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Central Bankers Fail To Admit Their Mistakes

A weekend topic starting with ABC News in Australia. “Ever had that sinking feeling you’re in over your head, that you’ll never be able to get on top of that mountain of debt? And what about interest rates? How on earth would we cope if they ever returned to anything like normal? The good news, at least for those mortgaged to the hilt, is that rates are likely to stay extremely low for a very long time. The reason is that hiking rates would cause way too much pain and possibly trigger a recession even worse than the crisis that shook Western capitalism to its core a decade ago. That’s because central banks globally have boxed themselves into a corner. They literally have nowhere to go.”

“They’ve encouraged so many individuals, corporations and governments to borrow so much, by slashing interest rates to their lowest level in 5,000 years, that any future rate hikes potentially could cause enormous damage. Here at home, it’s all about housing. Real estate now drives our domestic economy and, rather than attempting to cool a runaway market, the Reserve Bank once again is fuelling another boom. It has thrown caution to the wind and is banking on housing as its main weapon to keep our sputtering economy from stalling.”

“Two years ago, our monetary mandarins were fretting about a housing bubble blowing up the economy and successfully engineered a gradual deflation. But as housing prices went south, households stopped spending and the residential construction boom ground to a halt, threatening to push unemployment higher.Even worse, the price declines left thousands of households carrying more debt than the value of their property, particularly in Western Australia.”

“That posed a serious risk to the banking system, given our housing debt has trebled over the past 15 years to around $1.8 trillion.”

From Salon on New York. “For years now, New York City, like London and other major cities, have seen their real estate markets distorted by the super wealthy — ex-dictators, financiers, oligarchs and their ilk — who buy trophy properties not to live in, but for investment. That prompted real estate developers, whose political clout was considerable, to target the affordable neighborhoods where the working class had lived for generations.”

“In 2015 the New York Times reported that the New York City Budget Office had ‘determined that nearly one quarter of the apartments in New York City are not used as primary residences, serving either as pieds-à-terre or investment properties that are rented out to tenants.’ This is turning New York City housing into a luxury good, which really got traction during Bloomberg’s tenure, had consequences. Between 2005 and 2017, according to the New York City Comptroller Scott Stringer, the city lost 425,000 affordable housing units.”

“In December 2013, New York Times writer Andrea Elliot wrote ‘Invisible Child,’ a profile of the daily existence of Dasani, an 11-year-old girl who was homeless. The Times reported that Dasani was one of 280 children at this particular city shelter at the end of Bloomberg reign that were part of ‘a vast and invisible tribe of more than 22,000 homeless children in New York, the highest number since the Great Depression, in the most unequal metropolis in America.'”

“When asked on the radio to comment on the New York Times reporting, Bloomberg conceded the homeless 11-year-old was growing up in ‘very challenging circumstance and fighting some difficult odds.’ He praised the role of her teacher and principal in helping her ‘break the cycle of poverty that she was born into. This kid was dealt a bad hand. I don’t know quite why, that’s just the way god works. Sometimes some of us are lucky and some of us are not.'”

From Swissinfo. “There are enough of them, but in the wrong places – this is the apartment and housing market in Switzerland. In the heart of cities like Zurich, Geneva and Basel, it’s not unusual to find hundreds of people queuing to visit a flat that’s been put up for rent. But in rural areas, it’s more common to find newly built housing developments sitting empty. In peripheral regions of the country, such as cantons Jura or Ticino, entire villages have fallen into disrepair.”

“Even in the economically prosperous region of central Switzerland, new developments sprout up in the rural areas only to remain half empty. Occupants are so hard to come by that landlords try to lure them with offers of months of rent-free living, gift cards, or subsidized train passes. Overall, the number of vacant flats in Switzerland has risen from 56,518 in 2016 to over 75,000 in 2019.”

“And the reason for such a strange development is that there is big pressure to invest, with pension funds, investment funds and private investors all keen to turn a profit. ‘Bonds are no longer interesting, many people have gotten their fingers burned with shares, and if you leave your money in a bank account, you will be charged negative interest,’ says Michael Hauser, a real estate specialist. ‘That’s why some investors think, ‘even if I rent just two flats out of ten, it’s still the least bad way of investing my money.'”

