Thoughts From the Frontline, August 2013

How Do I Hate Thee?

August 31, 2013

How do I love thee? Let me count the ways.
I love thee to the depth and breadth and height
My soul can reach, when feeling out of sight
For the ends of Being and ideal Grace.
… I love thee with the breath,
Smiles, tears, of all my life! — and, if God choose,
I shall but love thee better after death.

– Elizabeth Barrett Browning (1806-1861)

When I was growing up, Labor Day always marked the official end of summer, since we started...

France: On the Edge of the Periphery

August 25, 2013

"The emotional side of me tends to imagine France, like the princess in the fairy stories or the Madonna in the frescoes, as dedicated to an exalted and exceptional destiny. Instinctively I have the feeling that Providence has created her either for complete successes or for exemplary misfortunes. Our country, as it is, surrounded by the others as they are, must aim high and hold itself straight, on pain of mortal danger. In short, to my mind, France cannot be France without greatness.

–...

Signs of the Top

August 17, 2013

The investment media seems obsessed with the question of whether the Fed will taper. The real question should be not about "tapering" but about credibility. What happens when fundamentals become the narrative as opposed to what the central bank is doing? What happens if the Federal Reserve throws a liquidity party and nobody comes? Today we look at some of the fundamentals. The market is in fact overvalued, but that doesn't mean it can't become more overvalued. Is this August 1987 or August...

We Can’t Take the Chance

August 10, 2013

What would it have been like to be in the decision-maker's seat at a central bank in the midst of the crisis in 2008-09? You'd know that you won't have the luxury of going back and making better decisions five years later. Instead, you have to act on the torrent of information that's coming at you from every quarter, and none of it is good. Major banks are literally collapsing, the interbank market is almost nonexistent, and there is panic in the air. Perhaps you feel that panic in the pit of...

Can It Get Any Better Than This?

August 3, 2013

What in the world is going on?! As I write this letter from the Maine woods, the S&P 500 has just cleared 1,700 for the first time. The German DAX continues to set all-time highs above 8,400. The United Kingdom’s FTSE 100 is quickly approaching its 1999 record high of 6,930, and its mid-cap cousin, the FTSE 250, just broke through to its all-time level above 15,000. And last but not least, Japan’s Nikkei 225 is extending its gains once more, toward 14,500. This weekend I am sitting around with...