At some point within the last two years, as I devoted more and more time to understanding economics (some might say obsessively), I realized the Federal government was not constrained to spending based on tax revenue. The Treasury can issue as many bonds as needed, either borrowing from purchasers or as we saw in 2009, having the Federal Reserve Banks create money out of thin air to purchase bonds, something Bernanke said he would not do, then did in the amount of $300 billion.
Congress spends like tax revenue doesn't matter, and as Dick Cheney has been famously quoted "deficits don't matter". That is true, of course, until it is not.
But I don't want to get side tracked on Triffin's dilemma. This week, I stumbled on a 1946 speech by Beardsley Ruml, Chairman of the Federal Reserve Bank of New York titled:
"TAXES FOR REVENUE ARE OBSOLETE".
The first half of the speech discusses using the tax code to implement public policy. The second (less interesting) half focuses on the "evils" of the corporate income tax.
Clearly, the Federal Reserve has been thinking this way since the original Bretton Woods agreement. I think many people would be surprised or shocked to learn that governments and central banks operate this way, since leaders never [AFAIK] make the point explicit.
Friday, December 18, 2009
Thursday, December 17, 2009
The Ascent of Money - part 3
More fascinating tidbits from Niall Ferguson's The Ascent of Money. Can you tell I like this book?
The Failure of LTCM and the Quants
The Nobel prize winning economists and rocket scientists employing the Black-Scholes formula for pricing options found out the hard way in 1998 that humans aren't easily modeled.
Reversal of Capital Flows
For centuries, the capital flow was generally from West to East, but has reversed over the last 20 years.
A Modern Classic
There is so much wisdom in this book that I don't feel I have even touched on a fraction of it. It puts into perspective the disorienting chaos of global financial markets. Highly, highly recommended.
The Failure of LTCM and the Quants
The Nobel prize winning economists and rocket scientists employing the Black-Scholes formula for pricing options found out the hard way in 1998 that humans aren't easily modeled.
Meriwether himself, born in 1947, ruefully observed: 'If I had lived through the Depression, I would have been in a better position to understand events'. To put it bluntly, the Nobel prize winners had known plenty of mathematics, but not enough history. They had understood the beautiful theory of Planet Finance, but overlooked the messy past of Planet Earth.And later...
As we have seen repeatedly, the really big crisis come just seldom enough to be beyond the living memory of today's bank executives, fund managers, and traders.
Reversal of Capital Flows
For centuries, the capital flow was generally from West to East, but has reversed over the last 20 years.
And it is a mighty flow. In 2007, the United States needed to borrow around $800 billion from the rest of the world; more than $4 billion every working day. China, by contrast, ran a current account surplus of $262 billion.
A Modern Classic
There is so much wisdom in this book that I don't feel I have even touched on a fraction of it. It puts into perspective the disorienting chaos of global financial markets. Highly, highly recommended.
Tuesday, December 15, 2009
The Ascent of Money, part 2
The New Deal and Housing
More fascinating tidbits from Niall Ferguson's The Ascent of Money. A long stream of legislation was born out of the Great Depression that reinvented the U.S. housing market, and particularly, the mortgage market.
Prior to federal government involvement, home mortgages were typically 5-year interest only loans with a balloon payment due at the end. If you were unable to pay off or roll over the balloon payment, you were foreclosed. Home ownership was at about 40%. After FHA was established, mortgages were typically 20-year, amortizing, at 80% loan-to-value. FHA mortgages were also federally insured -- safe as houses.
Mortgage interest has always been tax deductible, since the inception of the federal income tax in 1913. Ronald Reagan defended the deduction while president stating that mortgage interest relief was "part of the American dream".
Restructuring in 1968
All of the key government institutions were now in place to support home ownership. My first home loan for $95,000, was through FHA, whose standards in 1992 required only a 3.5% down payment, with a loan limit in Texas of $120,000. I made a small gain when I sold it 4 years later for $108,000. Safe as houses.
More fascinating tidbits from Niall Ferguson's The Ascent of Money. A long stream of legislation was born out of the Great Depression that reinvented the U.S. housing market, and particularly, the mortgage market.
Prior to federal government involvement, home mortgages were typically 5-year interest only loans with a balloon payment due at the end. If you were unable to pay off or roll over the balloon payment, you were foreclosed. Home ownership was at about 40%. After FHA was established, mortgages were typically 20-year, amortizing, at 80% loan-to-value. FHA mortgages were also federally insured -- safe as houses.
The Public Works Administration spent 15% of its budget on low-cost homes and slum clearance. New agencies created included the Home Owners' Loan Corp to refinance mortgages on longer terms, the Federal Home Loan Bank Board, and the Federal National Mortgage Association (FNMA). By 1960, home ownership was up to about 60%.
Mortgage interest has always been tax deductible, since the inception of the federal income tax in 1913. Ronald Reagan defended the deduction while president stating that mortgage interest relief was "part of the American dream".
Restructuring in 1968
To broaden home ownership in wake of the Civil Rights movement, Fannie Mae was split in two: the Government National Mortgage Association (Ginnie Mae), which was to cater to poor borrowers like military veterans, and a rechartered Fannie Mae, now a privately owned government sponsored enterprise (GSE), ...was permitted to buy conventional mortgages creating a secondary market. Two years later, to provide some competition in the secondary market, the Federal Home Loan Mortgage Corporation (Freddie Mac) was set up.
All of the key government institutions were now in place to support home ownership. My first home loan for $95,000, was through FHA, whose standards in 1992 required only a 3.5% down payment, with a loan limit in Texas of $120,000. I made a small gain when I sold it 4 years later for $108,000. Safe as houses.
Sunday, December 13, 2009
The Ascent of Money - part 1
I just finished reading Niall Ferguson's The Ascent of Money. This book is a financial history of the world and is fantastic on many levels. The subject matter is highly relevant to today's malaise. It will take a few posts to highlight some of the juicy bits. The scope of this book is stunning, interleaving the rise of various financial innovations and their relationship to geopolitics.
The first noteworthy passage I found was in the introduction:
In light of the widespread fraud and moral hazard of the current era, this is a profound insight. With reflection, it holds up. Finance and credit do perform a vital role in society, but it can, and has, gotten off track.
The Government Bond Market
Following the history of the bond market, which grew out of transferable bonds in Italy, it was surprising to find that bonds financed war more than public works. War bonds issued by city-states, then nation-states, have been used mostly to initiate or defend against aggression. Ferguson covers the rise of the Rothschilds and the incredible fortune made buying and selling British bonds during the Napoleonic wars.
He covers the American Civil War from the perspective of the Union and Confederate bond market. As the value of Confederate bonds fell, their ability to finance the war crumbled.
