Tag Archives | credit bubble

And now the stumble?

Last week the US Federal Reserve announced the second move in its so-called tapering process, and reduced its bond buying by another $10bn/month.  But there was only a temporary repeat in stock markets of the enthusiastic response to its first reduction in December.  We are thus about to test whether the blog’s theory of ‘two steps and a […]

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EU CPI Jan14

Deflation gets closer in Europe, USA and China

Demographics drives demand.  If it doesn’t, then its hard to think what does.  So forecasting economic growth depends on two key variables: If you have lots of young people in your adult population, then you should have fast growth If you have lots of older people, then you will be lucky to have any growth […]

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China auto sales could drop if lending squeeze continues

Imagine for a moment that you had become president or premier of China following the leadership transition in March.  You know that the country’s economic model has to change.  But you also know that you have to carefully develop your powerbase, whilst also putting in place new policies. Probably you would take things cautiously at […]

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“2 Steps and Then a Stumble”, as the Fed starts to taper

The most important event of the past week, and possibly of the whole year, was Wednesday’s decision by the US Federal Reserve to finally “taper” its vast stimulus effort – now worth $4tn, nearly 25% of US GDP. The timing was no great surprise.  The blog was convinced Ben Bernanke would want to start the process […]

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The trend is your friend, until it isn’t

Investing in today’s financial markets is relatively easy.  You simply have to believe that governments in the US, Japan and Europe will continue to provide plenty of free cash to investors as part of their Recovery Scenario of a quick return to ‘normal growth’.  It doesn’t matter whether the investor believes in the Scenario, the driver is simply the fear of […]

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Boom/Gloom Index hits record high as western financial markets soar

The best view is always from the top of the mountain.  At least that is how it feels today, with this month’s IeC Boom/Gloom Index (blue column) hitting a record high.  Nor it is alone, as the S&P500 (red line), the world’s most important financial market index is also at record levels. Central banks broke […]

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A little bit of China stimulus goes a long way in housing

It was only a “mini-stimulus” that was delivered by China’s new leaders in July.  Well, thank goodness it wasn’t more, to judge by the above chart from Albert Edwards at SocGen.  It shows how house price inflation has jumped in 69 of China’s 70 main cities between March and September: In March (orange column) inflation […]

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China’s auto sales rise as bank lending booms

Autos are now the largest single manufacturing industry in the world.  Not only do they directly and indirectly employ vast numbers of people, but they are also increasingly key to consumer spending.  Thus it is no surprise that governments have tried to increase auto sales since the Crisis began in 2008. China is the prime example of […]

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Investors decide central banks may not know what they are doing

The blog was speaking last week at the major Euromoney investor conference on bond markets.  It followed a keynote by the head of the UK’s Debt Management Office, who noted that the Bank of England now ‘owned’ ~30% of total UK government debt compared to none in 2008 The reaction to his speech revealed just how investor […]

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China loans Sept13

China lending remains out of control ahead of November’s plenum

The blog’s views on the unsustainability of China’s epic economic growth since 2009 have now become truly mainstream.  Everyone now agrees, including the new leadership, that it was created by a credit bubble.  State-owned China Daily has even now warned that a commercial property bubble potentially now exists alongside the residential bubble and the infrastructure ‘white elephants’, adding: “Once […]

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