All Posts Tagged With: "global economy"

All central banks are desperate to stop stress from building in the global banking system. Despite what they say, job No. 1 of every central bank is to do whatever it takes to prevent a disorderly collapse of banks caused by “bank runs.”

Not much action in the markets on Friday. It was a helluva week, though. The global economy was brooding.

About a decade ago, the Chinese government chose a policy of growth at any cost. China’s leaders considered strong GDP growth essential for political survival and national stability.

Governments and central banks have managed to engineer some more spin, but only at the expense of piling more debt on top of the already wobbling structure.

The emerging markets have “emerged,” as you will see. For you and me a big opportunity has also emerged in something called the Great Convergence.

Sometime around last Thursday afternoon the mood in the market went from concerned to “totally freaked out”. It is a trifecta of concerns that have investors on the edge. Chinese growth is slowing. The American employment picture is not good. And Europe is in the middle of a dangerous debt crisis.

Goldman Sachs has raised its rating on large banks to “attractive.” In related news, Neal Barofsky, the special inspector general for the Troubled Asset Relief Program has said that the Feds may have, er, not quite told the truth about the health of the banks receiving TARP funds. He didn’t use the word, lie though. How are these two items related? We’ll explain below.

“‘Minsky’ was shorthand for Hyman Minsky, a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck, and he remains a shadowy figure in the profession.