Finance Trends Letter

The US debt crisis is a contrived political showdown , James Grant tells Bloomberg TV. If you want a real crisis, look to Europe, says Grant.  Also up for discussion: the 30 year bull market in US Treasuries and the risks associated with government paper. Plus, the future of monetary arrangements and the gold standard vs. the "Phd standard". Enjoy the clip.

Grant's Interest Rate Observer founder, Jim Grant sits down with Consuelo Mack for an interview on WealthTrack . Topics include: the rising cost of living and commodities, the US dollar's decline, and the Federal Reserve's targets for "desired inflation". See what Grant has to say about all this, and more, in this discussion. By the way, I don't think anyone who caught Grant's interview or Michael Burry's recent talk on America's financial condition was surprised by S&P's recent warning on America's AAA debt rating. Only the timing of the outlook revision might have come as a surprise, and even that may have been telegraphed to market participants earlier. Related articles and posts : 1. Jim Grant and John Hathaway chat with Charlie Rose . 2. Jim Grant's latest interview with King World News . 3. Lew Rockwell and Jim Grant discuss Austrian economics, gold standard .

We're wrapping up some of your favorite posts (and mine) for this Finance Trends "Best of 2010" features edition. You'll find key interviews with leading businessmen and investors, along with the best of this year's posts emphasizing the strong trends and events that are shaping our country, our investment markets, and our world. Without further ado, here are some key posts highlighting the big picture trends we've witnessed in 2010, some of which may continue to unfold in 2011 and beyond. 1. On a Return to Classical Education . Your educationally-deprived editor muses over the benefits of a Classical education, and how such a foundation in thinking might help us as investors and as citizens of the world. 2. Marc Faber: Final Crisis Yet to Come . Wonderful presentation by Marc at this year's Mises Circle in NYC, offering a crucial take on US monetary policy and the likely outcomes of the Fed's "quantitative easing" experiments. Video and pres...

James Grant, John Hathaway, and Peter Munk sit down with Charlie Rose to discuss gold and the nature of our monetary system in this important roundtable discussion. I was surprised and delighted to find that Grant and Co. would be Charlie's guests on Monday's program. The topic of discussion became even more newsworthy as the US dollar gold price hit a record high (in nominal terms) that same day. But this is more than just a chat about a commodity hitting a new high. As you will see from James Grant's opening statements to Rose, gold is money and it has been for centuries. What we see in the rising gold price is a concurrent loss of faith in the viability of all paper currency systems worldwide. This is the basic truth about gold and silver as real money and store of value that Rose and his audience need to hear. Plus, John Hathaway, subject of one of our earliest posts , and James Grant provide some much needed counterbalance to the prevailing narrative of the 2007-200...

Here's what I'm reading and checking out today: 1. John Carney says, "The government's insider trading rules are still insane!" 2. 47 mind-blowing, psychology-proven facts you should know about yourself . 3. Lew Rockwell interviews Jim Grant , of Grant's Interest Rate Observer. Topics: the classical gold standard and Austrian economics. 4. Chicago Sean's series on The Minimalist Trader is inspired reading. 5. A way to "play" Mongolia? Part of a very cool series of posts on global investing from Adventures In Capitalism. Stop by tomorrow, we may have a very interesting interview to share with you ahead of the Thanksgiving holiday. Until then, you can catch us on Twitter and StockTwits . Ciao!

Wanted to share this McAlvany podcast entitled, "The Gold Standard: An Unwelcome Political Restraint. An Interview with Guilio Gallarotti" . Hat tip to Maoxian , who noted that Jim Grant recommended Gallarotti's book, The Anatomy of an International Monetary Regime: The Classical Gold Standard, 1800-1914 , to better understand the workings of a gold standard monetary system. As I said on Twitter the other night, there are some fascinating insights offered by Gallarotti in this interview, particularly in his discussion of how universal suffrage politicized economics during the 20th century. I'm sure you'll find much more of interest besides, so tune in to the interview above and enjoy.

If you read James Grant's excellent and succinct piece on banking reform , you might also be interested to see his latest appearance on Bloomberg TV. Grant recently joined Pimm Foxx on "Taking Stock", where he discussed the economic recovery, the problems of our 21st century 'capitalism', and how to implement truly meaningful banking reform. I was surprised and delighted to hear Jim bring up Brown Brothers Harriman as an example of a long-lived investment banking firm that had survived this crisis due its prudence and its more conservative partnership structure, in which owners are personally accountable for losses. In recent weeks, I had been half-jokingly mulling over this very example of a private bank which stuck to its roots and sailed through the crisis unimpeded. Great to hear Grant bring up this point and elaborate on it so nicely; be sure to listen for it.

