Englund

The Chart of Doom shows credit dropping off in the U.K., Japan, and the eurozone while remaining expansionary in the U.S. and China.  “Once private credit rolls over in China and the U.S., the global recession will start its rapid slide down the Seneca Cliff,” wrote Smith in a post on his blog ‘Of Two Minds.’ Seneca Cliff is a reference to Lucius Annaeus Seneca, a Roman philosopher who is credited with saying: “As it is, increases are of sluggish growth, but the way to ruin is rapid.” Sue Chang, MarketWatch Feb 8, 2016 Doom at IntCom

If they don’t pay for their mistakes, then there is no incentive not to keep repeating them. The key index of European bank stocks has lost almost a third of its value in only a few weeks. Everyone thinks record low rates are there to help banks, but actually they have been hurt most of all.  On top of that, there are now negative rates across much of Europe, so the cash on their balance sheets is actually costing them money.  Matthew Lynn, Telegraph 8 Feb 2016 Moral Hazard at IntCom Economists will no doubt be debating the effectiveness of QE for a couple of generations at least.  Matthew Lynn, Telegaph 19 Jan 2015

How can the data showing a steady employment recovery be reconciled with the widespread perception of ongoing recession and mass unemployment? The key lies in the falling participation rate, or the proportion of Americans making themselves available for work. There has indeed been an employment recovery since 2009; but that recovery started from appallingly low levels. Even now, employment is only back to where it was in 1978, and is far below its peak during the boom of 2000. No wonder Americans are angry. John Authers, FT, February 5, 2016 Participation rate at IntCom

I might be overstating the risk for a US recession and it might be slightly premature to call the recession, but if I would take a bet on this I would certainly be positioning myself for a US recession in 2016. In terms of the US dollar I am actually a bit split. I think it is quite clear that the dollar is overvalued in real terms against most currencies in the world. However, that does not mean that the dollar should weaken right now. Lars Christensen, The Market Monetarist, February 2016

Central banks need to be prepared for this eventuality.  The most important part of such preparation is to convince the public that they know what to do. Personally, I would prefer “helicopter money”  Martin Wolf, FT 4 February 2016 Helicopter Money Asset price bubbles and Central Bank Policy

Indicators show most severe US ‘growth scare’ since Great Recession in 2009 John Authers,  FT February 3, 2016  http://www.ft.com/cms/s/0/18b79508-ca5e-11e5-a8ef-ea66e967dd44.html#ixzz3zBWhYARl Finanskrisen - The Great Recession http://internetional.se/hedgefunds2016.htm