Friday , 29 March 2024

Economy

The China Syndrome – Fully Understanding China’s Economic Prospects: Michael Pettis (+2K Views)

In order to argue that we will not see a sharp slowdown in Chinese growth, it is not enough to claim that a) some expert or institution has predicted that Chinese growth will not slowdown, b)that China has enough savings in its coffers to bail itself out of a crisis or c) that Beijing leaders cannot tolerate growth below 8%, so of course growth will not drop below 8%. As greater evidence for the bear camp surfaces, China bulls need stronger justifications for their positions or risk losing credibility. [In fact, they need precise answers to 3 questions put forth in this lengthy but extremely insightful (dare I say, absolute best, article on the China sydrome to have ever been written!) article. Words: 4130

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Canada Could Be Developing a Minsky Moment In Real Estate – Here’s Why (+2K Views)

According to the Case-Shiller 10-City index Canadian house prices only appreciated by 84% between 1990 and 2006 compared to 181% in the U.S.. However, as U.S. prices plunged by almost 33% between the peak in April 2006 and the trough in May 2009, the chart below shows that Canadian home prices continued to rise, driven by very low interest rates and relatively benign unemployment. By July 2012, they had reached similar heights as U.S. prices before their decline and fall. I believe that house prices and consumer debt levels are overextended in Canada and that a "Minsky-moment" may be developing in Canadian credit markets. [Let me explain why I have come to that conclusion.] Words: 1892

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World's Advanced Economies Sliding in Unison – Will This Possible U.S. Development Turn the Tide?

Every strong economy in the world is getting weaker at the same time, and when you look around the world, it's hard to see an emergency booster engine lying in wait. [In fact,] the odds of a recession are climbing everywhere and the expectations for growth are falling everywhere. [That being said, might the U.S. be that engine of growth in that] residential investment finally seems ready to climb out of its five year hole and improve the earnings and spirits of the world's largest national engine of consumption? [Let's look at the graphs of the global growth index of a number of countries and a graph of the IMF's forecast for GDP growth worldwide for a better understanding of how serious the situation really is and what could possibly provide a boost to the world economy in the coming year.] Words: 425

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October Will Be a Challenging Month for Investors for These 6 Reasons

October has a well-deserved reputation of being a volatile month for the market. Historically, it is the second-worst performing month after September, and it has had its share of market meltdowns (1929, 1987). I don't foresee anything that dramatic this October after the long rally. However, I think it is going to be a challenging month for investors for a variety of reasons. [Below are 10 reasons to be wary this October in particular.] Words: 498

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QE 3 Will Actually SUPPRESS the Economy! Here's Why

The Fed professes that QE 3 or as I call it, QE Infinity (QEI), will create jobs but I am not sure how they can expect anybody to buy their rationale. As we know, QE 1 and QE 2 did very little in the way of creating jobs. Might the Fed realize that QE Infinity could actually be counter-productive to economic growth?

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Peter Schiff: QEternity Has Its Limits – Here’s Why (+2K Views)

The latest round of quantitative easing (an additional $40 billion a month until conditions improve) has been dubbed as "QEternity" or "QE-Infinity" by its critics but it will end much before that. We are witnessing a massive bubble in US government debt, and we've reached the point where no one in charge believes it will ever end - an excellent contra-indicator. [Let me explain.] Words: 720

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