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Economist Overheating Economies Index (interactive chart)

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Greece, Portugal / Germany, France

articles, news & charts

Headlines

Treasuries Decline on Concern Inflation Will Quicken; Two-10 Spread Widens -- great read!



The Political DynastiesThat Destroyed Greece, And The Real Reason The Country Is Such A Mess

So, with good reason, Greek's simply don't have faith that their fellow citizens are contributing and they don't trust the system. This distrust is cultural, pervasive and has infected the entire economy- Transparency International recently rated Greece the most corrupt country in Europe (along with Bulgaria and Romania).

The Dow-Gold Ratio

For some perspective on the long-term performance of the stock market, today's chart presents the Dow priced in another global currency – gold (i.e. the Dow / gold ratio). For example, it currently takes less than a mere eight ounces of gold to 'buy the Dow' which is considerably less than the 44.8 ounces it took back in 1999. Priced in gold, the Dow has been in a massive 11-year bear market. Recently, the Dow (priced in gold) stopped declining for long enough to break above its six-year, accelerated downtrend channel. However, shortly after the break out, the Dow (priced in gold) pulled back to post-crisis lows.

America needs to worry about the contrast between its attitude to China and Europe’s

A report by the Asia Society in Washington, DC, says that scaremongering about China could lead America to forfeit a share of $1 trillion-worth of outward Chinese direct investment by 2020.

More of that cash is instead heading to Europe. Investment bankers there are now sure to dial Chinese clients if they hear that a firm is a possible bid target. Chinese banks are rapidly increasing their presence in Europe. Mainlanders are snapping up central London residences. Chinese direct investment abroad has increased faster in Europe than in any other region.

Why There's A 97% Chance Of A Big Market Rally (click for chart)

Indeed, the model fell into “panic” territory a week ago and continued to be in panic this week despite the market’s rally (see Figure 1), which statistically argues that there is a roughly 90% probability share prices are higher in six months and a 97% chance of gains in 12 months. On average, stocks appreciate 8.9% in six months and about 17.3% in a year when reviewing data looking back about 25 years versus random outcomes of market gains in the 75% range of likelihoods when studying the same time period. Note that this proprietary metric fell into panic late in 2008 and again in the summertime last year both in front of healthy market moves to the upside. Conversely, it surged into euphoria in both 2007 and 2008, implying forward equity market weakness as well.

Not really sure about this one (plus, read the comments on the post) and compare to Buffet's #1 metric

US Home Prices poised to climb

“It’s very unlikely that we will see a significant further decline,” Donovan said yesterday on CNN. “The real question is when will we start to see sustainable increases. Some think it will be as early as the end of this summer or this fall.”

I've heard that one before 

Global "train wreck" coming

Professor McKibbin told the Melbourne Institute conference dozens of European countries now had gross government debts on track to exceed 60 per cent of GDP. ''Japan is forecast to be 200 per cent of GDP, the US is forecast to be over 100 per cent of GDP,'' he said.

''At zero interest rates that can be sustained, but at 5 per cent interest rates countries have to put aside 5 per cent of their GDP every year just to service the debt. That is not sustainable.  ''Already consumers aren't spending and investors aren't spending because of the tax increases that are in prospect.

New Armstrong Essay

Fantastic.  A must read!  Link

Deficit, Debt, Interest Rates, and Inflation

Here is a post I've cobbled together from a wide variety of sources about the relationship between the federal deficit, debt, interest rates, and inflation...

Headlines

Big Congrats to the new head of the IMF!  Good luck:

Debt-laden Greece finds no buyers in 'fire sale' of national assets (Guardian UK)
Report Predicts Chaos If U.S. Prioritizes Payments (newsmax.com)
Moody's warns over Spanish regional debt (expatica.com)
Berlusconi ally warns of government fall over austerity (reuters)
Portugal Deficit Much Higher Than Forecast (wsj)
Chile May Hold Back on Bond Sale Amid European Debt Crisis (Bloomberg)
European June Economic Confidence Declines to Its Lowest in Eight Months (Bloomberg)

Weekly U.S. unemployment numbers released and the Reuters article has attempts by apparent experts trying to come up with something cogent.

Also stories about Florida, Connecticut, and lots of stories about the California Budget (oh, and Stockton's credit rating has been reduced)

Finally, the South Carolina Budget Crisis May Force State To Cancel Republican Primary.  I don't even know where to begin with that one.

UBS Central Banker Survey re. $ as default reserve currency

The U.S. dollar is poised to lose its status as the global reserve currency during the next 25 years, according to a UBS survey of central bank reserve managers.

“Right now there is great concern out there around the financial trajectory that the US is on,” said Larry Hatheway, chief economist at UBS, told the Financial Times, because the dollar has dropped 5 percent so far this year, and is trading close to its lowest ever level against a basket of the world’s major currencies.

From this place, but it's all over the place

Silver shortage?

Post today from Jesse's Cafe Americain has doomsday scenario about physical silver shortage.  Good technical charts on Gold, Silver, and the Dollar.

Economagic

Added a new section to the right for metric portals.  Economagic is ridiculous.  Mouse over links for the chart; click links for the data.

Case-Shiller April Numbers

link to post from Seeking Alpha, image from Blytic.

Basically, prices are (kinda) going up, but year-over-year declines. (click image to enlarge)

the original Shiller 100 year chart:

China / Europe

China to Bail out Insolvent European Currencies via Zero Hedge (found @ Martenson's blog)

DANG!  Hard Core article about August, 2011 financial crisis from the Global Europe Anticipation Bulletin:

In this issue, we discuss the two most dangerous aspects of the Autumn 2011 shock, namely: . the detonating mechanism of European government debt . the explosion process of the US bomb in terms of government debts  

At the same time, in the context of the acceleration of the rebalancing of global power relationships, we introduce the anticipation of a fundamental geopolitical process for the holding of a Euro-BRICS summit by 2014.  

Finally, we focus our recommendations on the means of avoiding being part of the 15 trillion USD in ghost assets that will go up in smoke in the coming months, with a special mention for developments in real estate in Europe whose collapse we used to anticipate for 2015 will start in fact as early as 2012. 

So it's easy to put 2 and 2 together and assume that come 2012, China (with it's 2011 pullout of US debt), will start its European takeover.  Good times.

Ben Graham

Graham Investor's review of the 10 Golden Rules of investing through current lens. Always good to go back to the basics.

New Armstrong Essay

Armstrong Economics: Presidential Elections: 2016 the Year from Hell? (Martin Armstrong, 06/25/11)

Political Instability's affect on markets. As always, full of typos and interesting ideas


some key pullouts: 

Welcome

Portal / Blog about Macroeconomic trends and financial markets. This is basically for me, but if you want to use this information, go for it!