There is a problematic symbiotic relationship between the Federal Reserve (drunk #1) and large US banks (drunk #2).
• The Fed keeps interest rates at historically low levels.
• Low interest rates are paid by banks to consumers. Banks then loan at higher rates and make a profit on the interest spread.
• Leverage it up 10X, rinse, [...]

Jack Nicholson’s character in “ A Few Good Men “ had one of the coolest lines in a movie. It is also strangely apropos in describing our current economy.
We have become accustomed to our economy rolling along at 3-4% GDP growth for a seemingly endless time-span. Then reality hit. To wit, it turns out you [...]

I don’t know if this is just poor policy or political gamesmanship (why not both?), but the White House tried to get $13B allocated to go to Seniors as a cost of living (COLA) adjustment to Social Security. From a (responsible) public policy perspective, this is a poor idea. If consumer prices declined this year [...]

We have written fairly extensively on China over the past few years. Perhaps more important than other reasons, we pay a lot of attention to China because:
- We are likely to make more money there than the US in the next few years.
- China is likely to show large market moves ahead of the US.
- [...]

Now that cash for clunkers is over, let’s examine what reality looks like. August (the cash for clunkers program time period) experienced an annual new car sales rate of 14.1M vehicles. September is seeing new car sales at an annual rate of 7 – 8M — a 28-year low. For some perspective, here are previous [...]

I have written repeatedly over the past year (and longer than that) that the US banking system is very weak – more specifically, that it is weaker than the Fed, Treasury and financial press would have us know.  Here is an update, and a summary of what it means to how we are investing…

The Economist [...]

Every US President since Jimmy Carter has instituted international anti-trade policy at some point in their administration. George W Bush got into a mild trade war with China in 2002 over steel prices. Barack Obama can now add his name to the list, but the scale of the trade war is closer to bun-fight.
The Obama [...]