Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Mauldin’

European Threats

Posted by hkarner - 10. Dezember 2018

December 7, 2018

Someone asked recently how many times I had “crossed the pond” to Europe. I really don’t know. Certainly dozens of times. It’s been several times a year for as long as I remember.

That makes me an extremely unusual American. Most of us never visit Europe, except maybe for a rare dream vacation. And that’s okay because our own country is wonderful and has a lifetime of sights to see. But it does affect our perspective on the world. Many of us don’t fully grasp how important Europe is to the US and global economy.

We may soon get a lesson on that. I’ve talked about Italy’s ongoing debt crisis, which is not improving, but Europe has other problems, too. Worse, events are coalescing such that several potential crises—all major on their own—could strike at the same time, and not too long from now. As I’ve been saying for about three years, there is no reason for the US to have a recession on its own. I think events elsewhere will push us into it, and Europe is a really big current risk. I know from my visits to Europe and discussions with friends there, they see all sorts of problems with Trump and particularly his tariffs.

However, another concern is that the various actors in Europe are not playing nice with each other. I tell my European friends the same forces that yielded Trump are coming to a European country near them. In some places, they already have. Den Rest des Beitrags lesen »

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Posted by hkarner - 3. Dezember 2018

Pyramids of Crisis

November 30, 2018

In fact, we have been doing something about it for many thousands of years. An inverted pyramid of geniuses and giants, modern medicine, nutrition, sanitation, and assorted other innovations has extended our lifespans and helped more of us live to ripe old ages. That’s wonderful… but it’s also a problem many of us still don’t fully understand.

I have mixed feelings myself. At 69, I truly believe I’ll live well past 100 and stay as healthy and independent as I am now. But sometimes I wonder. For instance, in the past few weeks I had a growing adverse reaction to a new (to me) medicine. It made me tired and slowly lowered my blood pressure to a dangerous level. I didn’t recognize it and just thought the years and miles were finally beginning to take their toll. Finally, in consultation with my doctor, we figured out what was going wrong, changed course and the major symptoms improved quickly. But for about a month, I felt much older, almost invalid at times. It was kind of like the Hemingway line, “How do you go bankrupt?” The answer: “Slowly, and then all at once.” Den Rest des Beitrags lesen »

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Double Debt Problem

Posted by hkarner - 24. November 2018

November 23, 2018

The selloff in GE is not an isolated event. More investment grade credits to follow. The slide and collapse in investment grade debt has begun… (and later) Don’t be fooled by bond prices holding up, because trading volumes are down. There are fewer bids in the market, and the dispersion of bids is wider. It is time to jog—not walk—to the exits of credit and liquidity risk.

– Scott Minerd, Guggenheim Partners Chief Investment Officer

From a 50,000-feet viewpoint, we’re probably in a global debt bubble…Global debt to GDP is at an all-time high…This is going to be a very challenging time for policymakers moving forward.

– Paul Tudor Jones at the Greenwich Economic Forum in Connecticut, November 15, 2018

Last week, I talked about Ray Dalio’s new book on debt cycles. He describes how debt is inherently cyclical, because it enables more spending now that must be offset by less spending later.

Ray’s book helped me refine my description of The Great Reset. It’s a critical refinement, too. After reading the book I realized it is entirely possible we will have another debt crisis before what I think of as The Great Reset.,  I firmly believe the latter is still coming, but there may be another “mere” credit crisis beforehand. Den Rest des Beitrags lesen »

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Seventh-Inning Debt Stretch

Posted by hkarner - 19. November 2018

November 16, 2018

Within the closed system called Earth, we are much better at creating debt than eliminating it. But when we have too much, we eventually eliminate it in painful and unpleasant ways via some kind of debt crisis. This has happened over and over again throughout history.

Today we’ll look at a new book by Ray Dalio called Principles for Navigating Big Debt Crises in which he examines those debt cycles and what we can do about them. I read it on my recent trip to Frankfurt and I highly recommend you do the same. That link is for Amazon but you can also get a free PDF copy here. I read it on my Kindle so I could highlight and save notes in the cloud for later reference. Worth every penny of the $14.99 I spent.

At a minimum, you should read the first 60 pages, which explain his principles and thoughts. The rest of the book dives deep in the weeds of 48 modern debt crises, sorting them into different types and then analyzing each type. Data wonks will love that part. Ray gives us a brilliant tour de force examination of how debt crises arise and what you can do when one strikes.

At first blush, you will think that Ray is more optimistic than I am about the next debt crisis and an eventual event which I called The Great Reset, which I’ve written about extensively this year. I see The Great Reset as a generation-scarring economic cataclysm. Debt crises, while painful, have a fundamentally different character.

Ray’s book has helped me refine what I mean by The Great Reset. We’ll explore this more in future letters but here is one very important, critical, point:

 It is possible we will have another debt crisis separate from The Great Reset I envision. Indeed, it may be quite likely. Den Rest des Beitrags lesen »

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Economic Brake Lights

Posted by hkarner - 3. November 2018

By John Mauldin

November 2, 2018

Zombies and Unicorns
Missing Investment
The Deficit and Debt Drag on the Economy
Swimming in Liquidity

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

Warren Buffett (b. 1930), 1987 Berkshire Hathaway Annual Report

Those who do not learn from history are doomed to repeat its mistakes.

