Thursday, January 23, 2014


Nothing coming out of China these days sounds very good and hence, nothing coming out of Davos sounds very good, which, depending on how one looks at that is a good thing because in the past nothing has ever come out of this most expensive waste of time, or a bad thing as even these clowns are worried.  Seems as though no one really believes the Chinese numbers and the credit situation appears to be worsening both from the standpoint of quality and availability which, if true, is certainly bad news.  Not that any of this should come as a surprise mind you, but somehow what was always there, hiding in plain sight, suddenly terrifies everyone when someone suddenly says, "Oh, look what's hiding there in plain sight!"

Anyway, equity markets continued their dive into the gurgle tube on this and the continued realization that Mr. Bernanke's last act might be another tapering and the snoops at the ECB suggesting that all is not well with bank portfolios Over There all of which translates into the fear of a loss of liquidity which some think (me) that this was the only thing holding life together in the first place.

We have talked about the structural problems facing the Euros but yesterday it was demonstrated just how threatened they themselves feel when Brussels announced a dramatic shift in policy in regard to the all-time sacred cow of European politics: global warming.  Rather than setting guidelines for reduction in carbon emissions for individual counties, Brussels now looks to an average reduction target for all of Euroland which of course means no target at all.  The reason?  It was to cost too much and reduce economic growth to proceed in the original manner.  What's saving the world when votes are at stake.  Yesterday the mantra was that Euroland would look to China and the U.S. to do the heavy lifting economics-wise in the short to medium term; that changed today.  We're it Over Here.

Actually, the U.S. is in a sweet spot particularly as a result of energy costs.  We're lucky no doubt.  But keep in mind that the great energy boom of the past 5 years has come without any support whatsoever (Crazy Lizzy not withstanding) from the public sector--witness the no-brainer of a pipeline running where 83,000 miles of other pipelines run but denied its existence as a sop to the environmental lobby.  Nearly nine million jobs have been created in the past 5 years but we still have fewer working Americans than in 2007.  Financial regulation has reduced the availability of credit or the willingness to lend.  The U. S. is not in a good place as the leader of a global economic revival and yet we are the best bet out there.  We had best get our act together quickly which is one reason that I continue to believe Mr. Bernanke's last act will also be the last of the tapering as although it really does nothing for economic growth (as demonstrated) the result of QE not being there is too visible--down goes the stock market, and this is an election year.  Of course if we could only find a two or three year bubble that would help thing immeasurably

In his State of the Nation address next week, The Leader will look to none of these issues--or so it is reported.  Equality is the supposed vote getter and it is equality through unequal treatment that we shall get.  It should be a great speech…I can't wait.  Don't we live in interesting times?

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