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The State of the Union – Markets

Global stock and bond markets: Watch out below! I discussed over-priced markets here and here and here. 2017 was an outstanding year in many markets. DOW up 24.7% NASDAQ 100 up 31% (Wow!) Nikkei up 19% DAX up 12% Gold up 13.6% Silver up 7.1% XAU (gold mining stocks) Index up 8% Dollar Index DOWN 10% We can be certain of the following: Death, Taxes and Politics. When markets move too far and too fast in either direction, they correct. Bubbles crash! SO WHAT? We live with the inevitability of death, and the predations of taxes and politics. Stock markets […]

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The newly dreadful state of the Union

Last Thursday’s election was a shock. It was appalling for the Tories, extraordinarily encouraging for Labour and something of a “meh” for the Liberal Democrats and the Greens. And it was dreadful for nationalist parties. UKIP was completely wiped out, ending up with no seats at Westminster and a hugely reduced share of the poll. The SNP lost seats, and even Plaid Cymru did less well than it had hoped. Nationalism, it seems, is dying down. Well, in the UK, anyway. Faced with a disastrous result, any half-decent party leader would step down. To his credit, Paul Nuttall, the UKIP […]

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Rail Traffic Depression: 292 Union Pacific Engines Are Sitting In The Arizona Desert Doing Nothing

We continue to get more evidence that the U.S. economy has entered a major downturn.  Just last week, I wrote about how U.S. GDP growth numbers have been declining for three quarters in a row, and previously I wrote about how corporate defaults have surged to their highest level since the last financial crisis.  Well, now we are getting some very depressing numbers from the rail industry.  As you will see below, U.S. rail traffic was down more than 11 percent from a year ago in April.  That is an absolutely catastrophic number, and the U.S. rail industry is feeling […]

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The European Union must reform before it’s too late

At the Bank of England’s Open Forum in London’s Guildhall on Wednesday 11th November, an increasingly desperate-sounding Mario Draghi said this: As the majority of money is issued by private banks – bank deposits – there can only be a single currency if there is a single banking system. For money to be truly one, it has to be truly fungible, independent of its form and independent of its function.” This is far from being the first time that Signor Draghi has pushed the case for common supervision of banks, common deposit insurance and a common resolution mechanism. He has […]

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The problem of currency union, UK edition

In my last post, I discussed Richard Murphy’s “green QE” proposal in the context of a functioning currency union in which the decision to monetise debt would be made by the UK government. But the context of Richard’s piece opens the door to a disturbing idea. Some Scottish Nationalists interpreted his proposal as meaning that a fully fiscally autonomous Scottish government could demand that the Bank of England buy Scottish government bonds (whether or not issued by a Scottish Development Bank) in order to prevent Scotland’s debt/GDP rising as a consequence of infrastructure investment. The Scottish Nationalists who raised this […]

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