Economic Analysis

The Seven Fat Years of ZIRP

Thoughts from the Frontline

December 20, 2015

“The Fed’s emergency policies since 2008 have in one sense been a huge success, though we will never know the counter-factual. A great depression was averted. Output is 10pc above its previous peak. Employment is up by 4.7m.

“Yet zero rates and QE set off torrid credit bubbles in the emerging world, pushing up the global debt ratio by 30pc of GDP beyond their previous record in 2008. The Bank for International Settlements calls this a “Pareto sub-optimal” for the world as a whole. The chickens...

The Fed Awakens

Outside the Box

December 16, 2015

I got the following from a friend at J.P. Morgan just a few minutes ago. You might have had something like it hit your inbox as well.

WASHINGTON – Federal Reserve officials said Wednesday they expect a more gradual pace of short-term interest rate increases in coming years than they did three months ago.

They also tweaked very modestly their views on the outlook for the economy, according to forecasts released after the conclusion of the Fed's two-day policy meeting. Officials made small...

Origins and Strategy of the Islamic State

Outside the Box

December 14, 2015

Today’s Outside the Box is from my good friend George Friedman of Geopolitical Futures. George, who founded the well-known Stratfor, is one of the world’s top geopolitical forecasters. I’m very excited to welcome him as a Contributing Editor for Mauldin Economics.

Starting today and every Monday, we’ll publish a regular feature from George called This Week in Geopolitics. In this weekly letter written for Mauldin Economics, George will highlight the top international events that investors and...

George Friedman’s World of Geopolitics

Thoughts from the Frontline

December 11, 2015

Today I can finally announce an exciting event for Mauldin Economics and for me personally. I believe you will be excited, too.

Longtime readers know that George Friedman, one of the world’s foremost geopolitical analysts, and I are very close friends. We have been collaborating for years.

Of Central Bankers, Monkeys, and John Law

Outside the Box

December 9, 2015

Back in April, my good friend Charles Gave, Chairman of Gavekal, penned a short but brilliant piece in which he likened central bankers to a bunch of monkeys in a cage. In the unforgettable “Of Central Bankers, Monkeys and John Law,” he proceeded to run down the parallels between France’s 18th-century “Mississippi Bubble” and the situation in the Eurozone today.

Now Charles has given us a follow-up, titled “The Apex of Market Stupidity,” in which he regales us with a sardonic but spot-on recap...

You Have Questions, I Have Answers

Thoughts from the Frontline

December 6, 2015

Every week when I write letters to you, I face the question of what to write about and where to start. I actually had a story finished for you early Friday (and it was unusual for me to be done so early).

Dear Media, Stop Freaking Out About Donald Trump’s Polls

Outside the Box

December 2, 2015

I’m going to offer something a little different in this week’s Outside the Box. Nate Silver has consistently been one of the best political analysts of the past 12 years. I wasn’t terribly enamored of his move from the New York Times to ESPN – to go back to covering sports rather than politics – but he still covers politics over at 538.

This past week he wrote an article called “Dear Media, Stop Freaking Out About Donald Trump’s Polls.” It’s not that he’s got an anti-Trump bias, but he points...

Holidays amid the Threats

Thoughts from the Frontline

November 27, 2015

“Nobody in Europe will be abandoned. Nobody in Europe will be excluded. Europe only succeeds if we work together.”
– Angela Merkel, December 15, 2010

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough.”
– Mario Draghi, July 25, 2012

“We have to safeguard the spirit behind Schengen,” Mr Juncker told the European Parliament on Wednesday. “Yes, the Schengen system is partly comatose. But . . . a single currency does not exist if...

Be Careful Out There

Outside the Box

November 25, 2015

Michael Lewitt, author of The Credit Strategist, likes to get right to the point. Here’s the opening paragraph of this month’s TCS:

Commodity prices are plunging, the dollar is powering higher, the yield curve is flattening, ObamaCare is collapsing, global trade is plummeting and terrorism is spreading across the globe. The high yield credit markets are sending distress signals and 10-year swap spreads are negative. Energy companies are going out of business faster than you can say “frack” and...

The Economic Impact of Evil

Thoughts from the Frontline

November 22, 2015

“Political leaders still think things can be done through force, but that cannot solve terrorism. Backwardness is the breeding ground of terror, and that is what we have to fight.”

– Mikhail Gorbachev

“... Europe exemplifies a situation unfavorable to a common currency. It is composed of separate nations, speaking different languages, with different customs, and having citizens feeling far greater loyalty and attachment to their own country than to a common market or to the idea of Europe.”