Posts Tagged ‘bad debt’

THOSE WHO IGNORE HISTORY….

THOSE WHO IGNORE HISTORY….

Courtesy of The Pragmatic Capitalist 

Elderly Asian woman in kimono standing on bridge

My position over the last 2 years has been as follows: this is a Main Street debt crisis.  I have been highly critical of the government’s incessant interventionist policies over the last few years largely because they ignore the actual problems at hand.  First it was Mr. Bernanke saving the banks because he believed the credit crisis started with the banking sector.  The great monetarist gaffe ensued.  Tim Geithner piled on with the PPIP.  FASB jumped on board the bank rescue plan by altering the accounting rules.  And then the icing on the cake was the Recovery Act, which, in my opinion, just shoveled money into the hole that had become the output gap, without actually trying to target the real cause of the crisis – those burdened by the debt.  In essence, the various bailouts primarily targeted everyone except the people who really needed it.

A year ago I posted a story citing the many reasons why we were sinking into the deflationary Japanese trap.  The primary flaw with the US response to the crisis was that we never actually confronted the problem at hand.  I have often cited Japanese economists such as Richard Koo who appear to have a good grasp on the problems in Japan and now in the USA.  In this case, I cited Keiichiro Kobayashi who is now looking most prescient:

We continue to ignore our past and the warnings from those who have dealt with similar financial crises. Keiichiro Kobayashi, Senior Fellow at the Research Institute of Economy, Trade and Industry is the latest economist with an in-depth understanding of Japan, who says the U.S. and U.K. are making all the same mistakes:

“Bad debt is the root of the crisis. Fiscal stimulus may help economies for a couple of years but once the “painkilling” effect wears off, US and European economies will plunge back into crisis. The crisis won’t be over until the nonperforming assets are off the balance sheets of US and European banks.”

Read that last paragraph again.  These are scarily accurate comments.  While the USA claims to have many economists who understand the Japan disease and/or the Great Depression the policy actions we’ve undertaken do not appear to be in line with any understanding of this history.

What we’ve done over the last few years is repeat the mistakes…
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A Warning To America From The East

A Warning To America From The East

JapanCourtesy of Karl Denninger at The Market Ticker

Ambrose Evans-Pritchard writes the following:

Democrat leader Yukio Hatoyama, who won a landslide victory over the weekend, has pledged that there would be no increase in debt to fund his $180bn boost for child allowances and social policy by 2013, but his advisors are already back-tracking as they examine the dire tax figures.

While Japan pulled out of recession in the second quarter, it has barely begun to make up for the 11.7pc contraction of its economy over the preceding year. Industrial production was still down 23pc in July. Exports were down 39pc to the US.

Uh huh.  These are great promises, but Japan’s tax receipts are down 27% over the last year.   This sounds oddly familiar…. our government’s tax receipts are down huge as well, as are the tax receipts of the states.

Michael Taylor from Lombard Street Research said Japan made a strategic error during its Lost Decade by waiting too long to pull the monetary levers. "They failed to boost money supply the way the Fed and the Bank of England are trying to do through quantitative easing. Their fiscal packages led to a massive deterioration in public finances."

Oh nonsense.

Japan tried to avoid the truth.  They tried to sweep the bad debt under the rug instead of forcing it out of the system.  They attempted to apply the Keynesian "fix" that seems to be the tonic to all that ails the economy – spend spend spend and loosen loosen loosen monetary policy.

Did it work?  No. 

Nor will it work here, because just like in Japan the lies have not been flushed from the system and those who have hidden boluses of garbage have not been forced to admit to and clear them.

"IMF studies show that as public debt rises above 60pc of GDP fiscal stimulus loses it effect. People anticipate the consequences: higher taxes, and eventually higher interest rates. The bond vigilantes will always get you in the end," he said.

Hmmm…. Public debt in the US is about $11 trillion, GDP 14ish, so where does that leave us?…
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Phil's Favorites

Momentum Monday - Digital Dominance...This Week Semiconductors and 5G

 

Momentum Monday – Digital Dominance…This Week Semiconductors and 5G

Courtesy of Howard Lindzon

Good Monday morning everyone.

As always here is this weeks Momentum Monday from Ivanhoff and I.

I walk through the Apple explosion to new highs and what that means for my stops and area where I would get defensive.

Google is the weakest of the FAANG stocks.