There is also a nice piece on the German hyperinflation after World War I:
The Germans apparently miscalculated the French response to their money printing and after the French invaded to force collections, the political situation got out of hand. We can see evidence of Ferguson's assertion by looking at the political situation in Argentina over the last couple of decades and Zimbabwae today. Hyperinflation flourishes in the midst of political breakdown.
The first noteworthy passage I found was in the introduction:
...poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence. Only when borrowers have access to efficient credit networks can they escape from the clutches of loan sharks.
In light of the widespread fraud and moral hazard of the current era, this is a profound insight. With reflection, it holds up. Finance and credit do perform a vital role in society, but it can, and has, gotten off track.
The Government Bond Market
Following the history of the bond market, which grew out of transferable bonds in Italy, it was surprising to find that bonds financed war more than public works. War bonds issued by city-states, then nation-states, have been used mostly to initiate or defend against aggression. Ferguson covers the rise of the Rothschilds and the incredible fortune made buying and selling British bonds during the Napoleonic wars.
He covers the American Civil War from the perspective of the Union and Confederate bond market. As the value of Confederate bonds fell, their ability to finance the war crumbled.
There is also a nice piece on the German hyperinflation after World War I:
Inflation is a monetary phenomenon, as Milton Friedman said. But hyperinflation is always and everywhere a political phenomenon, in the sense that it cannot occur without a fundamental malfunction of a country's political economy.
The Germans apparently miscalculated the French response to their money printing and after the French invaded to force collections, the political situation got out of hand. We can see evidence of Ferguson's assertion by looking at the political situation in Argentina over the last couple of decades and Zimbabwae today. Hyperinflation flourishes in the midst of political breakdown.
Gold Charts 12/1/2009
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
For the second month in a row, M2 and MZM continued to rise. However, the gold price rose much faster. I expected economic conditions, particularly housing, to deteriorate in November, but the numbers were more moderate. The first time homebuyer tax credit, foreclosure moratoriums, and Federal modification programs have slowed the housing correction and artificially limited supply at the low end.
Looking at the money supply to gold price ratios, it is the most expensive time in 2009 to buy gold. Inflation adjusted gold prices are still not near the peaks of 1980.
The first part of December saw a long overdue dollar rally. If it continues, gold prices will be under pressure.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
For the second month in a row, M2 and MZM continued to rise. However, the gold price rose much faster. I expected economic conditions, particularly housing, to deteriorate in November, but the numbers were more moderate. The first time homebuyer tax credit, foreclosure moratoriums, and Federal modification programs have slowed the housing correction and artificially limited supply at the low end.
Looking at the money supply to gold price ratios, it is the most expensive time in 2009 to buy gold. Inflation adjusted gold prices are still not near the peaks of 1980.
The first part of December saw a long overdue dollar rally. If it continues, gold prices will be under pressure.
Wednesday, December 9, 2009
Nordegren Woods (This Bird Has Flown)
I once had ten girls, or should I say, they once had me...
She scratched up my face, isn't it good Nordegren Woods.
She asked me to go and she told me to split anywhere,
So I looked around and I noticed my phone on a chair.
I ran to the car, biding my time, drinking her wine,
We fought until two and then she said: "It's time you're dead"
She smashed out my glass with a wedge and started to laugh.
I told her I'm sorry, and crawled off to sleep in the path
And when I awoke, I was alone, this bird had flown
So I may retire, isn't it good Nordegren Woods.
-- The Beatles
http://www.youtube.com/watch?v=KkcRZSdc8us
She scratched up my face, isn't it good Nordegren Woods.
She asked me to go and she told me to split anywhere,
So I looked around and I noticed my phone on a chair.
I ran to the car, biding my time, drinking her wine,
We fought until two and then she said: "It's time you're dead"
She smashed out my glass with a wedge and started to laugh.
I told her I'm sorry, and crawled off to sleep in the path
And when I awoke, I was alone, this bird had flown
So I may retire, isn't it good Nordegren Woods.
-- The Beatles
http://www.youtube.com/watch?v=KkcRZSdc8us
Thursday, December 3, 2009
Tuesday, November 17, 2009
US Debt passes 12 Trillion
November 16 was another debt milestone (or is that millstone) with the Federal debt reaching $12,031,299,186,290.07.
The 11 trillion milestone was passed on March 17, or just under 8 months.
How long to 13 trillion? My guess is under 8 months.
The 11 trillion milestone was passed on March 17, or just under 8 months.
How long to 13 trillion? My guess is under 8 months.
Thursday, November 12, 2009
Gold charts 11/1/2009
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
In October, both M2 and MZM broke a four month trend and started to rise. The additional money created by the Fed to purchase Treasuries and Agency MBS has helped fuel a powerful stock market and precious metals rally. I expected more negative news in October.
Looking at the money supply to price ratios, it is the most expensive time in 2009 to buy gold. Roughly historical years for M2/price would be 1973 and 1985.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
In October, both M2 and MZM broke a four month trend and started to rise. The additional money created by the Fed to purchase Treasuries and Agency MBS has helped fuel a powerful stock market and precious metals rally. I expected more negative news in October.
Looking at the money supply to price ratios, it is the most expensive time in 2009 to buy gold. Roughly historical years for M2/price would be 1973 and 1985.
Monday, November 9, 2009
Added world currency exchange rates
Added a link to FXstreet.com major currency exchange rates.
I suspect the risk of a currency dislocation, such as the the one in Iceland last year, will increase in the first half of 2010. The trigger event could be the end of Fed MBS purchases, but it could also come from a major devaluation of a small Euro state currency that spreads to a major currency.
It could also happen if the Fed tries to unwind some of its questionable assets or raises rates.
I suspect the risk of a currency dislocation, such as the the one in Iceland last year, will increase in the first half of 2010. The trigger event could be the end of Fed MBS purchases, but it could also come from a major devaluation of a small Euro state currency that spreads to a major currency.
It could also happen if the Fed tries to unwind some of its questionable assets or raises rates.
Wednesday, November 4, 2009
Barry Ritholz: The Hubris of Economics
In this blistering commentary about a recent WSJ article, Mr. Ritholz chastises the profession of economics for starting with incorrect assumptions, relying on incomplete models, and being paid to look the other way.
Someone should give this guy a Nobel prize. Oh, wait, they did. Twice.
Science is the ultimate “show me” state.
Economics has a somewhat, shall we call it, less rigorous approach. Indeed, the arrogance of economics is that it is the polar opposite of Science. It begins with a few basic assumptions, many of which are obviously untrue; some are demonstrably false.
No, Mankind is not a rational, profit maximizing actor. No, markets are not perfectly, or even nearly, efficient. No, prices do not reflect the sum total of all that is known about a given market, sector or stock. Those of you who pretend otherwise are fools who deserve to have your 401ks cut in half. That is called just desserts. The problem is that your foolishness helped cut nearly everyone else’s 401ks in half. That is called criminal incompetence.
