Goons Versus Gold

When, more than 100 years ago, George Gilbert Williams, president of the famously conservative Chemical Bank, was asked for the secret of his success, he replied: “The fear of God.” You can have the fear of God or the socialisation of risk, but you cannot have both at once.



“There’s enough bang in there to send us all to Jesus.”

- Anonymous commentator on the nature of JP Morgan’s Chief Investment Office credit exposure.

The most important attribute of any investment is the price you first pay for it. An attractive valuation can ultimately transform even the lousiest [...]


DocComment: Ghosts of Economies Past

So we beat on, boats against the current, borne back ceaselessly into the past.

-F. Scott Fitzgerald, The Great Gatsby

Almost every day that goes by, more and more economic and financial market evidence appears that is reminiscent of the 1930s and ’40s.  One day it is yet lower interest rates.  Another day it [...]


KeithGram: Morgan Stanley’s ‘Gains’

The very prolific Keith Weiner is launching “KeithGrams”, brief notes on market activity. We hope you will enjoy his insights.

Bank bonds are falling in market value.  But realize that a bond is a liability to the bank who issued it.  So this leads to a “creative solution” to the problem [...]


More David Stockman

Chris Martenson interviews our David Stockman. You can hear it here. It is a good overview of our problems. He refers to the “Keynesian end-game.” Here is a sample of what he says:

I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the gold window and let [...]


The Week That Was

It’s been an interesting week or two:

The S&P 500 was down 6.2% this week, the 10 year Treasury went from 2.246 to 2.062, an 8.19% decline in yield, and gold closed at 1848 for the week, up 6.6%. The dollar ended this week relatively unchanged.

S&P 500



Berlusconi Shoots Messenger

The bond vigilantes are going after Italy and Spain right now. Instead of accepting the blame for poor fiscal and monetary management, their politicians act right out of the standard playbook and blame “speculators” for their problems. I don’t think I’ve ever not heard a politician say this in such circumstances. Does anyone believe them [...]



When I go walking in the Santa Barbara hills, I see signs indicating the fire risk. In the dry season, sometimes the arrow points to “very high,” and sometimes it points to “extreme.” How the authorities distinguish between a very high and an extreme risk of fire is no doubt known to them, but it [...]


Will the Next Recession Look Different from the Last One? (Assuming the Last One Has Ended)

Mish has a post up involving a discussion with a Cerdian economist named Ed Leamer. I am going to comment on one point:

Leamer: Dips come from collective postponement of the postponable purchases: homes, cars and equipment. But all three of these are at record lows relative to GDP after all the postponement that has [...]


Why Short Duration Treasuries Are Overvalued But Long-Term Treasuries May Be a “Buy”

Just as it can be more properly argued that it is a market of stocks rather than a stock market, certain parts of the bond market can be bubbly and others be reasonable buys. An obvious example came in the wake of the Lehman-AIG market disruption, where the 30-year Treasury yield collapsed to 2.6% just [...]


Are Stocks Finally A “Buy”?

Yes, I believe that some finally are.

This is written by someone who sold virtually all stocks at Dow 13,000 in August-September 2007 with such confidence that even when the market went up 7-8% in the fall, had no indecision and argued with friends and relatives to get out when the getting was good.  Except [...]