Juggling Dynamite

Over the past 6 years, Central Bankers have led the world in a barrage of ’emergency easing’ measures that were taken right out of the failed play book of Japan since its property and stock market bubbles burst in 1989.

Similar steps have not surprisingly led to similar outcomes: toxic debt levels in households, corporations and governments, predictably weak demand, resumed asset deflation and mismanaged zombie banks still holding securities at marked-to-make-believe valuations. Here is a direct video link.

As a result, QE liquidity and zero to negative real interest rates through the developed world have failed to ignite desired inflation and growth. North American interest rates continue to be high relative to global peers, and as shown below in the chart of the US 10-year-treasury yield, falling rates seems likely to continue for the foreseeable future. Unfortunately for the growth bulls though, low rates have run to the end of their stimulative efficacy, and demand is likely to slow from here no matter what monetary tricks are tried.

Good reminder on the traditional evolution of ground-breaking auto technology that has always begun in the most expensive models before trickling down to mass production. Here is a direct video link.

This clip this morning from Bloomberg underlines the glaring disconnect today between the reality of the real economy and households and those working on the sell side in finance.

Completed dental follow up appointments in the US have retraced to the lows of the 2008 recession. But not to worry, Wells Fargo sell side “Equity Strategist” Gina Martin Adams offered a bullish take on this presently bearish indicator. Adams cheerfully explains that she has been so busy helping her firm sell IP0’s–risky investment-products-at record-valuations–to Joe Public the past couple of months, that she just can’t get to the dentist. Poor Gina: oblivious, clueless and in need of a cleaning. Hard to not feel painfully embarrassed for her.  Here is a direct video link.

The same group were also discussing with some alarm the throngs of homeless people that are now living on the streets of New York. Two of the guests said they were life long New Yorkers and had never seen so many street people in lower Manhattan. More evidence of the economic hardship that has grown from the financial crisis and great recession. Shades of the 1930’s. Of course the bankers, who created the debt bomb and then were rescued from their deserved financial demise by the taxpayers, remain mystified as to why this is all happening…