201802.22
0
3

Blaming The Boom Basis

Once the sick man of the global economy, Europe’s system had roared back in 2017. According to the narrative, everything is right right now on the Continent. Manufacturing couldn’t possibly be any better, and the ECB forced into “emergency” monetary measures for longer than almost anyone else (except, as always, Japan) is talking confidently about…

201802.21
9
5

Independence, At Some Point

The Federal Reserve is ostensibly an independent agency of the government. Already it is beset by a contradiction. How can it be independent if it is otherwise an arm of the federal structure? It’s a problem beyond mere perception that officials have struggled to overcome since its inception. Between the Banking Act of 1935 that…

201802.21
3
4

Not At All The Inflation They’ve Been Hoping For

The National Association of Realtors is confused. The trade group for real estate professionals and salespeople just reported a significant drop in the level of resales for January 2018. After peaking at an annual pace of 5.72 million (revised) in November, existing home sales declined to 5.56 million (revised) in December and now just 5.38…

201802.20
2
6

The Einstein Stimulus Equation

The housing bubble began to reverse in the middle of 2006. Strangely, Economists presented with the possibility were almost uniformly confident that it wouldn’t matter. Forgetting the market and liquidity issues, even by the middle of 2007 it was clear the end of the housing bubble had already restrained economic growth. Confidence abounded anyway, largely…

201802.20
1
4

What The Petroyuan Is Not

In mainstream monetary convention, bank reserves are at the center of the monetary pyramid. They are the byproduct of any central bank policy which requires direct action. In the US system, they had been absent, however, until around 2008. The reason was the Federal Reserve’s belief that it didn’t require any change in the corresponding…

201802.20
2
4

Stubborn Recoveries And The Bad Ideas That Follow From Them

We have ample enough evidence for the efficacy, or inefficacy really, of tax cuts as fiscal stimulus. They have been deployed numerous times all over the world the last ten years, and the results have been nearly identical in all. Most charitably, proponents have been left with some form of “jobs saved” to describe, counterfactually,…

201802.16
4
4

A Rough Sketch For Hong Kong, China, Maybe A Lot More

What we know about what’s going on in Hong Kong is limited. That’s a real shame because I have no doubt what has been transpiring is important for a lot more than Hong Kong and the short run. The connections are too obvious for it to run any other way. I’ve been asked several times…

201802.16
3
4

The Home Builder Rationalization

Home construction rebounded in January 2018, though that may have been nothing more than statistical noise. Total permits filed to build new residential structures totaled 1.396 million (SAAR) last month, up from a revised 1.300 million in December. The entirety of that increase was due to a big jump in permits for the multi-family segment….

201802.16
0
4

Escalation(s) TIC

According to the US Treasury Department’s Treasury International Capital (TIC) report, foreign private holders of UST’s had been selling them steadily in the last quarter of last year. Estimates including those just released for December 2017 show a total net reduction of $24 billion. While that’s not a huge number, private overseas interests typically buy…

201802.15
2
3

Escalation(s)

This is the Year of the Dog, or it will be starting tomorrow across Asia. Tonight marks the opening of celebrations for China’s Spring Festival Golden Week. These weeklong breaks in Chinese contributions to the global system have over the past few years rarely been so uneventful. Their absence has been noted both good and…