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Junk Bonds: How Quickly They Forget

Jason Farkas — Wed, 13 Jan 2010 05:30:00 ET

One measure of investor unease, the junk bond-to-Treasury spread, which soared during the height of the crisis, has fallen more than 75% from its high, indicating that investors are confident about corporate health. But junk bond investors aren't always the best judges of risk -- take a look at this chart.

Japan's Deflation: A Great Case Study For The U.S.

Jason Farkas — Wed, 06 Jan 2010 06:45:00 ET

Imagine the disappointment the Japanese faced in the 1990s. Their 1980s boom created enough wealth to buy landmarks like Rockefeller Center and Pebble Beach. But the 1990s turned inflation into deflation. Stimulus packages and bailouts failed to prop up Japan's property market and to prevent the deflationary collapse. Now the U.S. government is trying to do the same thing -- and here's why they are likely to fail.

New Year: New Economic Boom?

Nico Isaac — Mon, 04 Jan 2010 05:30:00 ET

In the realm of market psychology, there's a big difference between optimism and extreme optimism. The first is seeing the glass half full. The second is seeing the glass half full deep in the heart of a bone-dry desert. In finance, it's what we call "Buying the Dip" mentality -- when all outcomes, even losses, are cause for celebration...

U.S. Government: The New Growth Industry

Jason Farkas — Mon, 28 Dec 2009 06:15:00 ET

Don’t be fooled into thinking the Great Recession is over because of the recent 3.5% gain in third-quarter GDP. The only reason for the uptick was the government’s contribution. Because the government’s size has increased so dramatically since 2000, the U.S. is now closer to socialism than capitalism. And here's what that could mean for the U.S. economy.

Can The Fed Ensure Economic Recovery? RATE-ing In Vain

Nico Isaac — Wed, 23 Dec 2009 03:15:00 ET

This Holiday season, all hopes are pinned on the bearded man in the fancy suit AND his faithful team of helpers to swoop down and deliver the one gift that is on everyone's wish list: A sustained economic recovery. And no, I'm not talking about sled-driving Santa, but rather Fed-driving Ben Bernanke.

Bank Sector Recovery... What Recovery?

Nico Isaac — Mon, 21 Dec 2009 02:45:00 ET

Since the very start of the financial crisis, the talking heads have glided down a slope of unwavering hope. At so many fleeting lows, they called the absolute "end" to the rout -- only to watch in horror as banking shares were battered even further. To illustrate this phenomenon is the following close-up of the Philadelphia/KBW Bank Index since 2006 alongside some of the most blatantly misguided mainstream insights.

U.S. Economy: Debt Overhang Will Reduce Consumption

Jason Farkas — Thu, 17 Dec 2009 01:45:00 ET

In the U.S., consumer spending represents about 70% of GDP. After decades of an inflationary “crack-up” boom, people are stuffed to the gills with consumer debt. But it appears that its long build-up has turned down, which is a message businesses should heed.

Killer Debt: Dubai, Greece, Spain -- Now the Baltics?

Vadim Pokhlebkin — Thu, 10 Dec 2009 02:00:00 ET

This week, Fitch Ratings announced that “Latvia and Lithuania’s ratings are under pressure from the sharp deterioration in public finances.” They've also just cut their rating on Greek government bonds, and S&P cut its outlook for Spain's debt from to "negative." All that less than three weeks after Dubai defaulted on its debt through its subsidiary Dubai World. Should you care? Yes, says EWI's Jason Farkas.

Will Muni Bonds Keep Your Investments Safe?

Nico Isaac — Wed, 02 Dec 2009 06:30:00 ET

For an economy to run smoothly, two players must coexist: A willing and able lender and a well-qualified borrower to pay said lender back, with interest. Take either one away, and the system goes -- as my grandma used to say -- "Plotz!" Case in point: the "muni-bond malaise" of early 2009.

The Weakest Link

Jason Farkas — Tue, 01 Dec 2009 02:30:00 ET

With all the talk about the end of the Great Recession, I continually ask myself the following questions: Am I just being a pessimist for believing in a deflationary depression? Am I a fool to fight those who make the rules: Congress, the Fed and the Treasury? So, let’s address a key point that most mainstream analysts seem to have missed...