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    Outside the Box, April 2011

    Iraq, Iran, and the Next Move

    April 28, 2011

    For those of you that have read about my new book, Endgame, you know I make the point that, while there are no good options for dealing with the debt crisis, the worst choice of all is doing nothing. In today's Outside the Box, you'll see a similar argument — but this "lesser of two evils" situation deals with the U.S. troop withdrawal from Iraq, and the ever-present Iranian push to dominate the Persian Gulf region.

    George Friedman — my friend, and founder of STRATFOR, a global intelligence...

    The Mess in Europe

    April 26, 2011

    The disconnect in Europe just gets worse and worse, as I sadly predicted at least a few years ago, and have made a big deal out of over the last year, with the very pointed note that a European banking crisis is the #1 monster in my worry closet. Today, within 15 minutes of each other, I ran across the following three notes, from Zero Hedge, the London Telegraph, and the Financial Times, with a quote from Bloomberg as well. Read them all. And then try and figure out how they can...

    Charles Plosser and the 50% Contraction in the Fed’s Balance Sheet

    April 19, 2011

    Dr. John Hussman is no stranger to Outside the Box readers. And his recent posting has my mind reeling. In essence he is saying that if the Fed wants to stop the QE and allow rates to rise, they must either reverse the QE or bring on inflation. And he does it with numbers and his usual strong reasoning. I really did read this 3-4 times, thinking through the implications.

    “There are a few possible outcomes as we move forward. One is that the economy weakens, and the Fed decides to...

    STRATFOR’s 2011 Second Quarter Forecast

    April 15, 2011

    I always look forward the beginning of a new quarter, because it gives me a chance to read STRATFOR's update of their annual forecast, which I shared with you in January. Their quarterly forecast explores developing geopolitical trends in each region of the world.  In recent months and quarters I've noticed a much wider recognition in published discussions of "geopolitical risk" as it relates to investments.  Of course geopolitical risk is nothing new to my long-time readers who've been plugged...

    The End of QE2: Major Policy Shift Ahead

    April 11, 2011

    This week’s Outside the Box is from my friend David Galland, an interview he did for The Casey Report, and it represents a philosophical train of thought more in line with Austrian economics and libertarianism than my own. But if we only read what we already think, then how do we learn? It is only when your ideas are challenged and you must determine why the other guys are wrong and you are right, that you can either become more firm in your beliefs, or change. And much of what David says in...

    Birthdays and Investment Risk

    April 4, 2011

    “Tail risk (the risk of large losses) is dramatically underestimated by many investors and the tools we have available to manage such risks are hopelessly inadequate. Financial theory which is taught at business schools and universities all over the world is plainly wrong.”

    This week we turn to my friend Niels Jensen of Absolute Return Partners in London for our Outside the Box offering, in which he looks at tail risk, Modern Portfolio Theory, and a risk he identifies as Birthday Risk. It...