For some time I've been saying that the economy is in the “eye of the storm” and that when it emerged, the weather would be far rougher than in 2008. The trillions of currency units created since the Greater Depression began in 2007 have papered over the situation, but only temporarily.
Europe has been pretty quiet lately. But apparently that was an illusion. The Eurozone’s slide down the slippery slope continues, but because the current stage involves colorless bureaucrats debating the terms of debt swaps rather than street riots and air strikes, it has been overshadowed by the chaos in the Middle East.
And Their Likely Effects On Us
In 1848, protests and revolutions swept through Europe. The specific causes were different in each country, but the underlying cause was the same everywhere: The middle and upper middle classes—politically powerless in these absolutist monarchies—wanted more control over their lives.
Short answer: all things are possible, but change on the margin says no. With the US stock market hitting its three year anniversary this week, investors are getting skittish as fears mount about an impending bear market. Are we seeing the same signs of an imminent market top like we did in 2000 and 2007?
A lot of questions have been asked by economists wondering at what price will oil cause a recession. Secondly, they’ve been asking at what level interest rates will hinder economic growth. The consensus seems to believe that $150 and $200 oil are where we should find some resistance in the markets.
We continue to be very concerned about systemic risk in the global economy. Thus far, the systemic risk that was prevalent in the global credit markets in 2007 and 2008 has not subsided; rather, it has simply been transferred from the private sector to the public sector.
The economy is doing better, and we will survey some of the highlights. But does this mean the stock market is headed higher? A chart from Louis Gave got me to thinking, and I shot off a few thoughts and questions to Ed Easterling and Vitaliy Katsenelson.