Money and Finance
- Links
Kyle Bass on Wall Street Week (video) (LINK) Mutual Fund Observer, January 2016 (LINK) Hussman Weekly Market Comment: The Next Big Short: The Third Crest of a Rolling Tsunami (LINK) Over the holiday, we went with a group of friends to see The...
- Hussman Weekly Market Comment: Yes, This Is An Equity Bubble
Link to: Yes, This Is An Equity BubbleNow, as we observed in periods like 1973-74, 1987, and 2000-2002, severe equity market losses do not necessarily produce credit crises in themselves. The holder of the security takes the loss, and that’s about...
- Richard Duncan Quotes
Longer excerpt from The New Depression (taken from my Kindle highlights, so the excerpts aren’t necessarily the paragraphs I have put them in below, and there may be things in between that I didn’t highlight).The quantity theory of money held that...
- Hussman Weekly Market Comment: Bernanke Leaps Into A Liquidity Trap
Simply put, monetary policy is far less effective in affecting real (or even nominal) economic activity than investors seem to believe. The main effect of a change in the monetary base is to change monetary velocity and short term interest rates. Once...
- Hussman Weekly Market Comment: Defensive, With A Measure Of Equanimity
Probably my clearest drawback as an investment manager is that I have too often assumed that investors should recognize what seemed to me to be patently obvious dangers (the predictable collapse of the dot-com bubble, the tech bubble, the housing bubble,...
Money and Finance
How Do You Say “Minsky” in Mandarin? - By Christopher Pavese
Wikipedia defines a Minsky Moment as, “a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such moments occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money. The spiraling debt incurred in financing speculative investments leads to cash flow problems for investors. The cash generated by their assets no longer is sufficient to pay off the debt they took on to acquire them. Losses on such speculative assets prompt lenders to call in their loans. This is likely to lead to a collapse of asset values. Meanwhile, the over-indebted investors are forced to sell even their less-speculative positions to make good on their loans. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.”
GDP grew faster than credit for years during China’s Economic Growth Miracle. But since the financial crisis, when policymakers opened the credit spigots wide open, “the bubble has become so big that sustaining it requires twice as much money as the real economy needs,” per Stephen Roach via Caixin. Roach claims that for every three yuan of monetary increase, two go toward sustaining the bubble. In the first quarter of this year for example, total credit growth in China accelerated to north of 20% – more than double the pace of GDP growth. This gap has been widening for more than a year, as illustrated in the graphic below.
- Links
Kyle Bass on Wall Street Week (video) (LINK) Mutual Fund Observer, January 2016 (LINK) Hussman Weekly Market Comment: The Next Big Short: The Third Crest of a Rolling Tsunami (LINK) Over the holiday, we went with a group of friends to see The...
- Hussman Weekly Market Comment: Yes, This Is An Equity Bubble
Link to: Yes, This Is An Equity BubbleNow, as we observed in periods like 1973-74, 1987, and 2000-2002, severe equity market losses do not necessarily produce credit crises in themselves. The holder of the security takes the loss, and that’s about...
- Richard Duncan Quotes
Longer excerpt from The New Depression (taken from my Kindle highlights, so the excerpts aren’t necessarily the paragraphs I have put them in below, and there may be things in between that I didn’t highlight).The quantity theory of money held that...
- Hussman Weekly Market Comment: Bernanke Leaps Into A Liquidity Trap
Simply put, monetary policy is far less effective in affecting real (or even nominal) economic activity than investors seem to believe. The main effect of a change in the monetary base is to change monetary velocity and short term interest rates. Once...
- Hussman Weekly Market Comment: Defensive, With A Measure Of Equanimity
Probably my clearest drawback as an investment manager is that I have too often assumed that investors should recognize what seemed to me to be patently obvious dangers (the predictable collapse of the dot-com bubble, the tech bubble, the housing bubble,...