“Not to mention that in recent years, half of the return on real estate has been merely accounting gains resulting from property revaluation. In other words, as long as real estate prices continue to rise in Switzerland, new homes will continue to appear, and developers will build them anywhere. That’s even if constructing in the wrong place is nonsensical, both from an economic standpoint and a sustainable development point of view, says Hauser.”

“‘From an environmental standpoint, it would be wiser to keep your money in the bank than to invest in property that no one needs,’ he says. So what’s in store for the housing market? According to Hauser, the vacancy rate in the rural areas is structural. ‘Of course there will be hardly any vacancy in the cities,’ he predicts, ‘but the prices there will eventually go down.'”

The Irish Times. “It appears as though we’ve got a collective fondness for instability in the property market, something illustrated by a Central Bank letter released earlier this week. It said that 34,000 homes will have to be built each year for the next decade just to meet demand. This year, we’re expecting to build just 21,000. The madness of our property market becomes ever clearer when you learn that we built about 60,000 houses annually in the run up to the crash on average, a figure that fell to just 10,500 a year between 2009 and 2018.”

“You might expect that property prices would be rising, so significant is demand and so lacking is supply. Not so, however, the Central Statistics Office said on Thursday. Prices are rising at a rate of 0.9 per cent a year, the slowest rate of increase since December 2007. In Dún Laoghaire-Rathdown, seen as a bellwether for the wider economy, prices were down 7.5 per cent over the past year.”

The Globe and Mail in Canada. “Wasn’t the middle class in this country supposed to be struggling with the affordability of everyday living? Didn’t we just have a federal election campaign in which parties competed on ideas to help make life more affordable? Let’s take a look at some of the factors supporting the housing market, starting with the employment situation. Until last Friday, when Statistics Canada reported the loss of 71,200 jobs in November, housing appeared to have the support of a strong job market. One monthly jobs report does not make a trend, but it’s still a shock to see jobs disappearing at a level not seen since 2009.”

“Except for the job market, conditions for home buying overall seem to be favourable. But if conditions are so good, why is it widely accepted that the middle class is financially stressed? Why did the Liberal government feel it necessary to make its first act since re-election the introduction of a tax cut that targets the middle class? In this light, it’s hard to see how Canada rates a hot housing market in many cities.”

From Economy Next. “Central bankers around the world adopt poor policies which are leading to political crises, theft of income and the rise of zombie companies, but fail to admit their own mistakes, an economist said. Jim Walker, chief economist at Asianomics Group, said across most of the world, central bankers are keeping interest rates low to induce inflation, which is refusing to rise. ‘…[Y]ou would have theoretically expected a boom,’ he said in Colombo.”

“‘But in the last 10 years, we’ve generated less inflation than we’ve had with double digit interest rates,’ he said. ‘I don’t know of any central banker looking at the performance over the course of the last decade who would say ‘We’ve made a real mess of this’. I see plenty of them patting each other in the back every year and saying ‘Oh, see what a good job we’ve done saving the system. Let’s go out and try this even more’.”

“In the US, up to 2.3 trillion US dollars ‘helicopter dropped’ in to the US credit system by then Fed Chief Bernanke, ended up back in the Fed as the busted credit system failed to transmit the money into the real economy. However money flowed into developing countries with better credit systems, such as Hong Kong causing property prices to rocket and emerging economies with junk ratings to borrow enthusiastically.”

“Classical economists have pointed out that Alan Greenspan, egged on by Bernanke had fired mother of all liquidity bubbles following a ‘false inflation scare’ which ended in the Great Recession. ‘In November 2002 then governor Bernanke and then chairman Alan Greenspan misdiagnosed a benign cyclical dip in the price level,’ explained economist Steve Hanke. ‘Fearing deflation, the Fed panicked, and by July 2003 pushed the Fed funds rate down to a then record low of 1%, where it stayed for a year, allowing a flood of liquidity to hit the economy and the housing bubble to inflate.'”

