Business

Authored by John Coumarianos, originally posted at MarketWatch.com,

One view of what caused the Great Depression in the 1930s is that the Federal Reserve failed to prevent a collapse in the money supply.

This is the famous thesis of Milton Friedman’s and Anna Schwartz’s A Monetary History of the United States, 1867-1960, and it was, more or less, the view of Ben Bernanke when he was chairman of the Federal Reserve.

The global economy today resembles that of the 1930s in several ominous ways.

Any time the relative performance of global financials to US Treasuries has stumbled as far as it has, as shown in the chart below, it has meant one thing - a major central bank intervention was imminent.

At least that's the interpretation of BofA's Michael Hartnett, who shows that in order to provide the kick for the bounce in this all too important "deflationary leading indicator", central banks engaged in major unorthodox easing episodes, whether QE1-3, or the ECB's QE.

Why intervene now? Here are the problems according to Hartnett:

Authored by Paul Craig Roberts,

The US economy died when middle class jobs were offshored and when the financial system was deregulated.

Jobs offshoring benefitted Wall Street, corporate executives, and shareholders, because lower labor and compliance costs resulted in higher profits. These profits flowed through to shareholders in the form of capital gains and to executives in the form of “performance bonuses.” Wall Street benefitted from the bull market generated by higher profits.

While we have previously observed the massive glut of oil product in the US, which has led to such arcane developments as a "parking lot" of oil tankers outside of Galveston, TX...

... or ships loaded to the brim with crude making U-turns in the middle of the Atlantic Ocean, taking advantage of the supercontango while unable to find buyers...

Authored by Stephen Roach, originally posted at Project Syndicate,