—George Santayana (1863–1952), Spanish-American philosopher

Those who don’t study history are doomed to repeat it. Yet those who do study history are doomed to stand by helplessly while everyone else repeats it.

—Tom Toro (b. 1982), American cartoonist for The New Yorker Den Rest des Beitrags lesen »

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Debt Alarm Ringing

Posted by hkarner - 27. Oktober 2018

October 26, 2018

Debt is future spending pulled forward in time. It lets you buy something now for which you otherwise don’t have cash available yet. Whether it’s wise or not depends on what you buy. Debt to educate yourself so you can get a better job may be a good idea. Borrowing money to finance your vacation? Probably not.

Unfortunately, many people, businesses, and governments borrow because they can, which for many is possible only because central banks made it so cheap in the last decade. It was rational in that respect but is growing less so as the central banks tighten their policies.

Earlier this year, I wrote a series of articles (synopsis and links here) predicting a debt “train wreck” and eventual liquidation—an event I dubbed The Great Reset. I estimated we have another year or two before the crisis becomes evident.

That’s still my expectation… but I’m beginning to wonder again. Several recent events tell me the reckoning could be closer than I thought just a few months ago. Today, we’ll review those and end with a few suggestions on how to prepare.

Addicted to Debt

As noted, debt can be appropriate—even government debt, in some (rare) circumstances. I am glad FDR issued war bonds to help defeat the Nazis, for instance. Now, however, governments go into debt not because they face existential threats, but simply to keep their citizens and benefactors comfortable.

Similarly, central banks enable debt because they think it will generate economic growth. Sometimes it does, too. The problem is they create debt with little regard for how it will be used. That’s how we get artificial booms and subsequent busts.

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Red Hot China Mailbag

Posted by hkarner - 15. Oktober 2018

October 12, 2018

Last week’s trade deficit letter lit some fireworks. The response was immediate and, in many cases, quite passionate in both directions. I got emails from old friends and longtime readers saying it was my best letter in years. Others said I had lost my marbles or gone over to the dark side. In fact, my whole China series has generated a lot of response. Evidently, I kicked the anthill.

I always appreciate feedback, even when it’s negative. Our staff collects feedback from social media, the comment threads on our website, email, and probably other ways unknown to me. They dutifully assemble it into one document and distribute it to the team. When that email hits my inbox, it gets top priority and I read them all. I always learn a great deal. An amazing number of intelligent, articulate people read these letters. So today, I’ll feature some reader comments from recent weeks and explain further where my point perhaps wasn’t clear. Den Rest des Beitrags lesen »

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Chinese Growth Spurt

Posted by hkarner - 17. September 2018

September 14, 2018

So it is with China. We hear a lot about that vast country’s problems and challenges. They are very real and could have major consequences… which we will explore soon… but there’s good news, too. We reviewed some of it last week in China’s Command Innovation. Today, we’ll add a few more positive data points.

This letter will be a little different than most. Below you’ll read several short vignettes about positive events in China. They aren’t necessarily related and won’t build to any particular conclusion. My goal is simply to demonstrate that China has good news, and even some fabulously great news, much of it quite compelling. Whether it is enough to overcome the challenges is a different question we will address next time. And frankly, the manner in which they are growing clearly makes Western countries uncomfortable, as it is not our usual playground.

First, a quick aside. We have been making an aggressive effort to keep the main body of this letter around 3,000 words, a length most people can read in a few minutes. We’ve had good feedback on it, too. Then in my personal section, I share a great story from Art Cashin from last Monday night. So you can read either part of this letter, or both, as you wish. Den Rest des Beitrags lesen »

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The Growing Economic Sandpile

Posted by hkarner - 3. September 2018

August 31, 2018

“Two ways. Gradually, then suddenly.”

―Ernest Hemingway, The Sun Also Rises

As you may have noticed, I’ve been in a pensive mood lately. I’m re-thinking a lot of things as I process economic developments, personal issues, and the clock ticking as I reach birthday number 69 in a few weeks. Many good things are happening but with them comes change.

Change will be today’s topic. Below I’m reproducing part of a letter I originally wrote in December 2007 and have referred to several times. It is the single most-read letter I have written and the most commented-on, too. I consider it, in some ways, my most important letter. If you’ve read it before, you should read it again. I have updated it a little bit, but the principles are just as timeless as ever. And for the time conscious, we have shortened it a bit and at the end, I try to apply those principles to present economic times.

Change happens quickly and often, unpredictably. And as we will see, the unpredictable part is actually a mathematical principle. As in the Hemingway quote above, not just bankruptcy but change also happens slowly and then seemingly all at once. It’s time passing without change that causes the worst problems, including some historic economic catastrophes. It turns out we shouldn’t just accept change; we actually require it. Den Rest des Beitrags lesen »

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Revolutionary Future Ahead

Posted by hkarner - 27. August 2018

August 24, 2018

Change Happens Fast 

The Mathematical Reason for Accelerated Change

As someone privileged to have met some of the world’s greatest thinkers, I know what first-rate intelligence looks like. I am not in their league, but I think I’m pretty good at holding opposing ideas. It’s why I’m often called the “muddle-through guy.” When I consider contradictory scenarios, I figure reality will be somewhere in between. That’s right more often than you might suspect.

So, let’s consider two seemingly conflicting ideas.

  1. Major economic pain is coming.
  1. We have a bright, prosperous economic future.

Can both of those be right? I think so. Den Rest des Beitrags lesen »

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