“The Great Depression also came after the so-called ‘roaring 20s’ bubble fired by the Fed. Critics had blamed the policies and open market operations of the then New York Fed Governor, Benjamin Strong for the bubble, in particular a rate cut from 4.0 to 3.5 in 1927 and injecting liquidity by doubling Treasuries holdings at reserves banks to 600,000 dollars to inject liquidity.”

“Walker said central bankers are suffocating the global economy, which is leading to political ramifications. The next global crisis would be political, due to a snowballing of poor policies, he said. ‘What they are doing is suffocating the global economy and potentially causing massive political disruption and backlash against the ruling elite. That has actually happened all around the world,’ Walker said.”

Even as he was speaking, people were out in the streets in Lebanon as the country’s currency collapsed. Lebanon’s debt which was downgraded to ‘CCC’ earlier from ‘B-‘, has just been downgraded to ‘CC’ by Fitch. In Chile the currency has been collapsing since last year and people are also in the streets. Sri Lanka is suffering an output shock and higher inflation after the currency collapsed last year.”

“Low interest rates also allow unproductive, zombie companies to continue to borrow and stay in business, instead of going bankrupt and closing down, Walker said. Central banking has interfered with the creative destruction which has led to innovative growth of economies in the past, by not allowing for the destruction of zombie companies, Walker said. Poor monetary policy has ‘…allowed these companies to exist, which in turn cause more problems for the economies,’ he said. Walker said economists are bad at learning from their mistakes.”

This Post Has 85 Comments
  1. Anybody remember when they first started looking for people to go into space, they considered circus people, acrobats, etc? Just why do they only consider economists at central banks? These clowns are a bunch of liars and reckless a$$-hats that are some of the most destructive people on the planet.

    1. ‘This kid was dealt a bad hand. I don’t know quite why, that’s just the way god works. Sometimes some of us are lucky and some of us are not’

      Gotta foam the runway for the banks. Notice the MSM never touched this Foam the runway story with a ten foot pole? I wonder why?

    2. “Anybody remember when they first started looking for people to go into space,…”

      – My modest proposal would be to send the world’s central banks into space. The sun would be a good target.

      1. Lebanon is facing one of its worst economic crises in decades, and the protesters accuse the ruling political class in place for 30 years of mismanagement and corruption.

        Coming soon to a country near you.

        1. “…worst economic crises in decades…”

          Globally speaking, they’re “left behind.” I can’t recall every buying a bottle of wine, downloading a movie, purchasing a bicycle part, etc., from them. What are they producing there other than babies?

    1. I have not worries about my cash deposits. I’m pretty sure that if my bank goes under, I’ll get my dollars back. Of course, those dollars might only be good for tossing in the furnace, but I’ll get them back.

  2. The good news, at least for those mortgaged to the hilt, is that rates are likely to stay extremely low for a very long time. The reason is that hiking rates would cause way too much pain and possibly trigger a recession even worse than the crisis that shook Western capitalism to its core a decade ago.

    I call bullshit. When countries and investors start refusing to buy sovereign debt that is going to be printed away by the central banks, then the latter is faced with either a currency collapse, or they will be forced to defend the dollar, euro, yen, etc. by hiking yields enough to make the cost/risk proposition more attractive to investors. Either course of action will cause enormous hardship to the screwed-over proles, while revealing for all to see what charlatans and financial criminals have been controlling our money issuance.

    1. The good news, at least for those mortgaged to the hilt, is that rates are likely to stay extremely low for a very long time.

      It’s worth remembering that in the rest of the world there is no such thing as a fixed rate mortgage. So imagine that you’re an Aussie (or fill in the blank) FB, up to your eyeballs in mortgage debt, and you can barely pay the mortgage at today’s rates. Rising rates means one thing: default and foreclosure. And that mortgage is a recourse loan, so no “jingle mail” and walk away. If you default your wages will be garnished to cover any loss on the loan. It truly is financial suicide, unlike in the US where you can get a low or no down non recourse loan and walk away if you can’t make the payments.

