The banking system may not be as sound we’ve been led to believe. It continues to get propped up through central bank interventions, which strongly suggests it wouldn’t be able to stand on its own.
Last Thursday, the Federal Reserve injected another $115 billion into financial markets via “temporary operations.” The Fed is targeting the repo market in particular, through which banks lend to each other on an overnight basis.
For some reason, banks have grown weary of committing liquidity to each other in what should be one of the safest lending markets on the planet.
Five charts to contemplate as we prepare for the New Year
1. Gold’s annual returns 2000 to present
In the February edition of this newsletter, we ran an article under the headline: Will 2019 be the year of the big breakout for gold? Though we would not characterize gold’s move to the upside so far this year as ‘the big breakout,’ 2019 has been the best year for gold since 2010 even with the recent correction taken into account. Back in September when the price gold reached $1550 per ounce – up almost 22% on the year – 2019 was looking more like a breakout year. Now with the move back to the $1460 level, the market mood has become more restrained. As it is, gold is up 15 of the last 19 years and still up 14.45% so far this year.
Recently, there has been a parade of central bankers along with their lackeys on Wall Street coming on the financial news networks and desperately trying to convince investors that there are no bubbles extant in the world today. Indeed, the Fed sees no economic or market imbalances anywhere that should give perma-bulls cause for concern. You can listen to Jerome Powell’s upbeat assessment of the situation in his own words during the latest FOMC press conference here. The Fed Chair did, however, manage to acknowledge that corporate debt levels are in fact a bit on the high side. But he added that “we have been monitoring it carefully and taken appropriate steps.” By taking appropriate steps to reduce debt levels Powell must mean slashing interest rates and going back into QE. The problem with that strategy being that is exactly what caused the debt binge and overleveraged condition of corporations in the first place.
The Week That Was: November 9, 2019, Brought to You by www.SEPP.org
By Ken Haapala, President, The Science and Environmental Policy Project
“You must do the best you can–if you know anything at all wrong, or possibly wrong–to explain it. If you make a theory, for example, and advertise it, or put it out, then you must also put down all the facts that disagree with it, as well as those that agree with it. There is also a more subtle problem. When you have put a lot of ideas together to make an elaborate theory, you want to make sure, when explaining what it fits, that those things it fits are not just the things that gave you the idea for the theory; but that the finished theory makes something else come out right, in addition.”
“In summary, the idea is to try to give all of the information to help others to judge the value of your contribution; not just the information that leads to judgment in one particular direction or another.” – Richard Feynman, Cargo Cult Science
The Buck Stops Here: President Harry Truman (1945 to 1953) was not well liked by the eastern political establishment, either Republican or Democrat. He was considered ill-educated, crude, and ill-suited for the job. Yet he was well read in history. He was ill-prepared for assuming office on April 12, 1945 because President Roosevelt hid his illness and did not include Truman in important discussions.
By David L. Debertin, – Re-Blogged From WUWT
California again easily could become one of the top three fossil fuel producing states in the nation, but the largely liberal state has made drilling for fossil fuels within the state very difficult if not impossible. So the drillers have wisely looked elsewhere for locations that pose less of a political burden. North Dakota and its leaders welcomed the drillers. The result is tax dollars flowing into the state treasury from a variety of oil-related taxes levied not only on the drillers, but on individuals receiving mineral royalty income. In the past dozen years or so this has meant that taxpayers outside the oil producing counties have seen state-level taxes drop and the state can pursue projects that benefit the residents in a host of different ways simply by using funds that would not have been available had the drilling not occurred.
By Rud Istvan – Re-Blogged From WUWT
Part One provided a high level overview of SoCalEd’s silly version of the Green New Deal. This second guest post flies strafing low and slow over point one of five of SoCalEd’s net neutral carbon 2045 plan—decarbonized grid electricity.
There are two pathways to decarbonized grid electricity: nuclear, or renewables. SoCalEd did not advocate nuclear. In a sense, that is good, because building out Gen 3 nuclear (like the now grossly over budget Voglte 3 and 4 units in Georgia) is an exercise in futility. The rational answer is to use the time that fracked natural gas and CCGT gives to experiment with the several Gen 4 nuclear concepts at proof of concept/experimental scale, pick one (or more) winners, and roll out 4G nuclear engineering winner(s) in future decades. Several realistic 4G options are discussed (with footnotes) in my ‘Going Nuclear’ essay in ebook Blowing Smoke.