Someone should give this guy a Nobel prize. Oh, wait, they did. Twice.
Tuesday, November 3, 2009
Monday, October 26, 2009
CFNAI monthly index down, 3 month average up
The Chicago Fed National Activity Index (CFNAI) is one of the reports I favor with significant weight. It is a very broad measure of economic activity.
The October report was released today.
From the report:
This looks like a very weak report to me. The monthly index has been down the last two out of three months. The second derivative is negative. The 3-month moving average (MA3) only broke -0.7 because of the very strong reading in July, probably influenced by cash 4 clunkers.
Without an improved number in October, the MA3 is likely to move back below -0.7 again next month.
The October report was released today.
From the report:
"Thirty-two of the 85 individual indicators made positive contributions to the index in September, while 53 made negative contributions. Thirty-nine indicators improved from August to September, while 46 indicators deteriorated."
This looks like a very weak report to me. The monthly index has been down the last two out of three months. The second derivative is negative. The 3-month moving average (MA3) only broke -0.7 because of the very strong reading in July, probably influenced by cash 4 clunkers.
Without an improved number in October, the MA3 is likely to move back below -0.7 again next month.
Friday, October 23, 2009
Mass layoffs return
Mass layoffs announced in the last week:
Sun Microsystems - 3,000
Sun Announces 3,000 Layoffs, 10 Percent of Workforce
NCR - 2,200
NCR Corp. Q3 profit dives, will cut 2,200 jobs
International Paper - 1,600
International Paper - 1,600
Oak Forest Hospital - 200
Oak Forest Hospital eliminates 200 jobs
Georgia Pacific - 300
Georgia-Pacific Mill In Fordyce Laying Off Workforce
Obama and the Fed better start saving or creating some jobs soon. I am also starting to smell whiffs of credit stress in some other blogs, but not seeing it in any credit indicators yet. Could be one hell of a winter.
Sun Microsystems - 3,000
Sun Announces 3,000 Layoffs, 10 Percent of Workforce
NCR - 2,200
NCR Corp. Q3 profit dives, will cut 2,200 jobs
International Paper - 1,600
International Paper - 1,600
Oak Forest Hospital - 200
Oak Forest Hospital eliminates 200 jobs
Georgia Pacific - 300
Georgia-Pacific Mill In Fordyce Laying Off Workforce
Obama and the Fed better start saving or creating some jobs soon. I am also starting to smell whiffs of credit stress in some other blogs, but not seeing it in any credit indicators yet. Could be one hell of a winter.
Wednesday, October 21, 2009
Hoisington 3rd quarter review and outlook
Van R. Hoisington and Lacy H. Hunt, Ph.D. of the Hoisington Investment Management Company have published their 3rd quarter review and outlook.
The major theme is deflation, followed by more deflation.
They make persuasive arguments of what is to come following our enormous housing bubble bust, and address the current dollar weakness.
The major theme is deflation, followed by more deflation.
They make persuasive arguments of what is to come following our enormous housing bubble bust, and address the current dollar weakness.
Monday, October 19, 2009
Frontline: The Warning
PBS Frontline has the story of Brooksley Born, the CFTC regulator who tried to stop the explosion of reckless derivatives.
The Warning airs this week.
The heroes in this entire episode have been women: Brooksley Born, Elizabeth Warren, and to a lesser extent, Sheila Bair.
The villains have been, and continue to be, men.
The Warning airs this week.
The heroes in this entire episode have been women: Brooksley Born, Elizabeth Warren, and to a lesser extent, Sheila Bair.
The villains have been, and continue to be, men.
Sunday, October 11, 2009
Kitco Gold Index (KGX)
Kitco, one of the largest bullion dealers in North America, recently launched a gold index that prices gold in the same basket of currencies as those used to price the dollar index.
Those currencies are the Yen, Euro, Pound, Canadian dollar, Swedish krona, and Swiss franc. The new chart lets you see the change in gold price in the basket vs. the change due to dollar fluctuations.
I've added a link to it in the blog roll and in this post.
Kitco Gold Index (KGX)
Those currencies are the Yen, Euro, Pound, Canadian dollar, Swedish krona, and Swiss franc. The new chart lets you see the change in gold price in the basket vs. the change due to dollar fluctuations.
I've added a link to it in the blog roll and in this post.
Kitco Gold Index (KGX)
Gold Charts 10/1/2009
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
Gold was over $1000/oz on October 1 and has continued to rally to nominal records. Despite the high nominal price, the M2/price (8.23) and MZM/price (9.43) ratios are still at moderate levels. While the ratios are at their highest levels of the year, they have ranged from 2.40 to 19.33 going back to 1959. The inflation adjusted price is only about half of the peak in 1980.
If you think inflationary forces will win the day, then prices have plenty of room to rise from here. If you think deflationary forces will win the day, then prices are likely to drop by the end of the year. Both M2 and MZM have been shrinking slightly since July. Bank credit has been shrinking dramatically.
My guess is that high and growing unemployment along with negative real estate shocks will lead to somewhat lower prices by the end of the year. I am delaying additional purchases for now.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
Gold was over $1000/oz on October 1 and has continued to rally to nominal records. Despite the high nominal price, the M2/price (8.23) and MZM/price (9.43) ratios are still at moderate levels. While the ratios are at their highest levels of the year, they have ranged from 2.40 to 19.33 going back to 1959. The inflation adjusted price is only about half of the peak in 1980.
If you think inflationary forces will win the day, then prices have plenty of room to rise from here. If you think deflationary forces will win the day, then prices are likely to drop by the end of the year. Both M2 and MZM have been shrinking slightly since July. Bank credit has been shrinking dramatically.
My guess is that high and growing unemployment along with negative real estate shocks will lead to somewhat lower prices by the end of the year. I am delaying additional purchases for now.
Saturday, October 10, 2009
Added Jesse's Café Américain
Added Jesse's Café Américain to the blog.
Dropped Zero Hedge from the blog roll.
I've been getting better analysis from Jesse than Zero Hedge on a consistent basis. Zero Hedge does have some good posts, but the noise to signal ratio is a bit too high.
Dropped Zero Hedge from the blog roll.
I've been getting better analysis from Jesse than Zero Hedge on a consistent basis. Zero Hedge does have some good posts, but the noise to signal ratio is a bit too high.