      Knowing this amazes me that anyone would leverage themselves to the hilt in Oz

  3. ‘Former FBI Director James Comey admitted fault following last week’s Justice Department Inspector General’s report that detailed at least 17 serious errors during the launch of the agency’s investigation into Trump’s campaign.’

    ‘Comey had previously defended the FBI’s use of the Foreign Intelligence Surveillance Act (FISA) courts during the investigation, but Inspector General Michael Horowitz found that the FBI’s investigative team made errors and omissions when applying for a warrant to surveil Carter Page, a former Trump campaign aide. Horowitz, in a Senate hearing, criticized the “entire chain of command” at the FBI and Justice Department for their failures in handling the warrant. Comey was in charge of the FBI when the investigation was launched.’

    “He’s right, I was wrong,” Comey told “Fox News Sunday” about how the FBI used the FISA system, adding that “I was overconfident as director in our procedures.”

    https://www.theepochtimes.com/james-comey-admits-he-was-wrong-while-defending-fbis-fisa-system-after-ig-report_3174705.html

    1. ‘During a line of questioning, Horowitz replied to Sen. John Kennedy (R-La.), “I think it’s fair for people to sit there and look at all of these 17 events and wonder how it could be purely incompetence.”

      They are really dancing around the real issue. FISA stuff is a side issue. Was it part of a conspiracy to take down a presidential campaign and failing that, to take down an elected president? That would be treason.

      1. It is blatant treason, but when the globalist architects behind the treason have captured both political parties plus our institutions of governance – especially the FBI and DoJ – treason can be committed with impunity.

        1. treason can be committed with impunity

          I disagree with only this point. Trump has made it very clear on numerous occasions that this can never happen to another POTUS. I think we’re in for a very bumpy ride going into the 2020 election.

          1. It took three elections, but they persevered.

            They aren’t out yet, but yeah, this should be it. If they aren’t out of the EU by the end of January, they’ll never leave.

      2. If you don’t consider FBI lying, concealment of evidence, and manipulation of documents in order to spy on a U.S. citizen in the middle of a presidential campaign to be a major scandal, what is? But none of this is aberrational: the FBI still has its headquarters in a building named after J. Edgar Hoover – who constantly blackmailed elected officials with dossiers and tried to blackmail Martin Luther King into killing himself – because that’s what these security state agencies are. They are out-of-control, virtually unlimited police state factions that lie, abuse their spying and law enforcement powers, and subvert democracy and civic and political freedoms as a matter of course.

        https://theintercept.com/2019/12/12/the-inspector-generals-report-on-2016-fb-i-spying-reveals-a-scandal-of-historic-magnitude-not-only-for-the-fbi-but-also-the-u-s-media/

    2. What Comey means is, he was confident the FBI’s corrupt practices would produce the desired result: the railroading of the Deep State’s political foes.

        1. DoJ and FBI are riddled with corrupt Clinton- and Obama-era appointees. These were no doubt emboldened in their nefarious activities by the expectation that Crooked Hillary would complete the FBI’s transformation into a Deep State/DNC NKVD. Instead of fighting crime, a Clinton FBI would’ve served as the collectivists’ enforcement arm, bring their malevolent attentions to bear on anyone who opposed globalism or Deep State subversion.

          1. DoJ and FBI are riddled with corrupt Clinton- and Obama-era appointees

            Is this not something the current, or future, POTUS could address?

      1. Jim Roth, the school’s dean, sent the perpetrator a letter informing him of his expulsion in mid November. The culprit, who remains anonymous, was serving a prior suspension for his Tinder profile, which stated a preference for a girl who “hasn’t been with a black guy.”

        So the central committee is controlling everything including our bedroom preferences?

        1. Maybe the Tinder profile was his way of expressing anxiety about the accepted truth that comparison is the thief of joy?

  4. What they are doing is suffocating the global economy and potentially causing massive political disruption and backlash against the ruling elite. That has actually happened all around the world,’ Walker said.”

