DEBT & DELEVERAGING
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"It was painful. It was extremely painful for Scandinavia back then. But they did it and the alternative was what the Japanese did at the same time. The Japanese propped up everybody with zombie companies and zombie banks.
The Scandinavian Way Versus The Japanese Way
Last year, the US Dollar was the butt of monetary jokes. In fact, some suggested it was worth as much as toilet paper. With Trillion dollar deficits and 0% interest rates, those with common sense looked to other currencies for capital preservation. In a moment of cosmic irony, some global investors are now fleeing to the safety of the US Dollar. Headlines about Greece possibly defaulting on its debt has investors wondering which is truly the worst of all possible worlds?
Which Countries' Debts Are Truly the Worst? -- Seeking Alpha
The Global Economic Picture Through Dow Chemical's Earnings -- S
A picture is indeed worth a million words…. This is a slide from Dow Chemical’s ( DOW ) earnings call on Tuesday. Why is it important? Simply put “Dow makes the stuff that everyone uses to make stuff”. Dow has a global footprint and it is tied to every major region of the world.
DEBT AND DELEVERAGING
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The New York Times writes tonight about strategic defaults on mortgages , and argues that enough mortgages are deeply enough under water to induce solvent borrowers to think about walking away: New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying…. by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance. They are stretched, aggrieved and restless.
Is the US Reaching a Strategic Default Tipping Point? « naked ca
What's The Difference Between AAA And AA+?
We simply don't have enough AAA and AA rated data to be statistically confident in these distinctions ex ante , which is why AA+ and AAA rated securities differ very little in their yields, usually by only 10 basis points (0.1%) on average. Note that the +/- addition, as in grades you got in college, just adds further granularity (Moody's uses the less obvious 1,2 and 3 suffixes, 1 being +, 3 being -). The main thing to realize is the default rates are approximately log linear in ratings category, and I would say this is a general law. People perceive things in log space (decibels, Richter scales, brightness, acidity), and so an "AA" is 2-5x as risky as an AAA.
How the Fed Got Itself Boxed In | The Big Picture
Yesterday morning’s comments ( Random Thoughts: Recent Trading/Market Activity ) began with this bullet point: “This entire crisis traces itself back in large part to then FOMC chair Alan Greenspan not allowing markets and the economy to flush themselves clean after the dot com collapse. It seems that nearly every Fed/Government policy action has been a response to the problems that error led to.” Quite a few people responded, seeking clarification, and so I wanted to briefly address this issue. The Federal Reserve (unlike most other central banks) has a dual mandate: Maintain full employment and keep inflation at bay. History informs us that these two factors are often opposed to each other: Growth begets price rises, and excessive price elevation retards growth.ARROYO GRANDE, Calif. (MarketWatch) -- Retire? You can fuggetaboutit if the new Global Debt Time Bomb is detonated by any one of 20 made-in-America trigger mechanisms. Yes, 20. And yes, any one can destroy your retirement because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st century, igniting the Great Depression II that George W.
Our debt time bomb is ready to go ka-boom Paul B. Farrell - Mark
THE PROBLEM OF EXPONENTIAL DEBT
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The Perfect Storm: The Beginning of the End of the Monetary Confidence Game - Seeking Alpha
We are currently going through battles of inflation vs. deflation, fiat money vs. precious metals, government spending vs. austerity, etc. There are so many hard positions being taken by all of our “experts”, and they are so diametrically opposed – in a similar manner to our politicians – that an ordinary investor feels almost frozen in his tracks. So let’s try and shine a light on these issues and try to come to what the ultimate truth of what is going on in this rather confusing financial world that seems to continually reward the “haves” on the backs of the “have-nots.” Since 1879, the United States’ monetary system had been on the gold standard, wherein its currency was actually backed by gold held by the government. On June 5, 1933, the United States went off the gold standard because the public was so frightened during the Great Depression that they began to hoard gold, thereby making the gold backed standard untenable.