Sunday, October 4, 2009
Ben
Ben, the two of us need work no more
We both found what we were looking for
With a Fed to call my own
I'll use non-recourse loans
And you, my friend, will see
we'll bail out AIG
(we'll bail out AIG)
Ben, you're monetizing here and there
You're not earning points with Sheila Bair
If you ever look behind
Reflation on your mind
There's one thing you should know
New bubbles you can blow
(new bubbles you can blow)
I used to buy, only "T"s
Now I gorge, on "GSE"s
I used to loan, to Jimmy Cayne
Billions lost, in Maiden Lane
Ben, most people would turn you away
Larry Summers wants your job today
They don't see you as I do
I wish they would try to
They'll buy on credit again
If they had a Fed with Ben
(a Fed) With Ben
(with Ben) With Ben
http://www.youtube.com/watch?v=U36DO_nrJeA
We both found what we were looking for
With a Fed to call my own
I'll use non-recourse loans
And you, my friend, will see
we'll bail out AIG
(we'll bail out AIG)
Ben, you're monetizing here and there
You're not earning points with Sheila Bair
If you ever look behind
Reflation on your mind
There's one thing you should know
New bubbles you can blow
(new bubbles you can blow)
I used to buy, only "T"s
Now I gorge, on "GSE"s
I used to loan, to Jimmy Cayne
Billions lost, in Maiden Lane
Ben, most people would turn you away
Larry Summers wants your job today
They don't see you as I do
I wish they would try to
They'll buy on credit again
If they had a Fed with Ben
(a Fed) With Ben
(with Ben) With Ben
http://www.youtube.com/watch?v=U36DO_nrJeA
I owe you (Barney)
I owe you
you owe me
we're an oligopoly
with a great big hug, payments missed from me to you
wont you say you owe me too!
I owe you
you owe me
we're best friends as friends should be
with a great big hug, payments missed from me to you
wont you say you owe me too!
you owe me
we're an oligopoly
with a great big hug, payments missed from me to you
wont you say you owe me too!
I owe you
you owe me
we're best friends as friends should be
with a great big hug, payments missed from me to you
wont you say you owe me too!
Tuesday, September 15, 2009
Added dollar index
Added the NYBOT US dollar index price chart.
The dollar index is sometimes indicative of price changes in stocks and commodities.
The dollar index is sometimes indicative of price changes in stocks and commodities.
Saturday, September 12, 2009
Gold Charts 9/1/2009
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
Monday, August 31, 2009
Gold Charts 8/1/2009
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
Saturday, August 29, 2009
Layoff Daily laid off
The grind of trying to keep up with layoffs finally sunk LayoffDaily.com.
I have removed it from the blog roll and added DailyJobCuts.com.
I actually ran layoffdaily.com for about a week and found it difficult to automate. I had to turn it back over to the founder who was also looking for a way out. It really takes 3-4 hours a day to run it and there was almost no return. Ad revenue was running about $100/month. Not a good use of time.
Anyway, sad to see it go.
I have removed it from the blog roll and added DailyJobCuts.com.
I actually ran layoffdaily.com for about a week and found it difficult to automate. I had to turn it back over to the founder who was also looking for a way out. It really takes 3-4 hours a day to run it and there was almost no return. Ad revenue was running about $100/month. Not a good use of time.
Anyway, sad to see it go.
Friday, August 28, 2009
Please Seize Me by The Beatles
In honor of Bank Failure Fridays
Please Seize Me
by The Beatles
Last night I said these words to my bank,
I know you never even try, thanks
C'mon...C'mon...C'mon...C'mon
Please seize me, whoa yeah, like trustees do
You don't need me to show decay, love.
Why do I always have delay "love,"
C'mon...C'mon...C'mon...C'mon
Please seize me, whoa yeah, like trustees do
I don't wanna sound complainin',
But you know there's always gain in my chart (in my chart).
I do all the appeasin' with you, it's so hard to reason
With Hu, whoah yeah, why do you make me blue.
Last night I said these words to my bank,
I know you never even try, thanks
C'mon...C'mon...C'mon...C'mon
Please seize me, whoa yeah, like trustees do
Whoa yeah, for Chairman Hu
http://www.youtube.com/watch?v=dkjGsG7tpwc
Please Seize Me
by The Beatles
Last night I said these words to my bank,
I know you never even try, thanks
C'mon...C'mon...C'mon...C'mon
Please seize me, whoa yeah, like trustees do
You don't need me to show decay, love.
Why do I always have delay "love,"
C'mon...C'mon...C'mon...C'mon
Please seize me, whoa yeah, like trustees do
I don't wanna sound complainin',
But you know there's always gain in my chart (in my chart).
I do all the appeasin' with you, it's so hard to reason
With Hu, whoah yeah, why do you make me blue.
Last night I said these words to my bank,
I know you never even try, thanks
C'mon...C'mon...C'mon...C'mon
Please seize me, whoa yeah, like trustees do
Whoa yeah, for Chairman Hu
http://www.youtube.com/watch?v=dkjGsG7tpwc
Tuesday, August 25, 2009
US Gold vs. M2 and MZM
In my regular historical and monthly gold charts, I compare the US money supply against gold, looking at two ratios: money supply vs. gold price and money supply vs. total above ground gold supply.
If I limit the comparison to just the US gold stocks, the numbers are a bit startling. In a previous post, I found two numbers for US gold stocks. In the following charts, I used the larger number from Wikipedia of 8,133.5 metric tonnes or 286,949,880 oz.
M2 / US Gold Supply (oz)
MZM / US Gold Supply (oz)
If the US government chose to re-monetize gold, backing each US dollar with gold bullion, the price would fall somewhere in the following range:
M2/oz (only US gold) is $29,203.71
MZM/oz (only US gold) is $33,385.62
You can look at this a couple of different ways. One angle would be that the difference between the $30,000 level and the current gold price (around $950) is how much value gold has lost since it was de-monetized. Another angle is how much inflation has taken place since the early 1930s when gold had a fixed price of $20/oz. Either way, it is an interesting bit of trivia.
If I limit the comparison to just the US gold stocks, the numbers are a bit startling. In a previous post, I found two numbers for US gold stocks. In the following charts, I used the larger number from Wikipedia of 8,133.5 metric tonnes or 286,949,880 oz.
M2 / US Gold Supply (oz)
MZM / US Gold Supply (oz)
If the US government chose to re-monetize gold, backing each US dollar with gold bullion, the price would fall somewhere in the following range:
M2/oz (only US gold) is $29,203.71
MZM/oz (only US gold) is $33,385.62
You can look at this a couple of different ways. One angle would be that the difference between the $30,000 level and the current gold price (around $950) is how much value gold has lost since it was de-monetized. Another angle is how much inflation has taken place since the early 1930s when gold had a fixed price of $20/oz. Either way, it is an interesting bit of trivia.
Sunday, August 23, 2009
Saturday, August 22, 2009
Linking from an icon in Hoocoodanode
Here is a some basic HTML for creating a linked icon in the Calculated Risk comment system (Hoocoodanode).
