Hustlers' High Time Preference Does Them In

“Hustlers” cost $20 million to make and is closing in on $100 million in box office receipts world-wide after only a couple weeks of showings.  There was a healthy Friday night crowd at a local theater when I saw the film, with the audience 80-90 percent female. It was a girls' night out to see JLo and company drain the credit cards of Wall Street A-holes--pre and post 2008 financial meltdown.  

More Financial Doom on the Way

His simple conclusion is “Runaway private debt and the resulting overcapacity does a better job than any other variable in explaining and predicting financial crises.” The author’s only mention of business cycle theory is to give a hat tip to Hyman Minsky’s devolution of loan quality during the boom phase from “hedge” to “speculative” to “Ponzi.”   

Tariffs Add to China's Banking Bust

China’s banks hold $30 trillion in deposits according to Alexander Campbell, more or less double the amount of aggregated U.S. bank deposits.  Campbell was pitching Alex Rosenberg on Real Vision on his thesis of buying gold in Yuan terms with the idea that bank bailouts take a flood of central bank created fiat money to paper over.  So while the Chinese may want to keep the Yuan near the 7 to the dollar range, bank busts are just beginning in China and 7 may become a distant memory.   

White Collar Welfare

Her account, “Washington Siren: A Woman’s journey through scathing scandals, lies, and secrets inside the FDIC, HUD, IRS and other agencies, with a love story that survives it all.”  written, for some reason in the 3rd person, chronicles O’Toole’s long career of Sisyphean frustration with government bureaucracy.  

Attack of the Killer BBBs

Roughly $1 trillion in BBB debt is in just five companies plus the shale industry.  The five are household names: AT&T, Ford, General Motors, General Electric, and Dell.  

Jerome Powell’s January hawk-to-dove pivot is now understandable.  He can’t afford for the bonds of Blue Chip names to tip into junk land where buyers will be few and far between. 

A Fighting Chance with Jr. Mining Shares

Parking shiny coins in a safe deposit box may not provide the excitement that FAANG investors are used to.  For those with a strong stomach speculating in junior mining shares provides maximum leverage to gold’s price--up and down. For the past decade, it’s been mostly down and painful.  

The Fed Has Lost Control

A year ago, it was tighten, tighten, tighten, now three rate cuts are expected by the market by year-end. Gromen told Harrison that Trump’s tariffs matter some, but, it’s the deficits that really matter and are forcing the Fed’s hand.

Navigating Booms and Busts

Boom times cause lenders to first make more and more speculative financing, and then graduate to Ponzi finance before it all comes crashing down.  The author quotes Minsky. “Over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is a large weight of units engaged in speculative and Ponzi finance.”     

Financial Markets: What Could Go Wrong?

The U.S. and EU banks are enormously intertwined, particularly in terms of funding and derivatives. Corporate debt has exploded and the bond market is only liquid in one direction. Zero interest rates have pushed pension plans to the brink of insolvency, even with a bull market.

The Battle for Sound Money

Elvira’s gold buying makes me think she has read Saifedean Ammous’s “The Bitcoin Standard: The Decentralized Alternative to Central Banking.”  Don’t let the title fool you. This book is not the cover-to-cover crypto cheerleading/gold bashing other authors attempt to jam down our throats.  Dr. Ammous Is actually a Professor of Economics, and none other than “Black Swan” author Nassim Taleb wrote the introduction.


The Hidden Housing Crisis

Most believe it’s clear sailing for housing.  Jurow’s view its anything but rosy for housing.  He believes the housing rebound is a mirage orchestrated by lenders and mortgage servicers keeping foreclosed homes and subprime loans in serious default off the market.  In other words, there are millions of homes just waiting to hit the market. Sometime.

IS WALL STREET'S SWAMP BEING DRAINED?

When they begin saying they are going to work on their balance sheets, that’s code for paying down debt and will be the end of share buybacks.  As DiMartino Booth puts it, companies will then be taking care of bond holders rather than shareholders.  The implication is the liquidity driving the bull market will seize up and a market correction is on the way.

Inflation: The Rumors of its Death are Greatly Exaggerated

Banks bitten in 2008, are, along with their regulators, twice shy to make the marginal loan.  The short summary of Hanke’s remarks in the latest Grant’s Interest Rate Observer, includes, “But he invited the audience to imagine an upsurge in bank lending, perhaps stimulated by a Federal Reserve decision to pay a reduced rate of interest on excess reserves.”

THE GAME OF BANK BARGAINS

“Fragile By Design” is a big book, and while it looks at banking systems in other countries, the authors devote many pages to the 2008 crash in the U.S.  But first, they make the important point that bank failure losses used to be borne by bank owners and depositors. Of course, now, with government overseeing the operation, costs have been shifted to taxpayers, in what the authors call “The Game of Bank Bargains.”   

Despite Fed Liquidity, Mall Value Plunges

The mall was encumbered by a $200 million commercial real estate mortgage, well supported by the 2007 value for the property of $250 million.  However, by 2017, SPG defaulted because it was “unable to repay the loan at maturity due to the size of the loan compared to the net operating income that the property generates and the tenants inability to increase sales due to the economic challenges.”