China’s announcement overnight that it will allow companies to settle international trade claims in yuan shows how serious the Chinese authorities are about building a local currency market. Bloomberg reports,
 
July 2 (Bloomberg) — China will allow companies to use the yuan to settle cross-border trade and let them keep their entitlement to export tax rebates, seeking [...]

In a recent post entitled, “The Stealth Deterioration in Asset Quality,” I argued that the rise in the US savings rate had only begun. That implies falling consumption, a weak housing market, and an L-shaped recession as far as the eye can see. That is just what we observe in the household spending and consumption [...]

When I put my orders in for gold and base metal mining shares yesterday, I hadn’t seen this Reuters report that a senior Chinese researcher had recommended buying gold instead of dollars for China’s reserves:

China should buy more gold because the U.S. dollar is poised for a fall and the metal is needed to support [...]

In a market bounded by deflationary tendencies (rising savings rate, aging population, risk aversion), inflationary impulses (budget deficit in excess of 10% of GDP, huge expansion of Fed balance sheet), low private consumption (with 10% unemployment by a generous count), and rising government consumption, there is little maneuvering room on any side. Credit remains the [...]

[Note: this post appears simultaneously on my blog at First Things].
The Iranian exile journalist Amir Taheri, the dean of regime critics writing in the English language press, says that civil war is unlikely in Iran.  In the most convincing analysis I have seen to date, Taheri points out that Ahmadinejad has his back to the [...]

As in this scene from Blazing Saddle Points, I’m tired of this market. There’s nothing to say that I haven’t set multiple times before, but here’s a note to make clear that I haven’t stopped thinking about things.
I announced at the beginning of the year that the stock market would chop sideways forever and that [...]

My inbox is bulging with gossip about the $134 billion in supposed smuggled bonds seized by Italian customs agents on June 5 from two Japanese men. The news is old, but William Pesek’s comment in Bloomberg this morning gave the second-day story some legs.
The idea that $134 billion in U.S. Treasury securities held by some [...]

While the world’s attention was focussed on the dollar, inflation, and the possibility of resurgent inflation, signs of deflation crept back into asset markets. Some vintages of subprime AAA’s, a barometer of sorts of household health, are trading at all time lows of less than a quarter on the dollar.

This is not surplrising given that [...]

Is Obama’s Economic Maneuvering Room Already Exhausted?
Wednesday, June 10, 2009, 3:55 PM
David P. Goldman

 
Between the election of Barack Obama and the afternoon of June 10, the yield doubled to 4% from 2% for 10-year Treasury notes, the benchmark for long-term yields in the U.S. economy. Part of the sharp rise in yield was a snapback [...]

 
The markets will chop sideways forever, I wrote early in January.
 

Above: Bank of America Option Implied Volatility (from ivolatility.com)
 
Volatility has collapsed back to pre-Lehman levels. Starting on April 27 I began warning of a volatility implosion, which now has run its course.

Too many things can go wrong at this point.
1) The real estate rally is aborting, [...]