By 2 Cents on April 19th, 2011 | Category: Economics | Nothing is more desirable than to be released from an affliction, but nothing is more frightening than to be divested of a crutch.
~ James Baldwin
This is an excerpt of an article that was originally published on Seeking Alpha as premium content. You can read the entire article there.
There’s been no shortage of potentially market-moving news for investors to digest so far in 2011. From major geopolitical strife in the Middle East to the sovereign debt crisis in Europe to the multilevel Japanese catastrophe, markets have been remarkably resilient so far. Perhaps that’s because these types of events aren’t what’s driving the markets.
The only news items that seem to have any lasting impact on the stock and bond markets these days are those that pertain to monetary policy, particularly that of the US Federal Reserve. David Rosenberg recently pointed out that there has been [...]
Read on and enjoy … What Happens After QE2?
By 2 Cents on March 21st, 2011 | Category: Economics |  If it keeps on rainin’, levee’s goin’ to break . . . Cryin’ won’t help you, prayin’ won’t do you no good.”
~ Led Zeppelin, “When the Levee Breaks”
Having taken some time off over the past week, I have yet to comment on the latest wave of crises buffeting the global financial system. I’ll throw my two cents into the mix today.
When subprime mortgages started to unravel in 2007 and 2008, I couldn’t get the Zeppelin classic “When the Levee Breaks” out of my head. I have the same feeling again as I watch global leaders try to minimize, juggle and contain a growing collection of economic threats.
The markets had been rallying relentlessly throughout the dawn of 2011 in spite of growing civil unrest across the globe, particularly in the MENA (Middle East North Africa) region. [...]
Read on and enjoy … When the Levee Breaks
By 2 Cents on February 9th, 2011 | Category: Economics |  So long as all the increased wealth which modern progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent.
~Henry George, Progress and Poverty, 1879
The civil unrest in Egypt over the past couple of weeks has generated a lot of discussion in the economic community. Aside from the more immediate and obvious concerns over human rights, debates have arisen over whether central bank policy has contributed to the food inflation and income inequality that are cited as instigating factors for the uprising. Further questions have centered around whether or not what’s happening in Egypt is so different from what’s happening in North America and Europe.
I’m not sure how all of this will play out, but I have noticed three [...]
Read on and enjoy … Egypt: Financial Lessons and Tipping Points
By 2 Cents on January 21st, 2011 | Category: Economics |  Think left and think right and think low and think high. Oh, the THINKS you can think up if only you try!
~ Dr. Seuss, Oh, the Thinks You Can Think
Update: This article was included in the Umpteenth Weekly Carnival of Wealth at Control Your Cash. Thanks!
John Mauldin’s weekly e-letter is a must read for me. His yearly economic outlook letters, even more so. The second part of this year’s outlook came out on January 15th. In it, Mr. Mauldin is Thinking the Unthinkable, and that makes it a perfect subject for the first Friday Food for Thought of 2011.
For new readers, Friday Food for Thought is just an occasional feature at Balance Junkie where I devote a Friday post to an article I found interesting or thought-provoking. Sometimes I’ll choose a longer, more complex article [...]
Read on and enjoy … Unthinkable Thinks from John Mauldin
By 2 Cents on January 18th, 2011 | Category: Economics |  If inflation continues to soar, you’re going to have to work like a dog just to live like one.
~George Gobel
This is an excerpt of an article that was originally published yesterday as exclusive content on another site. You can read the whole thing on Seeking Alpha.
The Food Crisis of 2011 (Excerpt)
Our overview of 2011 What Ifs concentrated on the concepts of bifurcation and biflation. Those themes are already playing out just a couple of weeks into the New Year. Inflation in all types of commodities has ramped up even further, leaving countries like China, India, Brazil, Thailand and South Korea to deal with more than their fair share of these inflationary forces. Meanwhile, easy monetary policy in the U.S. and Europe just adds fuel to the inflation fire.
The [...]
Read on and enjoy … Why Are Commodity Prices Rising? Let Me Count the Ways
By 2 Cents on December 17th, 2010 | Category: Economics |  “Nobody…nobody…knows for sure what it going on,” said he. “On the one hand, there are plenty of excesses and bad investments in China. There must be. We’ve been growing so fast. And there must be a lot of bad debt hidden in the banking system, for example.“But on the other hand, China is booming. There have never, ever been so many people working so hard to make money. It’s a bit like the US probably was a hundred years ago. Only bigger. Faster. And with more government involvement.”
~ Chinese businessman, quoted in The Daily Reckoning
Today we wrap up our 3-part series on China. So far, we’ve looked at the bear case and the bull case. Today, we’ll look at some of the basic similarities and differences between what’s happening in the Chinese economy and what’s happening in Western economies.
Today’s opening [...]
Read on and enjoy … Is China Different?
By 2 Cents on December 15th, 2010 | Category: Economics |  The Chinese have been effective at dealing with every economic problem they have faced.
~ Byron Wien
On Monday we looked at the bearish side of the China debate. Today, we turn our attention to the bulls. They look at the growth potential in China and see investment there as a long term no-brainer. Not only that, but they believe “The Chinese Miracle” might be just what the rest of us need to pull out of the economic morass we’ve created.
On Monday’s post, Mich from Beating the Index commented that even if China’s GDP halved to 5% as one expert predicted, that still means robust and increasing demand for commodities – just at a slightly slower pace. Again, it’s the sheer scope of the Chinese economy that makes it different. (I know – famous last words. But let’s hear out the bulls.)
China: The Bull Case
By 2 Cents on December 13th, 2010 | Category: Economics |  I remain convinced we are witnessing a bubble of epic proportions which will burst – catching investors as unawares as the bursting of the Asian bubbles of the mid-1990s. Ignore these indicators at your peril.
~ Albert Edwards
Update: This article was featured in the 11th Canadian Personal Finance and Investing Carnival at Investing Thesis. Thanks!
Is China a bubble in search of a pin, or the global growth engine that will save us all from our debaucherous debt? You can find plenty of smart people to argue either side, so I thought I would put together some of the information I’ve collected on the topic over the past couple of months and let you decide what you think. There’s so much analysis out there, however, that I’m going to take on this task in three parts. Today we’ll just look at the factors that [...]
Read on and enjoy … China: The Bear Case
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