The Boeckh Investment Letter - Government Policy and the Markets: Prepare For Some Big Changes
When markets don’t perform the way politicians want, you can count on them to bypass, manipulate or manage these markets. All too frequently these attempts are motivated by short-term political needs where appearances take priority over substance. Currently market distortions in housing, credit and the financial system are huge and dangerously unstable. We are now beginning to pay the price. There is a critical shortage of political will to tackle the underlying problems and band-aid solutions will likely keep us lurching from one crisis to the next over the coming years.
As we discussed in The Great Reflation the steady increase in credit during the debt supercycle hid a multitude of sins. Distortions in both the domestic and global economy grew virtually unchecked behind a veil of prosperity. Such a facade was supported by the expansion of private debt relative to income or GDP–choose your yardstick. The distinction between wealth and credit became clear in the aftermath of the financial crisis. Peering behind the veil reveals an ugly, distorted picture: unsupportable private debt levels, spiraling public sector debt, massive trade imbalances with the accumulation of reserve assets of a few countries, and a flawed international monetary system. All of these issues imply economic stagnation and high structural unemployment in the U.S. and other developed countries.
- Deleveraging, What Deleveraging? - The 16th Geneva Report On The World Economy
Link to report: Deleveraging, What Deleveraging? It is widely accepted that high levels of debt (of various forms) have played a central role in the 2008-09 global financial crisis, the 2010-12 euro crisis and many previous crisis episodes. The adverse...
- Hussman Weekly Market Comment: The Heart Of The Matter
Over the past 13 years, the S&P 500 has underperformed even the depressed return on risk-free Treasury bills. Real U.S. gross domestic investment has not grown at all since 1999, and even as a share of GDP, real investment remains weak. The ongoing...
- Hoisington Q4 2011 Letter
High Debt Leads to Recession As the U.S. economy enters 2012, the gross government debt to GDP ratio stands near 100% (Chart 1). Nominal GDP in the fourth quarter was an estimated $15.3 trillion, approximately equal to debt outstanding by the federal...
- Hussman Weekly Market Comment: "illusory Prosperity" - Ludwig Von Mises On Monetary Policy
Illusory Prosperity - Ludwig von Mises on Monetary Policy"Credit expansion cannot increase the supply of real goods. It merely brings about a rearrangement. It diverts capital investment away from the course prescribed by the state of economic wealth...
- 2009 Chou Funds Annual Report
WAS THE GREAT STIMULUS A SILVER BULLET? - THINK AGAIN: It now appears that the great stimulus provided by almost all governments has averted the second Great Depression and the North American economy may well be on its way to recovery. However, looking...