An HTML link is created using the anchor tag:
<a href="http://www.calculatedriskblog.com">Linked Text</a>
The target of the link is specified using the href parameter. It is usually best to copy the target URL from your web browser address bar so you don't mistype it.
To attach the link to an icon, simply replace the "Linked Text" part with one of the many textual smileys, like :rant:, :wine:, or :coffee:.
Here is a complete example, linking from the coffee icon:
<a href="http://www.calculatedriskblog.com">:coffee:</a>
Note that many web pages you may want to link to have long URLs with many variables. Make sure you copy the complete URL into the href parameter and surround it with double quotes as shown.
An HTML link is created using the anchor tag:
<a href="http://www.calculatedriskblog.com">Linked Text</a>
The target of the link is specified using the href parameter. It is usually best to copy the target URL from your web browser address bar so you don't mistype it.
To attach the link to an icon, simply replace the "Linked Text" part with one of the many textual smileys, like :rant:, :wine:, or :coffee:.
Here is a complete example, linking from the coffee icon:
<a href="http://www.calculatedriskblog.com">:coffee:</a>
Note that many web pages you may want to link to have long URLs with many variables. Make sure you copy the complete URL into the href parameter and surround it with double quotes as shown.
Tuesday, August 18, 2009
U.S. gold reserves
How much gold does the US have?
I researched this from two angles. Wikipedia has numbers, which come from Gold Council, on the gold reserves of each country. According to Wikipedia, the US has 8,133.5 metric tonnes. This is equivalent to 17,934,367.5 lbs, or 286,949,880 oz.
According to the Federal Reserve H.4.1 release on August 13, 2009, the central bank hold $11,041 million dollars in gold stock. If valued at the last official price of $42/oz, that is equivalent to 262,880,952 oz.
The numbers are fairly close, with perhaps the difference held by the Treasury. In theory, most of it is held at the Federal Reserve Bank of New York and Fort Knox, but I'm not sure when the last audit was performed.
I researched this from two angles. Wikipedia has numbers, which come from Gold Council, on the gold reserves of each country. According to Wikipedia, the US has 8,133.5 metric tonnes. This is equivalent to 17,934,367.5 lbs, or 286,949,880 oz.
According to the Federal Reserve H.4.1 release on August 13, 2009, the central bank hold $11,041 million dollars in gold stock. If valued at the last official price of $42/oz, that is equivalent to 262,880,952 oz.
The numbers are fairly close, with perhaps the difference held by the Treasury. In theory, most of it is held at the Federal Reserve Bank of New York and Fort Knox, but I'm not sure when the last audit was performed.
Sunday, August 16, 2009
Gold charts 7/1/2009
I have updated my M2 and MZM vs. gold charts and broken them out into historical and current year. The historical charts are annual and start from 7/1/1959. The current year charts are monthly and use the money stock and gold stock values on the first of each month.
I probably won't update the historical charts again until next July unless there is some dramatic movement that warrants a historical perspective. I plan to update the current charts monthly.
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply. I plan to prepare similar charts comparing US money stock vs. US gold supply. I expect those numbers to be much more dramatic.
On 7/1/2009, M2/oz was $1,619.26.
M2/World Gold Supply (oz) since 1959
On 7/1/2009, MZM/oz was $1,851.14.
MZM/World Gold Supply (oz) since 1959
On 7/1/2009, M2 (in billions)/Gold Price was 8.93. The minimum (max relative gold price) was in 1980 at 2.40. This metric might be one way to detect a growing gold bubble.
M2/Gold Price since 1959
On 7/1/2009, MZM (in billions)/Gold Price was 10.21.
MZM/Gold Price since 1959
Monthly Charts for 2009
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
I probably won't update the historical charts again until next July unless there is some dramatic movement that warrants a historical perspective. I plan to update the current charts monthly.
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply. I plan to prepare similar charts comparing US money stock vs. US gold supply. I expect those numbers to be much more dramatic.
On 7/1/2009, M2/oz was $1,619.26.
M2/World Gold Supply (oz) since 1959
On 7/1/2009, MZM/oz was $1,851.14.
MZM/World Gold Supply (oz) since 1959
On 7/1/2009, M2 (in billions)/Gold Price was 8.93. The minimum (max relative gold price) was in 1980 at 2.40. This metric might be one way to detect a growing gold bubble.
M2/Gold Price since 1959
On 7/1/2009, MZM (in billions)/Gold Price was 10.21.
MZM/Gold Price since 1959
Monthly Charts for 2009
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
Friday, August 7, 2009
Gold charts as of 6/1/2009
Gold Charts
In my ongoing quest to understand the gold relationship to the US dollar, I have created some charts and added a new twist to the analysis.
M2 money supply vs. world gold supply in oz. (above ground).
M2 numbers from the Federal Reserve (not seasonally adjusted).
Gold supply from the Gold Council.
Since 1959, the number of dollars has been growing compared to gold supply. As of 6/1/2009, there are about $1,616.09 dollars per oz.
M2 money supply vs. world gold supply chart
(M2/capita) vs. gold price.
M2 from the Federal Reserve (not seasonally adjusted).
US population numbers from the US Census bureau.
Gold supply from the Gold Council.
This chart attempts to adjust the rising money supply for the rising population before comparing to the gold price. The lowest ratio is 7/1/1980 at 10.58. The highest ratio is 7/1/1970 at 83.01. The current ratio as of 6/1/2009 is 29.00. You can really see the top of the bubble in 1980 in this view.
(M2/capita) vs. gold price chart
MZM money supply vs. world gold supply in oz. (above ground).
MZM numbers from the Federal Reserve (not seasonally adjusted).
Gold supply from the Gold Council.
Since 1959, the money of zero maturity dollars has been growing compared to gold supply. As of 6/1/2009, there are about $1,856.91 MZM dollars per oz.
MZM money supply vs. world gold supply chart
(MZM/capita) vs. gold price.
MZM from the Federal Reserve (not seasonally adjusted).
US population numbers from the US Census bureau.
Gold supply from the Gold Council.
This chart attempts to adjust the rising money supply for the rising population before comparing to the gold price. The lowest ratio is 7/1/1980 at 6.01. The highest ratio is 7/1/2001 at 68.10. The current ratio as of 6/1/2009 is 33.32.
(MZM/capita) vs. gold price chart
It is interesting that the M2/capita apex was in 1970, while the broader MZM/capita apex was in 2001. Maybe that reflects the growing use of money market funds vs. time deposits.
In my ongoing quest to understand the gold relationship to the US dollar, I have created some charts and added a new twist to the analysis.
M2 money supply vs. world gold supply in oz. (above ground).
M2 numbers from the Federal Reserve (not seasonally adjusted).
Gold supply from the Gold Council.
Since 1959, the number of dollars has been growing compared to gold supply. As of 6/1/2009, there are about $1,616.09 dollars per oz.
