Economic Analysis
Whither China?
Outside the Box
June 18, 2013
All weekend long and this morning as I wake up in Monaco, the number of disparate publications screaming at me about problems in China is just overwhelming. Then I get myself up early to hear a speech by the esteemed British economist Charles Dumas of Lombard Street fame, and I am confronted with even more China. I have been watching China for a long time, expecting a crisis, as I readily admit I simply do not understand a country that has defied so many of the economic laws of gravity for so...
Economists Are (Still) Clueless
Thoughts from the Frontline
June 15, 2013
Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.
- John Maynard Keynes, A Tract on Monetary Reform
There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have insight to appreciate the incredible wonders of the...
The Risk of Government Policies and the Rationing of Retirement
Outside the Box
June 11, 2013
In addition to our own, there is another conference I normally go to every spring; but sadly, I missed it this year. Rob Arnott of Research Affiliates indulges me and lets me attend the annual Research Affiliates Advisory Panel he conducts at some exclusive location (usually but not always) in Southern California, in close proximity to one or more fabulous gourmet establishments. And he is an oenophile of the first rank, a pastime that at one time in my life was a huge attraction. I now just...
Banzai! Banzai! Banzai!
Thoughts from the Frontline
June 8, 2013
I shot an Arrow into the air
It fell to earth I know not where….
Henry Wadsworth Longfellow
As kids, not knowing that we were being politically incorrect on so many levels, we would shout “Geronimo!” when we were playing war or getting ready to do something reckless. (For those not familiar, Geronimo was a rather fearsome Apache chief who plagued Mexico and the American cavalry.) Sam Houston and his fellows cried, “Remember the Alamo!” as they rode down upon Santa Ana at San Jacinto. The...
Following the Fed to 50% Flops
Outside the Box
June 4, 2013
John Hussman is one of the savviest investing minds I know, and so I never miss his Weekly Market Comment. This week he wrote about an interesting disconnect between what investors believe about "fighting the Fed" (i.e., don't do it) and the reality of S&P 500 returns, and I've made that piece today's Outside the Box.
John leads off with a provocative fact: "… the last two 50% market declines – both the 2001-2002 plunge and the 2008-2009 plunge – occurred in environments of aggressive,...
Deus Ex Machina
Things That Make You Go Hmmm...
June 3, 2013
The tiny island of Salamis in Greece was the birthplace, in 480 BC, of one of the three great tragedians of the Classical Athenian era. Aeschylus and Sophocles were the other two, but the third member of that legendary triumvirate was not only the author of some 92 plays but also the subject of one of the earliest knock-knock jokes ever recorded:
Knock-knock
Who's there?
Euripides
Euripides who?
Euripides trousers? You menda dese trousers.
OK, so the Ancient Greeks in general (and...
Central Bankers Gone Wild
Thoughts from the Frontline
June 1, 2013
When Jonathan Tepper and I wrote Endgame some two years ago, the focus was on Europe, but we clearly detailed how Japan would be the true source of global volatility and instability in just a few years. “A Bug in Search of a Windshield” was the title of the chapter on Japan. This year, I wrote in my forecast issue that 2013 would be “The Year of the Windshield.” For the last two weeks we have focused on the problems facing Japan, and such is the importance of Japan to the world economy that...
Are We There Yet?
Outside the Box
May 28, 2013
Vitaliy Katsenelson is a modern-day American success story, the kind we need more of. He grew up in Murmansk, in the extreme northwest corner of Russia, north of the Arctic Circle and close to the Finnish border. He says he barely escaped a career in the engine rooms of Russian Navy vessels when his family wrangled a visa to emigrate to the US in 1991.
He finished high school here, knocked out a BA in finance at the University of Colorado at Denver, and followed up with an MS in finance and...
What On Htrae Is Going On?
Things That Make You Go Hmmm...
May 28, 2013
In the early 1960s, a new planet was discovered in the outer reaches of the universe, and it turned out to be a strange place, populated by some weird and wonderful characters. Originally the planet was a normal spheroid, but due to a peculiar set of events the planet is now cube-shaped.
The planet was given the name Htrae.
Htrae is better known as Bizarro World.
There are differing opinions as to how the planet was created, but it is generally acknowledged that it was fused together...
The Mother of All Painted-In Corners
Thoughts from the Frontline
May 25, 2013
Alice laughed: "There's no use trying," she said; "one can't believe impossible things."
"I daresay you haven't had much practice," said the Queen. "When I was younger, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast."
– Alice in Wonderland, Lewis Carroll
I wrote several years ago that Japan is a bug in search of a windshield. And in January I wrote that 2013 is the Year of the Windshield. The recent volatility in...