Posts Tagged ‘Austrian economics approach’

BIS: WE HAVE FAILED TO LEARN FROM THE NORDIC CRISIS

BIS: WE HAVE FAILED TO LEARN FROM THE NORDIC CRISIS

Courtesy of The Pragmatic Capitalist 

The BIS recently released an excellent paper comparing the current crisis to the Nordic crisis.  This is a particularly interesting case study because the Nordic credit crisis was relatively clean for a credit crisis.  Perhaps most interesting is the fact that their crisis was unfolding at the same time as the Japanese crisis.  The results, however, were dramatically different.  I believe the thoughts from the BIS are particularly interesting as I was a proponent of the harsher Swedish Model - a bit more of an Austrian economics approach to the crisis as opposed to the Japanese model of trying to ensure capitalism without losers.  In recent months the USA is looking more and more Japanese and the BIS believes it is due to our flawed response:

“Our analysis indicates that current policies have followed those (Nordic) principles in some respects, but have fallen short in other, arguably more important, ones. If anything, the authorities have intervened even earlier than in the Nordic precedent. In the current episode, the down-leg of the financial cycle had not proceeded as far and banks were further away from the point of technical insolvency. However, the underlying weakness in balance sheets has not been recognised as fully. Efforts to write down assets and induce underlying adjustment in the sector have not been as extensive. Impaired assets have been kept on balance sheets at highly uncertain, and possibly inflated, values. The conditions attached to financial support have not been as strict with respect to asset and cost reductions; if anything, they have been designed with an eye to  sustaining lending. The need to reabsorb the sector’s excess capacity has taken a back seat. All this has tended to slow down resolution.

In other words, the zombie banks live on just as they have in Japan.  But perhaps most important is the fact that the losers have not been allowed to lose.  Government intervention has only kicked the can down the road.  The BIS detailed the successful principles involved in a swift crisis response and sustainable recovery:

Principle 1: Early recognition and intervention 
P1: The nature and size of the problems should be recognised early and intervention should follow quickly.

The purpose of early recognition and intervention is to avoid a hidden deterioration in conditions that could magnify the costs of the


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How low will Bitcoin now go? The history of price bubbles provides some clues

 

How low will Bitcoin now go? The history of price bubbles provides some clues

The Bitcoin bubble is perhaps the most extreme speculative bubble since the late 19th century. Shutterstock

Courtesy of Lee Smales, University of Western Australia

Nearly 170 years before the invention of Bitcoin, the journalist Charles Mackay noted the way whole communities could “fix their minds upon one object and go mad in its pursuit”. Millions of people, he wrote, “become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first”.

His book ...



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Digital Currencies

How low will Bitcoin now go? The history of price bubbles provides some clues

 

How low will Bitcoin now go? The history of price bubbles provides some clues

The Bitcoin bubble is perhaps the most extreme speculative bubble since the late 19th century. Shutterstock

Courtesy of Lee Smales, University of Western Australia

Nearly 170 years before the invention of Bitcoin, the journalist Charles Mackay noted the way whole communities could “fix their minds upon one object and go mad in its pursuit”. Millions of people, he wrote, “become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first”.

His book ...



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Zero Hedge

This is What The "Trade" War With China Is Really All About

Courtesy of ZeroHedge. View original post here.

Forget soybeans, auto imports, iPhones, crude oil, and cheap Chinese gadgets. Also forget tariffs, duties, and subsidies. Even forget weapons.

The real reason behind the US-China "trade" war has little to do with actual trade, and everything to do with what China's president, Xi Jinping, said when he visited a memory chip plant in the city of Wuhan earlier this year. In a white lab coat, he made an unexpectedly sentimental remark, comparing a computer chip to a human heart: “No matter how big a person is, he or she can never be strong without a sound and strong heart”.

What is really at the basis of the ongoing civilizationa...



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Kimble Charting Solutions

NYSE facing critical 20-year support test!

Courtesy of Chris Kimble.

This chart looks at the NYSE index over the past 20-years. During this time frame, this broad index has spent the majority of the past quarter-century, inside of rising channel (1).

It broke above the top of the channel in 2016 and it experienced a very strong 12-month rally. Since the first of this year, it has created a series of lower highs and lower lows. Weakness this year has it nearing a test of support, which is the top of this 20-year rising channel. While nearing this key support test, it is also nearing another test of a rising support line at (2).

Support is support until...



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Chart School

Weekly Market Recap Dec 09, 2018

Courtesy of Blain.

Bears are certainly showing the type of strength we haven’t seen in a long time.   A week ago at this time futures were surging on news of a “truce” for 90 days between China and the U.S. in their trade spat.  But the charts were still not saying lovely things despite a major rally the week prior.   And by Tuesday, darkness had descended back on the indexes, with another gut punch Friday.    A lot of emphasis was put on a long term Treasury yield dropping below a shorter term Treasury.

On Monday, the yield on five year government debt slid below the yield on three year debt, a phenomenon which has p...



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Insider Scoop

Economic Data Scheduled For Monday

Courtesy of Benzinga.

  • The Labor Department's JOLTS report for October is schedule for release at 10:00 a.m. ET.
  • The Treasury is set to auction 3-and 6-month bills at 11:30 a.m. ET.
  • The TD Ameritrade Investor Movement Index for November will be released at 12:30 p.m. ET.

Posted-In: Economic DataNews Economics Pre-Market Outlook Markets

...

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Members' Corner

What should the House do? Part 1: Veto-proof actions... then aim for a thousand vetoes

 

Guest author David Brin — scientist, technology consultant, best-selling author, and one of the “World’s Best Futurists” — explores a myriad of topics on his lively and always interesting blog: politics, science, history, science fiction, etc. For more posts by David, visit the CONTRARY BRIN blog...



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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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Biotech

World's first gene-edited babies? Premature, dangerous and irresponsible

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

World's first gene-edited babies? Premature, dangerous and irresponsible

Vchal/Shutterstock

By Joyce Harper, UCL

A scientist in China claims to have produced the world’s first genome-edited babies by altering their DNA to increase their resistance to HIV. Aside from the lack of verifiable evidence for this non peer-revie...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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