In my most recent book, The Road to Ruin, I describe a phenomenon called “ice-nine.” The idea is that in the next financial panic, regulatory authorities will not be able to print money or lower rates enough to stop the panic because they failed to normalize rates or balance sheets after the last recession. Liquidity will
We told readers not to expect financial fireworks in China through 2017. The reason had to do with a Communist Party Congress that happens every five years and just concluded. China’s President Xi Jinping wanted a second five-year term and expanded powers from the Congress, and he got it. He also wanted to make sure
It’s true that the Fed has been raising interest rates since 2015, and had engaged in tapering for two years before that. Yet, these actions hardly constitute tight money. The tightness or ease of monetary policy needs to be judged relative to financial and economic conditions. You can have “easy money” at a 10% interest
The article above described the stock market (and other markets) as a bubble. Where’s the proof for this? Actually, it’s everywhere. The Shiller CAPE ratio is at levels only seen at the 1929 crash that started the Great Depression, and the 2000 dot.com bubble. Likewise, the market capitalization-to-GDP ratio is above the level of the 2008
To paraphrase one of the great gems of Wall Street wisdom, “Nothing infuriates a man more than the sight of other people making money.” That’s a pretty good description of what happens during the late stage of a stock market bubble. The bubble participants are making money (at least on a mark-to-market basis) every day.