Business

Submitted by Patrick Barron via The Mises Institute,

It seems that each new bubble brings forth claims that, although the bubble may be the result of artificially created demand, prices of this or that product will not fall and may even continue to rise. How many so-called real estate and financial planning “experts” claimed that the surest path to financial security was in buying the largest house possible with the least amount of one’s own money?

The Boom: McMansions and Luxury Cars

The fabric of the market is showing signs of fracturing, as 9 years of declining policy rates and 6 years of QEs failed to kick-off growth, while, as Fasanara Capital's Francesco Filia notes, further easing has a visibly decreasing marginal effectiveness.

But China was going to stimulate the world???

Crude has crashed to the post-Iran lows... and Energy stocks have collapsed...

And that has dragged every major stock index to the lows of the day...

As Regional banks get sold hard as perhaps, just perhaps, our independent sourced confirmation that The Fed is allowing banks to lie about their energy exposures is causing investors to sell...

Submitted by Olivier Blanchard via The World Economic Forum,

The stock market movements of the last two weeks are puzzling.

Take the China explanation. A collapse of growth in China would indeed be a world-changing event. But there is just no evidence of such a collapse. At most, there is suggestive evidence of a mild slowdown, and even that is far from certain.

Earlier today, the Baltic Dry Index hit a new all time low.

This is not new: we have been tracking the collapse of the Baltic Dry - aside for the occasional dead cat bounce - to all time lows, a proxy of global shipping and thus trade, for the past 7 years.

To be sure, for staunch goalseeking Keynesian the collapse in Baltic Dry rates had little to do with actual demand for this services, and everything to do with the alleged supply of drybulk shipping, which was the stated reason for the collapse in costs.

In other words, "trade was fine."