Sinking into Depression

 

Depression: The Economic Definition

In economics, a depression is a sustained, long downturn in one or more economies. It is more severe than a recession, which is seen as a normal downturn in the business cycle. Considered a rare and extreme form of recession, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression.

Falling in Love (ài qíng) 爱情

 The Rule About Falling in Love

We’ve heard it before and it is said in almost every investing or personal finance book out there; don’t fall in love with a stock. This same rule goes for categories of stocks, such as the Large, Mid-Cap, or Small Companies; areas such as Europe, Latin America, and Asia; or individual countries such as the U.S., China, India, Brazil, or Russia.

Me, Becoming More Cynical?

Me, Becoming More Cynical?

Several readers commented that in my last Analysis, I was becoming more cynical. Me, cynical? Really? LOL. Gee, I must really watch myself that I don’t write any more Analysis that are less cynical. That might ruin my reputation.

 

The Internet Weakens Democracy

 

The Financial Protection Agency

Even though the government appears unable to run its own two mortgage companies [Freddie and Fannie], the President wants to create an entirely new regulatory agency to police the financial decisions you make. I am not making this up. The new agency – the Financial Protection Agency – will be led by a financial regulatory “czar,” who will determine if the financial products you’re offered (credit cards, mortgages, home-equity loans) are “fair.”

Life, Love, and the Stock Market

August 1, 2009

 

The Black Swan

The title of this Commentary comes from a discussion I was having with my contact at Fidelity about the The Black Swan, a book written by Trader Nassim Taleb. The Black Swan refers to events that are beyond the norm; difficult to predict; but events that we nevertheless need to acknowledge will happen.  

 

 

Special Report: The Real Estate Market

The S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, posted their first month-to-month increase in nearly three years in May, but annual weakness continued.

 

Happy Summer 夏欢 xià huān

July 24, 2009

 “The Recession is Over” Redux

At the end of the first quarter of 2009, I had made the announcement that the recession was over. Those of you who realize that my outlook is global rather than just domestically oriented realized that this may have been true in other parts of the world but not true in the United States. Thus the Happy Summer – in China.

Who Owns the Federal Reserve?

July 17, 2009

Question from Readers

 

Is the Federal Reserve a government agency?

For the answer to this question, we look up the case of Lewis vs. U.S., case #80-5905, 9th Circuit, June 24, 1982. It reads in part: “Examining the organization and function of the Federal Reserve Banks and applying the relevant factors, we conclude that the federal reserve are NOT federal instrumentalities . . . but are independent and privately owned and controlled corporations . . . federal reserve banks are listed neither as `wholly owned’ government corporations [under 31 U.S.C. Section 846] nor as ‘mixed ownership’ corporations [under 31 U.S.C. Section 856] . . . Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the Reserve Banks are not federal instrumentalities.