James Grant penned a great opinion piece on banking reform for the Washington Post called, "The best financial reform? Let bankers fail" . Here's an excerpt from Jim's essay: " The trouble with Wall Street isn't that too many bankers get rich in the booms. The trouble, rather, is that too few get poor -- really, suitably poor -- in the busts. To the titans of finance go the upside. To we, the people, nowadays, goes the downside. How much better it would be if the bankers took the losses just as they do the profits. Happily, there's a ready-made and time-tested solution. Let the senior financiers keep their salaries and bonuses, and let them do with their banks what they will. If, however, their bank fails, let the bankers themselves fail. Let the value of their houses, cars, yachts, paintings, etc. be assigned to the firm's creditors. .." You can see why I like it already. Be sure to read the whole thing if you haven't already, and pass it ...

Over the weekend, I started reading what has to be the article of the week, and very possibly, one of the top choices for Article of the Year: Jim Grant's latest WSJ opinion piece, "Requiem for the Dollar" . Here's an excerpt from that piece: " Ben S. Bernanke doesn't know how lucky he is. Tongue-lashings from Bernie Sanders, the populist senator from Vermont, are one thing. The hangman's noose is another. Section 19 of this country's founding monetary legislation, the Coinage Act of 1792, prescribed the death penalty for any official who fraudulently debased the people's money. Was the massive printing of dollar bills to lift Wall Street (and the rest of us, too) off the rocks last year a kind of fraud? If the U.S. Senate so determines, it may send Mr. Bernanke back home to Princeton. But not even Ron Paul, the Texas Republican sponsor of a bill to subject the Fed to periodic congressional audits, is calling for the Federal Reserve chairman...

The Federal Reserve is highlighting signs of recovery as officials leave benchmark interest rates unchanged; The FOMC has voted 10-1 to keep the target fed-funds rates at 0% to 0.25% . There's also talk that the Fed will wind down its enormous MBS and housing agency bond purchases, according to Bloomberg and the Wall Street Journal . The FOMC will extend their program out to 2010 while slowing the pace of purchases in order to provide a "smooth transition" to the markets. So we started the week off with a debate over Jim Grant's call for a snappy recovery , and now we have some more economic happy talk from the Fed. Despite tent cities cropping up all over the United States, the stock market (and long participants) seems happy. And why not? From Bloomberg, "Stocks Extend Gains..." : " Equities have surged since March as the Group of 20 nations committed about $12 trillion to revive economic growth and the Fed kept overnight borrowing costs near zero t...

One of the most talked about economic stories of the weekend was Jim Grant's piece in the Wall Street Journal, "From Bear to Bull" . In it, Grant discusses the rationale for a rather zippy (or "V-shaped") recovery following this steep recession that began (officially) in late 2007. Here are some excerpts from that piece: " The Great Recession destroyed confidence as much as it did jobs and wealth. Here was a slump out of central casting. From the peak, inflation-adjusted gross domestic product has fallen by 3.9%. The meek and mild downturns of 1990-91 and 2001 (each, coincidentally, just eight months long, hardly worth the bother), brought losses to the real GDP of just 1.4% and 0.3%, respectively... ...Americans are blessedly out of practice at bearing up under economic adversity. Individuals take their knocks, always, as do companies and communities. But it has been a generation since a business cycle downturn exacted the collective pain that this one h...

Eric King serves up another great interview for us at King World News Broadcast, this time with investor Rick Rule , of Global Resource Investments. It's been a while since we've heard from Rick here at Finance Trends, but as long-time readers and Rick Rule fans will know, his views on everything, from investing in the natural resource markets to free-market economics and libertarian philosophy, are always insightful and often fascinating. Enjoy the interview with Rick Rule , and check out more of King's interviews with guests such as Marc Faber, Barry Ritholtz, and Jim Grant at the King World Broadcast page (Hat tip: Controlled Greed ). Related articles and posts: 1. Rick Rule: The Golden Rule - Finance Trends. 2. Three rules for buying resource stocks - Finance Trends.

Jim Grant joined CNBC for an in-studio appearance Wednesday and left the network bubbleheads with a few things to think about. Big topic of discussion: inflation and its appearance in the US following the recent raft of money creation by central banks, the Fed in particular. Grant notes that many in the US believe that inflation will not flare up due to "excess capacity" in the economy. However, Jim points out that measures of "output gaps" in the economy are not a useful leading indicator of inflation, and he reminds the assembled crowd that inflation is simply a product of "too much money". At some point, that money will begin to chase something, be it consumer goods, services, commodities, and those price rises will signal the arrival of inflation as measured by CPI. Always good to hear some thoughts from James Grant, especially since his equally thoughtful contemporaries, Marc Faber and Jim Rogers, have been notably absent from CNBC America lately (pr...

