It’s more than Freddie and Fannie, the US banking system is in trouble, $500 billion and counting. Yet another crisis confronts us, as we will have to deal with the aftermath of a rather large number of bank failures over the next year, which is likely to overwhelm the ability of the FDIC to insure your bank deposits.
A Mid-Year Correction. Whatever Happened to Decoupling? The UK Starts to Slow. A Recession by Any Other Name. What’s a Central Banker to Do?
Last week’s letter was the first part of a speech I have been giving on what I think will be the rise of a new asset class. This week will be the second and final part.
We vaporized 60 percent to the shadow banking system, the SIVs and CDOs, the people who actually bought US mortgages, who bought student loans, who bought credit cards, who bought car loans. That’s gone and it’s never coming back. As we’ll see, it’s going to take well into the next decade for us to create a completely new infrastructure to replace the broken one.
Earnings and Mr. Bear. Earnings Before Bad Stuff. How Ugly Can it Get? A Lean Mean Reversion Machine. Some Thoughts on Energy. Oregon, Maine and a Wedding.
US consumer price inflation rose at its fastest rate since November 2007 as oil and energy costs continue to soar.
The US Labor Department said prices increased by 0.6% in May, a higher increase than forecast.
John Mauldin examines the causes of inflation in in Outside the Box…
Flooding in the Midwest and fears of crop damage caused corn prices to climb in Chicago for the eighth consecutive day — their biggest gain in 11 weeks. Prices are expected to hit $8 a bushel by next week.
“Corn is in trouble because of the wet spring that has drenched the midwest,” says Justice Litle in Taipan Daily.
Yesterday, the USDA said in a report that American corn output will be down significantly from last year’s estimate.
But after all of this, you suddenly realize that the money that was taxed away comes roaring back into the economy as government spending, making a mockery of the whole thing, and then there is inflation to consider.
The new law was the Monetary Control Act of 1980. Why did Congress pass it? Because the banks were hemorrhaging money. Why? Because Federal Reserve policy had changed.