Economic Analysis

Debt Be Not Proud

Thoughts from the Frontline

February 24, 2015

Some things never change. Here is Eugen von Böhm-Bawerk, one of the founding intellectuals of the Austrian school of economics, writing in January 1914, lambasting politicians for their complicity in the corruption of monetary policy:

What Uber Could Teach the American Economy

Outside the Box

February 20, 2015

When I travel around the country, one of the questions that comes up often in conversation is, where will the jobs of the future come from? I have a stock answer that I glibly offer:

In 1980, the Japanese were beating our brains out. Inflation was well into the double digits, as was unemployment. Finding a job was hard (I know), as one industry after another was being reconfigured and jobs seemed to be disappearing left and right. The answer to the question “Where will the jobs come from?”...

Mamas, Don’t Let Your Babies Grow Up to Be Pension Fund Managers

Thoughts from the Frontline

February 15, 2015

We do not have to look to Greece to find massively underfunded obligations. Here in the US we can find hundreds of examples, willingly created by politicians and businessmen who proclaim they are working for the public good. We call them pension funds, but they’re just another form of unfunded debt. A sovereign bond is a promise to pay a certain amount of money over time. A defined-benefit pension fund is a promise to pay a certain amount of income over time. The value of either is determined...

Hoisington Quarterly Review and Outlook – Fourth Quarter 2014

Outside the Box

February 11, 2015

Forecasting is a singularly difficult task and is more often than not fraught with failure. The Federal Reserve has some of the smartest economists in the world, and yet their forecasts are so wrong so often (as in, they almost never get it right) that some have pointed out that it’s almost statistically impossible to be as bad as the Fed. Yet they continue to issue such forecasts and to base economic and monetary policy on them. Go figure.

Their forecasts, like most economic predictions,...

The Eurozone: Collateral Damage

Thoughts from the Frontline

February 8, 2015

Collateral damage. Unintended consequences. Friendly fire. Certainly no one intended to have a global banking meltdown when they let Lehman Bros. go under.

The Preface from Flashpoints

Outside the Box

February 4, 2015

All eyes are focused on Europe this week as another Greek drama plays itself out. I have to admit that in my student days I was forced to sit through a number of Greek dramas, which are admittedly a fine part of our cultural heritage; but while I can appreciate their time and place in history, I really can’t say that I enjoyed them all that much.

And while I can appreciate the passions involved in the unfolding Greek melodrama that is sweeping Europe, I must admit that I’m a bit weary of...

Portfolio Strategies 2015: Investing in an Age of Divergence

Thoughts from the Frontline

February 2, 2015

With all the negative news out of Europe, how do you find a positive story? Is there a way to structure a portfolio that gives you permission to be more aggressive when there are danger signs all around? Everyone is worried about being blindsided by a significant downdraft in the markets when maybe we should be thinking about making sure we don’t miss a bull market somewhere. These and several dozen other topics were on the table when the Mauldin Economics writing team gathered here in Dallas...

2015 Investment Themes

Outside the Box

January 28, 2015

“If it ain’t broke, don’t fix it,” says my friend Gary Shilling as he kicks off today’s Outside the Box. He’s referring to his investment themes for 2015. He first gives us 11 reasons to continue favoring long Treasury bonds. That’s an obvious play for him if you know his view, but it’s nevertheless a compelling one this year and one that you should think through, given the specter of deflation about in the world, the firing up of QE in Japan and Europe (which gives folks money to buy …...

How Global Interest Rates Deceive Markets

Thoughts from the Frontline

January 25, 2015

“You keep on using that word. I do not think it means what you think it means.”

– Inigo Montoya, The Princess Bride

“In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

“There is only one difference between a bad economist...

The Cult of Central Banking

Outside the Box

January 20, 2015

In today’s Outside the Box, good friend Ben Hunt informs us that we have entered the cult phase of the Golden Age of the Central Banker:

We pray for extraordinary monetary policy accommodation as a sign of our Central Bankers’ love, not because we think the policy will do much of anything to solve our real-world economic problems, but because their favor gives us confidence to stay in the market. I mean, does anyone really think that the problem with the Italian economy is that interest...