Author: David Haggith

The Great Recession

With stocks priced at record highs far above the economic landscape and still rising, the economy is still receding below. We’ll know at the end of January if the fourth quarter of 2019 was the worst of the past year, as I expect it will be. For now, we have to keep looking at numerous individual metrics to see if we are moving into recession or away form it.

First, lets be clear about the stock market. It is here:  Continue reading “The Tick, Tick, Talk of Recession Drones On”

The Great Recession

After two years of this third experiment with trickle-down economics via the Trump Tax Cuts, we should have enough data to get an unbiased, factual view of the results. The following is going to be a short-and-sweet stroll down memory lane in pictures.  Continue reading “Two Years of Trump Tax Cuts: What did they get us?”

The Great Recession

Did you know Dr. Frankenstein created a monster that stays alive to this day by eating zombies? Neither did the zombies. Neither, apparently, did Dr. Frankenstein. In fact, the zombies, being braindead as zombies are, do not realize that they are also keeping alive the diabolical doctor who made the monster that is eating them. Continue reading “Dr. Fed Frankenstein Kept Alive by Zombies”

The Great Recession

This little monster that feeds beneath the surface of global banking at its core briefly raised one ugly eye out of the water as 2018 turned into 2019. I wrote back then that the interest spike we saw in the kind of overnight interbank lending known as repurchase agreements (repos) was just the foreshock of a financial crisis being created by the Fed’s monetary tightening. I said the Fed’s continued tightening would eventually result in a full-blown recession that would emerge, likely out of the repo market, sometime in the summer. In the final two weeks of the summer, the Repo Crisis raised its head fully out of the water and roared.  Continue reading “Repocalypse: The Second Coming”

The Great Recession

Clear back in June I made the following easy prediction about Trump’s negotiations with the Chinese leader whose face can only be improved by a caricature:

The market finally fell in May after months of rising because it started to become clear there will be no Chinese trade deal in the near future. (It was always clear here, but most of the market willingly believed the president’s every tweet because it wanted to believe.) Prior to May, the market had been rising for months on Trump’s hot air about the Chinese deal coming soon because it had little other reason to rise. Continue reading “No-Deal Trade Deal, Not a Done Deal!”

The Great Recession

It can’t come as any surprise that the stock market’s lofty balloon ride during the past couple of months fell because of a few words this week. It only rode up on sweet tweets by Trump about trade, which created a thermocline for it to ride. So, of course, the market plummeted this week in the unexpected downdraft of Trump’s out-of-the-blue statement that his trade deal may be a year away … even for phase one.  Continue reading “What Went Up Came Down and Up and Will Come Down Again”

The Great Recession

Consider this a travelogue in pictures (graphs and charts really) that presents a rather striking and comprehensive image of a nation journeying into recession. Our decline is steeper now than it was even in my retelling of economic turns during the summer and early fall.

While the stock market has continued to rise (and I never said it wouldn’t rise this year until and unless recession begins and takes it down), earnings — upon which stock valuations used to be based in times long ago — have gone down quarter after quarter — both actual earnings and projected.  Continue reading “The Relentless Road to Recession Continued”

The Great Recession

That didn’t take long. I just published an article showing how the Fed had responded with a quarter of a trillion dollars to save the economy from what it claimed was a mere blip. Since then, the recession-causing Repocalypse I’ve warned of has roared around the world, forcing the Fed to amplify its response again.  Continue reading “Repocalypse: The Little Crisis that Roared”

The Great Recession

This Cat apparently does have nine lives, and it’s already used seven of them. After six consecutive quarters in which Caterpillar’s earnings failed to meet plummeting expectations, Cat’s stock started to die each time then took a dead-cat bounce back to life. After its seventh quarterly fail in October, it only climbed higher. Continue reading “Caterpillar Keeps Climbing Even on a Downgrade”

The Great Recession

It’s no longer just me using terms like “Armageddon, crisis, devastating, chaos, Great Depression;” it’s leaders of the world’s most august and conservative central banks!