I shared some fresh ideas with Ivanhoff in the software and 5G sector which include $ESTC $SWKS $QRVO and $QCOM.

I hope you enjoy it.

I also wanted...



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Biotech/COVID-19

There aren't enough batteries to electrify all cars - focus on trucks and buses instead

 

There aren't enough batteries to electrify all cars — focus on trucks and buses instead

Garbage trucks, buses and the van that delivers your Amazon purchases are all prime candidates for electrification. (Shutterstock)

Courtesy of Cameron Roberts, Carleton University

We need to change our transportation system, and we need to do it quickly.

Road transportation is a major consumer of fossil fuels, contributing 16 per cent of all human-caused greenhouse gas emissions, which warm up the Earth’s atmosphere and cause changes to the climate. It also ...



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Zero Hedge

"August Snoozer" On Deck With Dealers Back In "Long Gamma" But Everything Changes In September

Courtesy of ZeroHedge View original post here.

Charlie McElligott's prediction from last week that the Nasdaq could suffer from a nasty spill as dealer gamma had turned increasingly negative...

... was foiled by the blockbuster earnings from the mega tech companies which sent the Nasdaq to new all time highs, forcing dealers - and frankly everybody else - to chase the year's best performing sector into the stratosphere.

And indeed, in his latest note f...



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ValueWalk

Coronavirus stimulus check: Tell IRS if you didn't get the payment yet

By Aman Jain. Originally published at ValueWalk.

We are now in the final week when a decision on the next coronavirus stimulus package is expected. However, many still haven’t received their first stimulus check. The IRS has said that it would continue to send payments through the end of the year. Yet, if you meet the eligibility requirements and haven’t gotten the coronavirus stimulus check, you should let the IRS know.

Q2 2020 hedge fund letters, conferences and more

When to contact IRS for coronavirus stimulus check

The IRS has already send the majority of the payments. Though the agency would be sending ...



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Kimble Charting Solutions

Here's How To Buy The Top Stocks In The Hottest Sectors During The Covid Crisis

Courtesy of Chris Kimble

Tech has been the place to be during the Covid-19 crisis. Investors Business Daily recently highlighted how one can own the strongest of the strong by just owning one ETF (See article here).

This chart looks at the Dorsey Wright Focus Five index ETF (FV), which reflects that it is attempting a bullish breakout while creating higher lows over the past 6-years.

The $2.1 billion fund tracks the Dorsey Wright Focus Five Index, which provides access to five First Trust sector and industry ETFs. Dorsey Wright & Associates selects the funds based on relative price momentum, then weights the compone...



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Digital Currencies

Twitter Says "Human Error" And "Spear-Phishing Attack" Responsible For Massive Bitcoin Hack

Courtesy of ZeroHedge

Twitter suffered from a major hack about two weeks ago and has now said that its staff was tricked by "spear-phishing", which is a targeted attack to trick people into simply handing out their passwords. 

Twitter staff were targeted through their phones, according to a new report from the BBC. The attacks then allowed hackers the ability to Tweet from celebrity Twitter accounts. Twitter has said it was "taking a hard look" at how it could improve its permissions and processes.

"The attack on July 15, 2020, targeted a small number of employees through a phone spear phishing attack. This attack relied on ...



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The Technical Traders

ARE THE MARKETS ABOUT TO TURN?

Courtesy of Technical Traders

Deborah Honig from Adelaide Capital asks Chris the question on everyone’s mind – where are the markets heading? Where is the ‘big money’, the early movers in the market, going? Chris and Deborah also look at the technicals for Gold and Silver and discuss whether Gold and Silver are starting a big run-up now, or should we wait before taking positions?

Learn more about our latest research and alerts on Gold, Silver, Oil, and Equities at www.TheTechnicalTraders.com.

...

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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Chart School

US Dollar Cycle Review

Courtesy of Read the Ticker

If investors can correctly forecast the US Dollar then their portfolio will be standing on better ground.

Jesse Livermore said investors must familiarise themselves with all matters of the market. The sine wave cycle below shows regular tops and bottoms and if the investor ignores this repeating phenomena it could be at their peril. If you decide to do so, you best have a good technical or fundamental reason.

The sine wave cycle below was found with readtheticker.com 'Cycle Finder Spectrum' use of 'Bartels' logic. Yes it is mathematics, but within the site RTT Plus service we also examine the dollar fundamentals  (like: inflation, money s...

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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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