I apologize to regular readers (if any) but I’ve been on the road for more than a week. Meetings and keeping up with the game of musical markets combined with some too-good-to-miss leisure activities to keep me from putting finger to keypad.
I’m currently in Manila for an ASEAN workshop/conference which was meant to be about [...]
Well, it is ugly. I think I can stop worrying about my morbid pre-occupation with the macro environment distracting me from company specific issues. Right now liquidity, solvency and credit are the lions, tigers and bears prowling the market. If you are not dodging bullets, you’re road-kill. It is a day for mixed metaphors.
The best [...]
Krugman doesn’t think inflation expectations will lead to wage growth:
… inflation is well under control: wages aren’t taking off, the labor market is weak, and once oil and food price spikes end we’ll be, if anything, in a deflationary environment… I don’t think there’s any fundamental inflation problem, just a one-time hit on food and [...]
The housing-rescue legislation passed by the House and Senate offers emergency funding to Fannie Mae and Freddie Mac along with establishing a $300 billion fund to help struggling homeowners… and now bond investors are again snapping the portfolio up because of the combination of high yields with a government guarantee,
“We like it,” said [...]
Weird week. The SEC chairman Cox makes a big deal before Congress of a new order banning naked short selling of F&F and 16 other finance institutions although naked short selling has always been illegal and the SEC could have busted naked short-sellers at any time… I’m not sure how different this is from the [...]
Krugman has a go at working out some of the impact of higher oil on transport, citing this study:
[D]oubling transport costs from their median value … reduces trade volumes by 45%. Moving from the median value of transport costs to the 75th percentile … cuts trade volumes by two-thirds.
He guesstimates that current fuel costs will [...]
Krugman posts this chart from Oil Drum as a proxy for how much construction is going on in China… Pretty dramatic. Sort of a mirror image of the US rankings in world spending on military. Guns vs concrete…which is a better investment? I suspect that will be clear within the next decade.
A couple of pieces to sum up the state of markets; but first, a mystery quote:
”The whole wealth so swiftly gathered in the paper values of previous years vanished. The prosperity of millions of American homes had grown up a gigantic structure of inflated credit, now suddenly proved phantom. Apart from the nation-wide speculation in [...]
From Grains Gone Wild. The money quote:
Cheap food, like cheap oil, may be a thing of the past.
Krugman makes the case for structurally higher prices for food due to pricy oil, global warming, bad policy (eg. Iraq, warming, ethanol) and growth in Asian demand - “the march of the meat-eating Chinese”. He even sees a [...]
Krugman isn’t optimistic about the Fed’s fourth plan to deal with the credit crisis. He points out that it is not the liquidity of the system but the solvency that is in question.
Suppose that there’s a nasty rumor about the First Bank of Pottersville: people say that the bank made a huge loan to the [...]