M2 money supply vs. world gold supply chart
(M2/capita) vs. gold price.
M2 from the Federal Reserve (not seasonally adjusted).
US population numbers from the US Census bureau.
Gold supply from the Gold Council.
This chart attempts to adjust the rising money supply for the rising population before comparing to the gold price. The lowest ratio is 7/1/1980 at 10.58. The highest ratio is 7/1/1970 at 83.01. The current ratio as of 6/1/2009 is 29.00. You can really see the top of the bubble in 1980 in this view.
(M2/capita) vs. gold price chart
MZM money supply vs. world gold supply in oz. (above ground).
MZM numbers from the Federal Reserve (not seasonally adjusted).
Gold supply from the Gold Council.
Since 1959, the money of zero maturity dollars has been growing compared to gold supply. As of 6/1/2009, there are about $1,856.91 MZM dollars per oz.
MZM money supply vs. world gold supply chart
(MZM/capita) vs. gold price.
MZM from the Federal Reserve (not seasonally adjusted).
US population numbers from the US Census bureau.
Gold supply from the Gold Council.
This chart attempts to adjust the rising money supply for the rising population before comparing to the gold price. The lowest ratio is 7/1/1980 at 6.01. The highest ratio is 7/1/2001 at 68.10. The current ratio as of 6/1/2009 is 33.32.
(MZM/capita) vs. gold price chart
It is interesting that the M2/capita apex was in 1970, while the broader MZM/capita apex was in 2001. Maybe that reflects the growing use of money market funds vs. time deposits.
Tuesday, July 28, 2009
Added FRB G19 Consumer Credit
Added Federal Reserve Board G19 Release on Consumer Credit (Current).
Tracking total consumer credit will give us some indication of how the overall economy is fairing. Credit destruction is a drag on GDP and deflationary.
Tracking total consumer credit will give us some indication of how the overall economy is fairing. Credit destruction is a drag on GDP and deflationary.
Updated Zero Hedge link and RSS
Zero Hedge just changed to a stand alone domain with a new content management system, and I have updated the RSS feed accordingly.
The new fav icon is a zero with a capital H inside making a nice Omega symbol. Well chosen.
Keep punching the world in the face, Tyler.
The new fav icon is a zero with a capital H inside making a nice Omega symbol. Well chosen.
Keep punching the world in the face, Tyler.
Saturday, July 25, 2009
Added "News from 1930"
This is a fun site that posts news from the WSJ on the current date in 1930.
The economic headlines have interesting parallels.
"Consensus that business will improve seasonally in fall, but while optimists expect improvement to continue through winter, conservative authorities expect another slowdown in winter, and sustained upturn not until spring of 1931, and therefore continue to advise selling stocks on rallies and waiting for breaks to buy.
Reported industrial earnings so far have been considerably better than expected."
It seems recovery is always just around the corner.
The economic headlines have interesting parallels.
"Consensus that business will improve seasonally in fall, but while optimists expect improvement to continue through winter, conservative authorities expect another slowdown in winter, and sustained upturn not until spring of 1931, and therefore continue to advise selling stocks on rallies and waiting for breaks to buy.
Reported industrial earnings so far have been considerably better than expected."
It seems recovery is always just around the corner.
Thursday, July 23, 2009
Chapter 9 -- I hear the train coming
The Bond Tangent has an excellent backgrounder on Municipal Bankruptcy.
Jefferson County, Alabama is on the brink, a couple of California cities have already filed for Chapter 9, and I expect many more if the state "borrows" billions from counties and cities to fill its own budget hole.
Jefferson County, Alabama is on the brink, a couple of California cities have already filed for Chapter 9, and I expect many more if the state "borrows" billions from counties and cities to fill its own budget hole.
Thursday, July 9, 2009
Added UEMPMED, Median Duration of Unemployment
The St. Louis Fed publishes UEMPMED, the Median Duration of Unemployment.
If you lose your job now, chances are you will be unemployed for about 18 weeks. This is a record and far above any recession on record back to 1968 when it was first tracked.
Many people are going beyond 27 weeks and running out of state benefits. Due to the stimulus, the Federal government then kicks in for another 6 months in most cases. Still, that kind of extended unemployment not only wrecks your financial situation, it wrecks your self confidence and promotes underemployment. On the other hand, underemployment is better than no employment.
If you lose your job now, chances are you will be unemployed for about 18 weeks. This is a record and far above any recession on record back to 1968 when it was first tracked.
Many people are going beyond 27 weeks and running out of state benefits. Due to the stimulus, the Federal government then kicks in for another 6 months in most cases. Still, that kind of extended unemployment not only wrecks your financial situation, it wrecks your self confidence and promotes underemployment. On the other hand, underemployment is better than no employment.
Sunday, June 28, 2009
Money supply vs. gold
MZM vs. gold as of 6/1/2009:
MZM (billions, St. Louis Fed, not seasonally adjusted): 9609.9
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $939.30
MZM/oz: $1,857
M2 vs. gold as of 6/1/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8349.4
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $939.30
M2/oz: $1,613
MZM (billions, St. Louis Fed, not seasonally adjusted): 9609.9
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $939.30
MZM/oz: $1,857
M2 vs. gold as of 6/1/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8349.4
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $939.30
M2/oz: $1,613
Physics envy
“Economists suffer from a deep psychological disorder that I call ‘physics envy'. We wish that 99 percent of economic behavior could be captured by three simple laws of nature. In fact, economists have 99 laws that capture 3 percent of behavior. Economics is a uniquely human endeavor ..."
Andrew Lo, a professor of finance at the Massachusetts Institute of Technology
Andrew Lo, a professor of finance at the Massachusetts Institute of Technology
Saturday, June 27, 2009
Added ZeroHedge
ZeroHedge by Tyler Durden (of Fight Club fame) has an insider/trader perspective and is awash isn technical articles and news.
Wednesday, June 24, 2009
Added St. Louis Fed EMRATIO
During a long period of recession, the unemployment numbers become a less accurate measure of the employment situation because as benefits run out, people fall off the continuing claims roll. This has the same effect on the measurement as if they became fully employed.
When this happens, a better measurement to track is the civilian employment ratio, EMRATIO published by the St. Louis Fed.
When this happens, a better measurement to track is the civilian employment ratio, EMRATIO published by the St. Louis Fed.
Tuesday, June 16, 2009
Removed Interfluidity
While I like the writing and deep treatment of topics at Interfluidity, it is updated infrequently. I plan to replace it with another blog that has more timely commentary.
Thursday, June 4, 2009
Wednesday, June 3, 2009
What is a 2/5/30 butterfly?
One of my favorite blogs to follow is the bond oriented Across the Curve.
The author has a fantastic article explaining the butterfly trade with the Treasury 2-year note/5-year note/30-year bond.
