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The Fed exerts a dominant influence across the yield curve, not just on the short end
Long-term interest rates are a series of future short-term rates. That necessarily means that an interest-rate targetting central bank exerts the dominant influence not just on the short end in its currency area, but across the yield curve.…
The Dutch will miss targets in 2013 but refuse to institute more austerity
Well, well, well, it seems we have a problem in Euroland. The Dutch have now confirmed what I have been saying all along: they have run into so many fiscal problems that they will need to relax their targets instead of doubling down on…
Comments on Europe and thoughts on the cyclical recovery in the US
Europe is in recession right now, but the US is in a weak but fairly long-lived economic recovery. The difference in economic fortunes owes entirely to differing policy responses in both regions. In Europe, the economic paradigm has…
The Unsustainable US Economy
Yesterday I said that, given the housing rebound, it seemed ever more likely that the US economy would be able to power through the budget cuts from the sequester and the fiscal cliff. This is the asset-based economy at work. There is…
US Housing and Economy and Reaching for Yield
Today I thought I would try a little experiment by beginning to write a daily commentary. I have been thinking about doing this for a while and decided I needed to give it a go here because I don't have an in-depth article I am working on.…
Bill Gross on irrational exuberance
Bill Gross' latest investment outlook is up at PIMCO and he echoes the theme everyone is now talking about - irrational exuberance. He goes into great depth, saying that we are at about 6 on a scale of one to ten when measuring asset price…