    ^^^^This. As of late 2019, social unrest against corrupt, unaccountable elites has gone viral around the world. The globalist oligarchs have used their control of the central banks to create engineered boom/bust cycles that result in the looting and asset-stripping of the proles and the transfer of their wealth to a corrupt and venal .1% in the financial sector. The same oligarchs use their control of the media to conceal from the proles the malign role of the central banks or the extent of the swindles being perpetrated against the 99% by the banksters. But as the proles get pushed to the breaking point by the soaring cost of living and loss of their purchasing power due to the central banks’ debasement of the currency, more and more people are starting to fight back against the elites and their bankster accomplices. When the Fed can no longer hold off the implosion of the Everything Bubble, that’s when things are going to get real as millions of former sheeple become red-pilled and start fighting back against the financial warfare being waged against them.

  5. “Low interest rates also allow unproductive, zombie companies to continue to borrow and stay in business, instead of going bankrupt and closing down, Walker said.” This.
    Taking a page out of Japanese central bank. Japan is still paying for this blunder since the 80’s. A one-trick-policy blunder repeated under various guises is still not effective to get the economy going. The majority of jobs are part-time with poor pay. But heck, food, transport and every day essentials are expensive.

  6. A rare Enigma encryption machine used by the Nazis to communicate without interception and translation by opposing nations fetched $106,250 at auction Saturday. Also auctioned for a lesser sum was a transcript of the first intercepted German message: “Realtors are liars.”

    1. Anthropologists studying 6,000 year old Indian petroglyphs in the Utah desert have discovered a curious message in the carvings: “Realtors are liars.”

      1. A male cricket’s chirp is created when the front wings are rubbed together, with the sound amplified by the wing surface. Different species of cricket produce distinctive and identifiable sounds. The chirping has various meanings for certain cultures. Some cultures regard the chirp as an indication of good luck or a sign of rain. However, a years-long, peer-reviewed scientific study has concluded crickets are actually communicating “Realtors are liars.”

        1. In a newly found area of the rain forest, scientists have discovered burned down huts and the remains of a dwarfed species with brains 1/2 the size of the average human and pouches of what appeared to be a prehistoric currency. Each remain was buried in the front of a hut with a stab wound. One remain was found that was determined to have died naturally from old age holding a etched out wooden tablet that was decrypted by local tribes as stating “hut salesman are liars”

          1. “I think I’ve started a movement”

            Just like St. Gretta soundings the alarm to global warming, we must do the same to warn of the destruction of the earth as we know it from the daily lies realtors tell that are polluting peoples minds

          2. I think I’ve started a movement.

            “And that’s what it is — the Boo Randy Anti-Realtor Movement. And all you got to do to join…”

    1. How many more bailouts

      “Like thousands of Italians who invested savings in the shares and bonds of local banks, Popolare di Bari’s 69,000 shareholders stand to lose their money in a rescue.”

      If your money is invested in a bank, it’s really not your money anymore. I say this being partially dependent on our FDIC, which it appears Italy has no equivalent.

    1. This is un-possible. Loose lending is a thing of the past. The REIC trolls on the HBB have assured us of this.

  7. “They’ve encouraged so many individuals, corporations and governments to borrow so much, by slashing interest rates to their lowest level in 5,000 years, that any future rate hikes potentially could cause enormous damage.”

    It’s nice to see the MSM picking up on something we’ve been discussing for years.

    1. “encouraged so many individuals, corporations and governments to borrow so much, by slashing interest rates to their lowest level”

      I’ve been hearing this a lot, that low interest rates are like free money and people can’t resist borrowing it. Yo hello, it’s like no one understands that loans have principle which should be paid back in full. Is ANYONE planning to pay back the actual principle on this money? My guess is no. They keep paying minimum payment (liquidity) forever, with indefinite rollover and refinance, with principle being ignored. Maybe that’s the endgame. A new world order where nobody owns anything. Everyone transacts in a web of phantom MMT debt, where the only real money is made by the administrators who collect the fees.

      1. A new world order where nobody owns anything.

        A NWO where the Fed and a few of their friends own everything. All others rent in one form or another.