The big banking squeeze that began in September never went away. In fact, repo auctions last week looked worse than ever, in spite of the Fed’s launching of QE4ever. With a new $60 billion a month in permanent re-inflation of money supply pouring back into the economy now, the Fed still has found itself back to where it began in September with its repo operations becoming hugely oversubscribed, meaning it has more takers than what it is offering to give. Dealers submitted $52 billion in securities for two-week “loans” of new temporary money this past week against the Fed’s offer to do $35B worth. Continue reading “The Big Squeeze on Banks is Back and Badder than Ever!”

The Great Recession

The leaves are turning quickly now, and so is housing … down … like autumn’s leaves. Earlier this month, I wrote of how housing sales had started to float upward against my call for a long housing decline more than a year prior, but that turned out to be a mere swirl in the wind:  Continue reading “Housing Falls”

The Great Recession

As September rolled into October, the US central bank’s monetary madness blew all over us like a fountain of foam in a windstorm. First, the Fed burst into $75 billion in overnight funding operations due to obvious shortages all over the map in bank reserves. Then the surge spread beyond that into longer-term temporary funding of $30 billion twice a week because the overnight loans were not up to the needs. That still not being enough to end the troubles, the Fed’s rapidly expanded the overnight operations to $100 billion and doubled the term operations to $60 billion. Continue reading “Quick Recap of the Fed’s Foundering Follies and Our Descent into Economic Madness”

The Great Recession

It’s QE4ever, Baby! The Fed’s latest move back into quantitative easing took a quantum leap in a single day with last week’s rush announcement of major permanent money injections to begin this Tuesday. Since the Fed adamantly denies it is doing what it is doing — going back to quantitative easing (because they legally have to deny it) — we could just call it the Fed’s new quantitative mechanics. If we must avoid the term quantitative easing, as some writers are insisting we should, I’ve come up with the new term from the definition of quantum mechanics in which …  Continue reading “QE4ever Arrives in One Quantifiable Quantum Leap!”

The Great Recession

The Great Recession never ended. I say that because the deep economic flaws that caused it were never corrected. All recovery efforts since merely clouded our eyes to the problems growing larger around us, even making them worse, and now we are going back into the belly of the Great Recession.  Continue reading “The Beginning of the End: Great Recession 2.0 is Obscured but Here!”

The Great Recession

As noted in my last article, “Fed Loses Control of its Benchmark Interest,” bank liquidity strains are written all over this month’s troubles. Some may find that hard to believe because there is so much hot air (fiat money) still floating the system from a historical standpoint. There is a sound fundamental reason, however, that a lot is not enough. The diminished money supply is simply not enough to keep the world’s huge asset bubbles (hot-air balloons) moving around. Simply put: if you move or convert a LOT of big assets, you need a LOT of liquidity in banks to handle those transactions.  Continue reading “Sailing Through a Global Storm Without Enough Hot Air”

The Great Recession

Well, that didn’t take long! Four days ago, I stated the following in an article titled “Why are Bonds Going for Broke?“:

Central banks are losing control, and are admitting they don’t even understand what is happening.  

Continue reading “Fed Loses Control of its Benchmark Interest: Repo Rates through the Roof!”

The Great Recession

One argument for last week’s extraordinary plunge in bond prices, which I explored as something that might happen this time of year in one of my earlier Premium Posts, was that bond prices could get crushed by the supersized US treasury auctions planned for September and October as the government makes up for its inability to issue new debt during the debt-ceiling standoff.  Continue reading “Why are Bonds Going for Broke?”

The Great Recession

Two weeks ago a former Federal Reserve board member and bank president, William Dudley, wrote an editorial that encouraged the Fed use its powers to defeat Donald Trump’s second bid for the US presidency. I don’t recall choosing presidents as being listed in the Fed’s two mandates — controlling inflation while maximizing employment.

For an organization that has been speaking a lot lately about the importance of its independence from politics, that was the most overtly political statement I’ve heard from a central banker, albeit a former central banker, but one with a lot of influence.  Continue reading “Central Bankers Now Plotting Government Subversion?”

The Great Recession

It’s out of control. And I’m not even talking about the stock market, which fell off a cliff. I’m talking about the president who has deified himself. I hesitate to write strongly against Trump because I understand why many readers here voted for him, but today is a day that shall live in insanity!  Continue reading “Oh God, and I Don’t Mean Trump; I mean GOD help us!”