Fun reading, although I had to read it twice to get the idea.
The author has a fantastic article explaining the butterfly trade with the Treasury 2-year note/5-year note/30-year bond.
Fun reading, although I had to read it twice to get the idea.
Monday, June 1, 2009
GM Bankruptcy
GM entered chapter 11 today, which was not a surprise for anyone.
While this was unavoidable, it guarantees, in my opinion, the bankruptcy of Ford. My best guess is June 2010. The federal government is now providing financing to see GM through to the other side of chapter 11 and also funneling billions of dollars to GMAC (now Ally Bank) in order to finance more subprime GM and Chrysler cars.
I wonder who can finance more cars, Ford or the federal government? Ford is in terrible financial condition and would probably be bankrupt anyway, but this assures it.
So here is my prediction in writing. One year from today, Ford will complete the U.S. automaker bankruptcy trilogy.
While this was unavoidable, it guarantees, in my opinion, the bankruptcy of Ford. My best guess is June 2010. The federal government is now providing financing to see GM through to the other side of chapter 11 and also funneling billions of dollars to GMAC (now Ally Bank) in order to finance more subprime GM and Chrysler cars.
I wonder who can finance more cars, Ford or the federal government? Ford is in terrible financial condition and would probably be bankrupt anyway, but this assures it.
So here is my prediction in writing. One year from today, Ford will complete the U.S. automaker bankruptcy trilogy.
Saturday, May 16, 2009
Friday, May 15, 2009
China's Yuan to usurp dollar
According to professor Nouriel Roubini, China is taking steps to allow the yuan to ascend to the world's reserve currency.
Monday, May 11, 2009
Added Chicago Fed National Activity Index (CFNAI)
This aggregate was suggested by an insightful comment on the Calculated Risk blog. From the Chicago Fed web site:
The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one.It appears to have been a fairly accurate indicator of past recessions and the current one. Worth a look.
Sunday, May 10, 2009
Dow/Gold ratio, which way next?
Barry Ritholz has an interesting post and graph of the Dow/Gold ratio sing 1980 when it hit a low of 1.5. I don't expect the bear market to end until it at least touches 5 again. In that case, we've got a ways to go.
Tuesday, May 5, 2009
Chrysler Bankruptcy
We are only a few days into the Chrysler BK and things already looked muddled. The Detroit Free Press has an interesting article on the proceedings and the immediate road blocks thrown up by some creditors.
So, the taxpayers are already eating about $8 billion right out of the gate.
As bad as the initial $8 billion loss is, there is a small possibility that Chrysler could end up in liquidation. That would create untold chaos. Even if they emerge in partnership with Fiat, it looks their prospects are weak for surviving more than a couple of years. Ugly.
The U.S. Treasury wants to loan Chrysler $3.34 billion and the Canadian government $1.16 billion of the in-court financing.
He also said there was a "low probability" that Chrysler would be able to repay that loan. That means the U.S. Treasury could end up losing nearly $8 billion in loans issued to Chrysler -- including the $4 billion loaned in January.
So, the taxpayers are already eating about $8 billion right out of the gate.
"The survival of Chrysler's business is at stake in these proceedings, as is the fate of hundreds of suppliers and thousands of Chrysler dealers around the country," Chrysler's lead bankruptcy attorney, Corinne Ball, said in a court filing Sunday. "Absent immediate action, (Chrysler) will lose the only opportunity available to them to preserve their business as a going concern and to avoid the economic devastation that will occur if Chrysler's business, and Chrysler's suppliers and dealers, are forced to shut down."
As bad as the initial $8 billion loss is, there is a small possibility that Chrysler could end up in liquidation. That would create untold chaos. Even if they emerge in partnership with Fiat, it looks their prospects are weak for surviving more than a couple of years. Ugly.
Saturday, April 18, 2009
Removed Accrued Interest
Removed the Accrued Interest blog since Across the Curve is not going to paid content. I had three bond-related blogs, but two will suffice.
Thursday, April 16, 2009
Friday, April 10, 2009
Updated money supply vs. gold
MZM vs. gold as of 3/30/2009:
MZM (billions, St. Louis Fed, not seasonally adjusted): 9444.9
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $918.60
MZM/oz: $1,825
M2 vs. gold as of 3/30/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8308.0
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $918.60
M2/oz: $1,605
MZM (billions, St. Louis Fed, not seasonally adjusted): 9444.9
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $918.60
MZM/oz: $1,825
M2 vs. gold as of 3/30/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8308.0
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $918.60
M2/oz: $1,605
Thursday, March 26, 2009
Added The Bond Tangent
The Bond Tangent is a blog covering the municipal bond market. It also has a handy set of links for all manner of bond related statistics.
Gentlemen prefer bonds.
Gentlemen prefer bonds.
Tuesday, March 24, 2009
Added Accrued Interest
The Across the Curve blog will be going mostly "for-pay" on April 11. It is a great blog, great writer, great content, but I can't afford $25/mo. The insights are worth every penny, but as a non-professional bond trader, I can't afford it.
In light of the coming change, I've added another bond trader blog, Accrued Interest, to help fill the void.
In light of the coming change, I've added another bond trader blog, Accrued Interest, to help fill the void.
Monday, March 23, 2009
China calls for new world reserve currency
In a post on the People's Bank of China web site, China proposed dumping the U.S. dollar in favor of an enhanced SDR (special drawing right) using a basket of 20 or so currencies instead of the 4 that now make up the SDR.
http://www.pbc.gov.cn/english/detail.asp?col=6500&id=168
Down we go, further down the dollar death spiral.
http://www.pbc.gov.cn/english/detail.asp?col=6500&id=168
Down we go, further down the dollar death spiral.
Tuesday, March 17, 2009
$11 Trillion in debt
On January 20, 2009, the total public debt was 10,626,877,048,913.08.
On March 17, 2009, the total public debt was 11,033,157,578,669.78.
On March 17, 2009, the total public debt was 11,033,157,578,669.78.
Removed Marginal Revolution
I removed Marginal Revolution from the blog roll. There was nothing unique in the content and the analysis was marginal.
Friday, March 6, 2009
Hedge fund gates put downward pressure on market
From Marketwatch, the Mariner distressed debt fund erected a redemption gate for the first quarter of 2009:
Mariner raises 'gate'
The article mentions at least 75 other hedge funds that have also put up gates to prevent what they consider fire sales of their assets. They have locked the horses in the burning barn. I would be very upset if I had money locked in a losing hedge fund.
This means there is great pent up demand for people to exit the stock and bond market. That's why every small rally is sold into furiously by hedge funds to try to meet their redemptions. It is made even worse by the degree to which each hedgie is levered. Until redemption demand works its way out, the market will continue to grind down.
Get out...if you can.