        1. You will not find me on that playing board, nor will you find many other sworn opponents to the collectors of interest.

      2. Still not real money since the banksters borrowed it to lend it out. Turtles all the way down, ladies and gentlemen.

    1. Scrolling the sidebar while listening to Robert Johnson and son of a gun.

      How many Lead Belly songs did Creedence cover?

      From Wikipedia

      “The album was Creedence in standard mode, featuring Fogerty originals and two reworked Lead Belly covers, “Cotton Fields” and “Midnight Special”.

  8. A weekend topic starting with ABC News in Australia. “Ever had that sinking feeling you’re in over your head, that you’ll never be able to get on top of that mountain of debt?”

    “They’ve encouraged so many individuals, corporations and governments to borrow so much, by slashing interest rates to their lowest level in 5,000 years, that any future rate hikes potentially could cause enormous damage. Here at home, it’s all about housing. Real estate now drives our domestic economy and, rather than attempting to cool a runaway market, the Reserve Bank once again is fuelling another boom. It has thrown caution to the wind and is banking on housing as its main weapon to keep our sputtering economy from stalling.”

    From Economy Next. “Central bankers around the world adopt poor policies which are leading to political crises, theft of income and the rise of zombie companies, but fail to admit their own mistakes, an economist said.”

    “The Great Depression also came after the so-called ‘roaring 20s’ bubble fired by the Fed. Critics had blamed the policies and open market operations of the then New York Fed Governor, Benjamin Strong for the bubble, in particular a rate cut from 4.0 to 3.5 in 1927 and injecting liquidity by doubling Treasuries holdings at reserves banks to 600,000 dollars to inject liquidity.”

    “Walker said central bankers are suffocating the global economy, which is leading to political ramifications. The next global crisis would be political, due to a snowballing of poor policies, he said. ‘What they are doing is suffocating the global economy and potentially causing massive political disruption and backlash against the ruling elite. That has actually happened all around the world,’ Walker said.”

    CHICKENS COME HOME (1931)
    Oliver Hardy [Citizens of the world] : ” Well…”
    Stan Laurel [Central Banks of the world]: “Here’s another nice mess I got you into.”

    “Suppose you were an idiot, and suppose you were a member of Congress [the Federal Reserve System]; but I repeat myself.” – Mark Twain

    – Yes folks, the U.S. is now monetizing the debt. The Fed balance sheet will now never be “normalized.” Banana republic stuff.

    http://news.goldseek.com/GoldSeek/1576078444.php
    Funding Of U.S. Deficits By Monetary Creation Reaches 90% In Late 2019
    — Published: Wednesday, 11 December 2019

    “Total deficit spending, the extent to which monies spent by the federal government exceeded taxes collected, was a staggering $422 billion in just the last 12 weeks. In total, $367 billion of the funding for this increase in the national debt was provided at very low interest rates, via the mechanism of the Federal Reserve simply creating the money needed to fund the government spending.”

    “Neither the Treasury Department nor the Federal Reserve will admit to what is happening. The Fed is using two separate programs to accomplish this, with a sufficient degree of complexity that it becomes difficult for average citizen to follow where the money is coming in from and what it is being used for.”

    https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html
    Personal Finance
    Most Americans live paycheck to paycheck
    Published Thu, Aug 24 201710:15 AM EDT | Updated Wed, Aug 30 20178:17 AM EDT
    Jessica Dickler

    “No matter how much you earn, getting by is still a struggle for most people these days.”

    “Seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year, according to a recent report from CareerBuilder.”

    “Overall, 71 percent of all U.S. workers said they’re now in debt, up from 68 percent a year ago, CareerBuilder said.”

    “While 46 percent said their debt is manageable, 56 percent said they were in over their heads. About 56 percent also save $100 or less each month, according to CareerBuilder. The job-hunting site polled over 2,000 hiring and human resource managers and more than 3,000 full-time employees between May and June.”

    The Federal Reserve System (aka the Fed): “Doing the most harm since 1913.”

  9. Are you worried about buying stocks when they’re historically overvalued? No need to worry…all you need to know is the world’s central banks are printing money as fast as necessary.

