All Posts Tagged With: "credit cycle"

But remember, the central bankers telling us that America’s recovery is “nascent” and that Australia will benefit for many years from a “very big” investment boom in the resources industry are the same blokes who did not give you a single warning about what was coming in 2007 and 2008. Why is that?

The funding model for the funds industry was seriously strained by the outflows. As we understand it, the funds have three sources of funding: deposits, bank credit facilities, and the mortgage payments it receives from mortgagees (commercial and residential). The bank credit facilities are exercised either to make new mortgage loans or pay out withdrawals that exceed what the fund takes in via mortgage payments.

But there are some strange and perplexing crumbs to collect from news reports this morning. Yesterday we learned that for the first time in 70 years, yields on 90-day U.S. government securities were briefly negative. Investors – if you can call them that – were happy to loan money to the U.S. government for 90 days – and lose money.

Barclays Capital says gold could go to $1,500. We don’t know where they got that number. It could go to $15,000 for all we know.

What we suspect is that the upward trends of the last half a century have now reversed. We’re in a period when the excesses and mistakes of the boom/bubble period must be corrected.

“The watchdog overseeing the federal government financial bailout says the government’s maximum exposure to financial institutions since 2007 could total nearly $24 trillion, or about $80,000 for every American.

We report to you today from the banks of the Potomac. Our old friend, Congressman Ron Paul organized an off-the-record discussion with several other members of Congress. The subject was the financial meltdown…and the bailout. We were there to talk, of course, but we were more interested in listening.

Here in London, inflation is at its highest level in six years. In China, 8% consumer price inflation is spooking the financial authorities. And import prices in the United States jumped 1.8% in April.