While we do have the ability to choose our future path, taking action today would require more economic pain and sacrifice than elected politicians are willing to inflict upon their constituents. This is why throughout the entirety of history, every empire collapsed eventually collapsed under the weight of its own debt.
A low level of economic complexity isn’t necessarily a problem. Many countries with middle-to-low scores in the ranking have great standards of living and a high level of wealth. Countries like Canada, Norway, and Australia were all well down the list.
The issue of Fed vs President is not going away – while the market broadly believes Powell’s and the Fed’s independence is sacrosanct, and Trump can’t sack him, it damages the credibility of the Presidency that Trump still tries to bully the Fed. But – critically - it shouldn’t have that much effect on markets, because we all know that’s just the way it is...
For some farmers, “Farmageddon” is simply too much to bear. Seeing a farm that you put your blood, sweat and tears into go under can be absolutely devastating emotionally, and authorities are telling us that the number of farm suicides appears to be rising…
The corrupt and manipulated paper gold market is guaranteed to fail. A market that is leveraged 300X the underlying physical or real market has no chance of survival. When the holders of paper gold realise that they are holding a worthless piece of paper, the whole paper market will implode and gold surge.
The centre-right president of Chile, having initially taken a hard line against the protesters, has comprehensively caved in to their demands.
There was sadness and dismay in eastern Idaho’s potato community this weekend as the 2019 harvest wound down and growers began tallying up their losses from October’s disastrous freeze while pondering what to do with the tons of unusable tubers it left behind. This season’s harvest will be marked by tons of decaying potatoes for which there is no home.
The example I use most often is the resemblance to “stretching a rubber-band.” Stock prices are tied to their long-term trend which acts as a gravitational pull. When prices deviate too far from the long-term trend they will eventually, and inevitably, “revert to the mean.”
US consumer debt — which includes credit cards, student loans, auto loans, and mortgages — now totals over 14 trillion dollars. This massive government and private debts put tremendous pressure on the Federal Reserve to keep interest rates low or even to “experiment” with negative rates. But, the Fed can only keep interest rates, which are the price of money, artificially low for so long without serious economic consequences.
Freedom House warns that mass social media surveillance is growing. "Governments around the world are increasingly using social media to manipulate elections and monitor their citizens, tilting the technology toward digital authoritarianism." “Many governments are finding that on social media, propaganda works better than censorship,” said Mike Abramowitz, president of Freedom House. “Authoritarians and populists around the globe are exploiting both human nature and computer algorithms to conquer the ballot box, running roughshod over rules designed to ensure free and fair elections.” "Governments from across the democratic spectrum are indiscriminately monitoring citizens’ online behavior to identify perceived threats—and in some cases to…
One of the key factors driving stocks higher in the wake of a trade “accommodation” rather than a peace treaty is momentum – markets want to go higher, anticipating growth. But the market is equally driven by the volume of cash ready to be thrown at it. There is no shortage of ready liquidity - in this sense of too much easy money chasing too few assets, rather than liquidity: “who wants to buy this” conundrum.
To the extent that government can stimulate growth, it’s through structural reforms that improve the investment climate: Cut red tape. Reduce workplace regulation. Fast-track tax cuts. Fix the state-based payroll taxes and stamp duties on property that stifle labour mobility. Make the 30 per cent company tax rate more internationally competitive. Break the construction union’s monopoly power. Restore monetary policy to its appropriate role of maintaining price stability.
The Lib Dems said in May 2016 “…a vote to Leave would represent an immediate and profound shock to our economy. That shock would push our economy into a recession and lead to an increase in unemployment of around 500,000”. Well, the economy did not go into recession, unemployment has fallen by over 300,000 since mid-2016 and employment has risen by over 800,000.
There is massive danger is a reeling bond market. If we see rising yields morph into a serious bond market meltdown, the melt-up in stocks could split and go rancid very quickly. Rising rates have massive negative implications for corporate credit and without the juice of further central bank easing – stock markets could well lose heart.