But according to America’s self-described “#1 political prisoner” Martin Armstrong, the Western world’s fiscal malfeasance has left it trapped between two equally undesirable but unavoidable outcomes: default of civil unrest. We are at the pointy end of the crisis (Phase two as he describes it). Yet very few people seem to appreciate what’s actually happening.
March 22nd, 2010 | Dan Denning | 4 comments | ContinuedArchive for Dan Denning
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). Dan draws on his network of global contacts from his base in Melbourne. He’s the managing editor of resource newsletter Diggers and Drillers and the editor of The Daily Reckoning Australia.
Reality Sovereign Debt Finance Theatre
The European monetary family is in crisis. It meets on March 25th and 26th to discuss whether to kick Greece off the island (survivor style) or to intervene and save the prodigal son. The problem, from a German perspective, is that Europe is full of prodigal children. To save Greece means to save the rest of the economies troubled by rising public debt-to-GDP ratios.
March 19th, 2010 | Dan Denning | 0 comments | Continued
China’s Economy is the Greatest Bubble on Earth
But is there really going to be a round two? Well, if the first incorrect assumption was that Australia didn’t have a bad debt problem, the second assumption is probably even more dangerous. It’s more dangerous because it’s the single most unexamined assumption behind much of Australia’s economic prosperity. The assumption is that we’ll always have China.
March 18th, 2010 | Dan Denning | 30 comments | Continued
Federal Reserve to Withdraw its Support of U.S. Mortgage Market?
NAB has given us a preview of what we suspect the Federal Reserve is going to do. It’s our view that the Fed cannot realistically remove support from the mortgage market. Its announced intention to do so is merely cosmetic. It’s placating anxious holders of dollar-denominated assets.
March 17th, 2010 | Dan Denning | 8 comments | Continued
China’s Currency Manipulation is a Form of Economic Stimulus
China’s Wen Jiabao has told the Americans to stuff it, although not in so many words. At a two-hour news conference in which he warned that removing stimulus too early would lead to second dip in the global recssion, Wen also defended China’s currency manipulation.
March 16th, 2010 | Dan Denning | 8 comments | Continued
China Buys its Own Gold
As we wrote in a note this weekend, most analysts immediately took that to mean China would not be a buyer of the 191.3 metric tons of gold the International Monetary Fund announced it would sell on February 17th. And if China were out as a major buyer of gold on international markets, speculators reckon that the gold price is in for a fall.
March 15th, 2010 | Dan Denning | 0 comments | Continued
Inflation is a Reality in China
Bloomberg reports that consumer prices rose by 2.7% in February. That’s the fastest monthly growth rate in 16 months. And it eclipses the annual yield on savings deposits of 2.25%. Savers aren’t beating inflation. And if they can’t do that, they may as well spend the money. That could ignite a rising price cycle in China that monetary authorities want to avoid.
March 12th, 2010 | Dan Denning | 7 comments | Continued
Reserve Bank Agrees There is a Housing Shortage in Australia
RBA assistant governor Philip Lowe said in a speech in Sydney yesterday that constraints on home building are restricting the supply of homes in Australia. The shortage is one factor keeping prices up. Nothing was said about the lending boom.
March 11th, 2010 | Dan Denning | 42 comments | Continued
Shadow Banking System: A Murky World of Credit, Securitisation and Derivatives
Most of these are interest rate and credit derivatives. As we learned in the last two years, the big risk here is to institutions which owe and own these obligations amongst one another. In our view, the degree of interconnectedness among these obligations (they still aren’t unwound) still makes the entire global financial system vulnerable…
March 10th, 2010 | Dan Denning | 14 comments | Continued
Global Illness of Too Much Debt has Been Remedied by More Debt
But more importantly, the share market is at risk now for a big fall as it was in the middle of 2007 when the Bear Stearns story broke. Since then the perimeter of global markets has gradually been overrun by the forces of wealth destruction.
March 9th, 2010 | Dan Denning | 22 comments | Continued