvalued market of the past century.[More]
The U.S. used unusual methods in handling the bursting of the "Financial Mania" of the late 1990s, the one called the "Dot-Com" bubble.Instead of letting the free markets dictate just how low the prices of stocks and other assets would wind up after the bursting of the bubble, the "powers that be" intervened.[More]
Bloomberg Interview - March 10, 2009 The Fed and Treasury Dept. claim that the housing bubble could not be foreseen. Take a look at this video to see how obvious it really was.
Wonderful analysis that I have been reading for many years 9/03/11 I would like your permission to send a copy of your 8/25/11 market commentary to them since I agree that we are in a major credit/debt contraction of hugh scale and a good deal of the asset write-downs are ahead not behind us. irrespective of your answer I want to thank you for wonderful analysis that I have been reading for many years.
Your Message is Loud & Clear 8/25/11 Your weekly commentary plus the weekly postings on John Hussman's site should serve as required reading for anybody trying to follow this market.
Your message (much more concise than Dr Hussman's, I have to say)is loud & clear.
Hi there from Ireland. I've been reading your blog every fri morning GMT and before when it was daily for a long time now and in my opinion it is one of the best things on the Internet. I've emailed you about this before.
I've one comment on your Fri Dec 3 piece when you say "However if you believe, as we do, that the start date of our crisis was 2000 and not 2008, you can see that we postponed the inevitable for 8 years while we had a Fed-sponsored housing and stock market bubble that should have been addressed much earlier."[More]
I simply want to thank you for providing your frequent commentary on our economic outlook. It is always insightful. I simply look to many resources in trying to determine what lies ahead for our future. Your perspective has been very much appreciated these past several years.[More]
First of all, I love your work and the honest commentary you provide.
My question is this: Of the $40 trillion in Individual and corporate debt, I was wondering if any of it is double counted? For example, all home mortgage debt is counted properly to individuals. However, most of that debt is securitized and issued as debt again by a sponsoring institution. The same for some commercial real estate, credit card receivables, auto loans, etc.[More]