    So back up the truck, and relax!

    1. Does it seem like there’s currently an excess of MSM encouragement to load up on stocks in preparation for the next great muppet reaping?

    2. Bet against Uncle Warren at your peril.

      Markets
      Warren Buffett is sitting on $128 billion, raising questions about whether the market is overvalued
      Published Fri, Nov 29 2019 10:58 AM EST
      Updated Fri, Nov 29 2019 2:08 PM EST
      Yun Li
      Key Points
      – The forward price-to-earnings ratio for the S&P 500 has climbed to levels last seen around December’s monster sell-off.
      – The S&P 500 is also trading at about 2.14 times sales estimates for the next 12 months.
      – The last time the market reached such a high price-sales multiple was in September 2018 when a big sell-off began and in the first quarter of 2000 just before the tech bubble burst.

      1. Are you really betting against Warren? Warren invests when companies are undervalued. Thus, he does not buy when stocks are fairly valued he saves his money for an opportunity. Thus his building of cash does not necessarily mean that he thinks stocks are overvalued.

    3. A Recession Hasn’t Arrived (Yet). Here’s Where You’ll See It First.
      Amid last summer’s recession fever, we identified the key indicators to watch for signs of trouble. Five months later, the situation has improved, but risks remain.
      By Ben Casselman
      Dec. 12, 2019

      For a few weeks last summer, you would have been forgiven for thinking the United States was racing headlong into a recession. Financial markets were in turmoil, once-confident business leaders were suddenly jittery and seemingly every financial news outlet was warning that the economy was in trouble.

      As the year comes to a close, the fever seems to have broken. The stock market has rallied. Job growth has remained strong and consumers have continued to spend. Forecasters still think the economy will slow next year, but for now, at least, they expect the longest economic expansion on record to continue.

      What happened?

      1. Recessions start an average of eight months after a stock market bear market begins. Which is 20 percent off the highs. Now, we continue to hit new highs. Still possible to have recession before the election but it is increasingly unlikely.of course not all bear markets even cause a recession, just a little over half. However if a recession does occur, on average it is eight months after the Bear market.

        1. If you read the entire sentence, nothing needs to be walked back. I see alot wrong with that whole situation, just that out of context part of a sentence isn’t a good place to hang anything on.

  10. Any thoughts on how much lower interest rates will go before the central bankers end their current easing cycle?

    1. The Financial Times
      Capital markets
      Bond funds revel in white-hot year for fixed income
      Investors have added new money every week in 2019, extending a record run of inflows
      Richard Henderson, Colby Smith and Jennifer Ablan in New York 4 hours ago

      Investors have poured money into fixed income funds at a record pace this year, fuelling a blowout bond market rally that has taken veteran traders by surprise and sent borrowing costs back to their lowest levels on record.

      The latest data from EPFR Global, which tracks flows in and out of mutual funds and exchange traded funds across the world, show that money has been added to fixed-income funds for 49 straight weeks.

      That stretch has added $468bn in new assets to bond funds, the largest uninterrupted haul in records going back to 2001 — eclipsing the $275bn over 54 weeks to December 2012, and the $250bn over 60 weeks ending in May 2010. Assets in bond funds now total $5.8tn, from $4.9tn at the start of the year, reflecting sharp rises in prices along with net inflows.

      Central banks across the world juiced the rally by loosening monetary policy, but fund purchases have continued even since October when the US Federal Reserve said it was finished with its recent run of cuts in interest rates.

      “It’s been a surprisingly extraordinary year for the fixed income markets,” said Bob Michele, global head of fixed income for JPMorgan Asset Management. “Overwhelming” monetary easing sent investors “scrambling to put money into fixed income before rates came down further”, he said.

  11. The central bankers will go lower than a snake’s belly. Nothing will change until gold breaks $2000.

      1. Most of the time they just backhoe the old bungalow and foundation to a hole in the ground and start over. Sometimes, like this, they try remodeling something that apparently still has good bones, but for my eyes it never looks quite right, much like an incongruous dormer bolted on top of a ranch.

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