Mariner raises 'gate'
The article mentions at least 75 other hedge funds that have also put up gates to prevent what they consider fire sales of their assets. They have locked the horses in the burning barn. I would be very upset if I had money locked in a losing hedge fund.
This means there is great pent up demand for people to exit the stock and bond market. That's why every small rally is sold into furiously by hedge funds to try to meet their redemptions. It is made even worse by the degree to which each hedgie is levered. Until redemption demand works its way out, the market will continue to grind down.
Get out...if you can.
Thursday, February 26, 2009
Removed Fed NY Economic Calendar
After living with it a while, it turns out there was too much overlap with the FX calendar. The FX calendar is more useful and AJAXy.
Saturday, February 7, 2009
Updated money supply vs. gold
The Gold Council released their latest report in January, 2009. According to that report, the total above ground gold stocks at the end of 2008 were 5,175,202,156 oz. My previous estimate was 5,856,520,091 oz.
Adjusting for the new, lower amount leads to these results:
MZM vs. gold as of 1/19/2009:
MZM (billions, St. Louis Fed, not seasonally adjusted): 9411.8
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $840
MZM/oz: $1,819
M2 vs. gold as of 1/19/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8229.7
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $840
M2/oz: $1,590
Adjusting for the new, lower amount leads to these results:
MZM vs. gold as of 1/19/2009:
MZM (billions, St. Louis Fed, not seasonally adjusted): 9411.8
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $840
MZM/oz: $1,819
M2 vs. gold as of 1/19/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8229.7
Gold supply (oz, estimated): 5,175,202,156
Gold price in USD: $840
M2/oz: $1,590
Friday, February 6, 2009
Added Fed NY Economic Calendar
The Federal Reserve Bank of New York publishes an economic calendar with direct links to the various reports. It contains some different reports than those on the FX site.
Friday, January 30, 2009
Money supply vs. Gold
One of the interesting things I attempted last summer was to determine a fair value for gold based on the total world supply and historical prices. This exercise became difficult because until 1971, the dollar was officially tied to gold. Nixon broke that link and since then, fiat currencies and gold have floated freely.
As I began thinking about it, the best approach seemed to be comparing the total amount of above ground gold vs. the total face value of all world fiat currency. It is not sufficient to compare it with only the U.S. money supply because it is an international commodity that trades in all markets. Few governments publish numbers of their total fiat money supply, and those that do may not be publishing accurate numbers for various reasons. Due to the lack of information, and despite the crudeness, I decided to limit my comparison of the money supply to dollars since I could get numbers on the money supply from the Federal Reserve, and also since the U.S. dollar is still the world reserve currency.
A further limitation to any comparison is that most gold is not in investment form (bars or coins). The bulk of it is in jewelry. This is one reason why gold coins typically carry a premium over the spot price of gold on commodity exchanges.
Still, I soldiered on, collecting world gold supply numbers from the Gold Council and Kitco, then adjusting the numbers going from 1959 to the present assuming a average 1.6% increase in gold supply from new mining each year. I loaded all this data into a spreadsheet to crank out a fair value price and some interesting ratios.
Here are the MZM numbers as of 1/19/2009:
MZM (billions, St. Louis Fed, not seasonally adjusted): 9411.8
Gold supply (oz, estimated): 5,856,520,091
Gold price in USD: $840
MZM/oz: $1,607
Here are the M2 numbers as of 1/19/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8229.7
Gold supply (oz, estimated): 5,856,520,091
Gold price in USD: $840
M2/oz: $1,405
Even looking at the narrower M2 money stock, gold looks a bargain to me.
As I began thinking about it, the best approach seemed to be comparing the total amount of above ground gold vs. the total face value of all world fiat currency. It is not sufficient to compare it with only the U.S. money supply because it is an international commodity that trades in all markets. Few governments publish numbers of their total fiat money supply, and those that do may not be publishing accurate numbers for various reasons. Due to the lack of information, and despite the crudeness, I decided to limit my comparison of the money supply to dollars since I could get numbers on the money supply from the Federal Reserve, and also since the U.S. dollar is still the world reserve currency.
A further limitation to any comparison is that most gold is not in investment form (bars or coins). The bulk of it is in jewelry. This is one reason why gold coins typically carry a premium over the spot price of gold on commodity exchanges.
Still, I soldiered on, collecting world gold supply numbers from the Gold Council and Kitco, then adjusting the numbers going from 1959 to the present assuming a average 1.6% increase in gold supply from new mining each year. I loaded all this data into a spreadsheet to crank out a fair value price and some interesting ratios.
Here are the MZM numbers as of 1/19/2009:
MZM (billions, St. Louis Fed, not seasonally adjusted): 9411.8
Gold supply (oz, estimated): 5,856,520,091
Gold price in USD: $840
MZM/oz: $1,607
Here are the M2 numbers as of 1/19/2009:
M2 (billions, St. Louis Fed, not seasonally adjusted): 8229.7
Gold supply (oz, estimated): 5,856,520,091
Gold price in USD: $840
M2/oz: $1,405
Even looking at the narrower M2 money stock, gold looks a bargain to me.
Friday, January 23, 2009
Added "The Big Picture" blog
The Big Picture blog by Barry Ritholz has the highest traffic on any economic blog. His post for January 23 suggests nationalizing the big failed banks using the Swedish model. I am all for that.
Thursday, January 22, 2009
Added link to Treasury Debt
A link to the Treasury Direct national debt to the penny page has been added. There is no RSS feed for it, so you have to visit it to see the current numbers. It is updated every federal work day.
On January 20, 2009, the total public debt was 10,626,877,048,913.08.
George W. Bush nearly doubled the entire national debt while he was president, but we didn't crash the 11 trillion mark. Oh, well, we can still do it easily this year and with a little luck hit 12 trillion!
On January 20, 2009, the total public debt was 10,626,877,048,913.08.
George W. Bush nearly doubled the entire national debt while he was president, but we didn't crash the 11 trillion mark. Oh, well, we can still do it easily this year and with a little luck hit 12 trillion!
Monday, January 19, 2009
Dollar index the day before Obama inauguration
On January 19, 2009, the dollar index stands at 85.417. The 200 day moving average is well below 80.
Gold closed at 833.00, silver closed at 11.14, and oil closed at 34.60.
We'll see how things stand a year from now.
Gold closed at 833.00, silver closed at 11.14, and oil closed at 34.60.
We'll see how things stand a year from now.
Friday, January 16, 2009
Thursday, January 15, 2009
Added FXstreet real time economic calendar
The real time economic calendar show current, consensus, and prior economic statistics releases and major events, such as central bank speeches and rate announcements.
Wednesday, January 14, 2009
Welcome
Dollar Death Spiral was created primarily as a dashboard for collecting a variety of economic thought. The value is in the links, not the content.
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