Dan Denning is a contributing editor to Diggers & Drillers and a regular columnist for Money Weekly, a Taiwanese financial publication. From 2000 to 2006, Dan was the editor of Strategic Investment of Agora Publishing. His reporting and analysis for The Daily Reckoning is read by more than 500,000 people regularly.
All around the world this Friday, investors are wringing their hands. The papers are full of the cause. More job losses. Slower growth. Bankruptcies. Debt. There. Don’t you feel better now?
Sometimes you have to just stand back and admire the extremes a real bubble can produce. What you have now, as Bill explained last night at the Doomer’s Ball, is the last greatest bubble of them all, the bubble in U.S. bonds. It’s reaching staggering levels.
Stuck for Christmas gift ideas? Why not try a barrel of oil? You can get one for around US$40 these days. That’s 54% lower than this time last year and 72% below the price on July 14th ($145.16).
Selling stuff you bought with borrowed money is a process that’s mostly been confined to the financial markets in 2008. But now we see the behavior migrating into the economy. At the household level, a collective sense of thrift is beginning to set in. People are selling what they don’t need to raise cash.
t’s official, for what it’s worth. Both Europe and Japan are in recession. The Eurozone contracted by 0.2% for the second straight quarter. Germany (the largest economy in Europe) and Italy (fourth largest) both shrank in the third quarter. Japan’s economy-the world’s second largest-shrank by almost half a percentage point in the third quarter.
Not much. The world keeps turning. And the world economy keeps falling apart. Here in Australia, shares of port and rail outfit Asciano (AIO) fell off the table after a Citigroup analyst changed his valuation of the company and moved it from “buy” to “sell.” Asciano is down 93% from its all time high and was down nearly 60% yesterday before going into a trading halt.
Dan Denning takes issue with the idea that the Fed will be able to mop up the excess liquidity caused by its monetary expansion. Foreign savers are not going to keep funding US deficits forever. And that means the Fed must print more dollars to raise money. And that is super inflationary.
We are not going to see the world’s best businesses this cheap for a long time, says Dan Denning. He says it’s not hard to imagine another round of global rate cuts and a massive stimulus package in the US. And then there is the ‘Obama effect’. In other words, if you don’t want to own these equities now, why bother being in the market at all?
You know it’s a real financial crisis when capitalists are being told what to do by a bunch of socialists and communists. But these are the times we live in. Ironic and moronic.