A quick pre-holiday market wrap up, for those plugging away ahead of tomorrow's holiday-shortened trading sessions . News from the close of today's trading, and more, follows. 1. Reuters and Bear Mountain Bull summarize the day's trading. 2. US home prices collapse at near-Depression rate. Barry Ritholtz reviews the housing data and the NAR spin . 3. Merrill Lynch economist David Rosenberg thinks US commercial real estate is "the next bailout" . Washington Post has the details on commercial real estate investors seeking government aid . 4. "Sneaky ways you're lured to shop" - Forbes on Christmas sales. 5. Iceland boils over 'like Chernobyl' in civil unrest over economy. 6. Buffeted quants are still in demand . 7. James Grant : Fed's money printing carries dire consequences. 8. Financial Crisis: The Greatest Gift in a Generation . Merry Christmas, Happy Chanukah, and a great holiday to all of our readers. Check back in with us over t...

Jim Grant of Grant's Interest Rate Observer joins Bloomberg TV for an interview, and schools us all on the SEC and the recent monetary easing by the Federal Reserve. Hear why Grant feels the SEC is an "irrelevant" institution, and why the latest Fed actions will lead to a further debasement in the US dollar and slow any economic recovery. You'll also hear Jim's thoughts on where investment opportunities may be found in this crazy time of "zero yields", persistent gloom, and globally tanking stock markets. No spoilers from your editor, just press play (click on the image link) and get it straight from the horse's mouth. Enjoy the clip.

Welcome to our new readers, many of whom are joining us this week via links from Investment Postcards and The Kirk Report . If you would like to view our most recent posts, please visit our home page . You can also browse through our "Favorite Posts" section to get a taste for our site, or try our custom search bar to find more articles and posts on your favorite topics. Thanks for visiting Finance Trends Matter . Enjoy the posts! As we mentioned yesterday in, "Are we too bearish?" , today's post focuses on areas of investment that are starting to look attractive to seasoned investors. Some of the well-regarded market veterans you'll hear from on this topic are: Julian Robertson , Jeremy Grantham , Jim Rogers , and John Paulson . Whether you're currently bullish or bearish on stocks and other asset markets, we think you'll find some interesting points of views expressed here. Let's jump right in... A Tiger's Eye View of the Marke...

I've noticed a definite trend while looking over our last few "Features of the week" posts, and that is a recent preponderance of bad news. Whether we're talking about the direction of global financial markets (mostly down this year) or the fate of the global economy, it seems that most of the news we are talking about here is of the "gloomy" variety. In a way, this makes sense. When we look at the news related to the markets and the economy in recent months, we see that most of it is bad. In fact, one of the defining features of this recent downturn, or "economic crisis", is its ability to continually surprise to the downside. In fact, I think it's safe to say that most people have been caught off guard by how quickly and how far certain problems could spread throughout our well-linked global financial system. Yes, there's been an avalanche of news regarding falling markets and never-ending bailouts over the past several months, an...

Back in July, as the fallout from the 2007 credit crisis deepened, Jim Grant wondered about the lack of popular anger over Wall Street malfeasance in a Wall Street Journal piece entitled, "Why No Outrage?" . Today, as the "Main Street" economy worsens and the House gets set to revote on a revised and enlarged bailout bill , that outrage is here, and it's growing. So while Goldman Sachs may be getting the best of the credit crisis (and Warren Buffett too ), the average American is not really enjoying the current environment. It's bad enough to be suffering through declining real wages, rising inflation, and an unacknowledged recession; throwing on endless financial industry bailouts to the pile (and thereby saddling Americans with even more debt and inflation ) is really adding insult to injury. Looking over the last month's posts, it's clear to see that we've spent a lot of time talking about these very issues. And that's natural, given the...

What could take the stock market higher from here? I think this is a question that's had a few investors thinking lately. I know that I've been wondering the same thing, especially after hearing some of my favorite investment minds mulling this question over in recent days. You may be bullish on the market, bearish, or indifferent, but it's still a rather interesting puzzle to look over. So I'm sitting here wondering, where do we go from here? Recently, I looked at the cards in front of us and said, "Yeah, it's a bear market" . No sooner had I uttered that, than others began looking for a rally , albeit one within the context of a longer-term (secular) bear market. This was something we had to take seriously. After all, no market goes straight down without a fight. We are bound to get some rallies along the way, even if they don't take us back above previous highs. But even if we re-enter a period where the Dow Jones Industrial Average is bui...

If you've already checked in on Monday's post, you probably noticed our mention of investor Jeremy Grantham's recent interview in Barron's . Well, today we have two Grantham profiles for you: a link to his recent Barron's interview , and a profile of the famed Boston investor in today's Financial Times. Grantham, a founding member of the Boston-based investment management firm GMO, is known for his ability to take an unpopular stance on the markets and stick to his guns, in spite of doubters and detractors. An excerpt from the FT piece illustrates this point: "I remember when Jeremy made a stand against tech stocks in the late '90s, and was in the wilderness for what must have seemed like 50 years," says Jim Grant, founder and editor of Grant's Interest Rate Observer, who has known Mr Grantham for 15 years. "He lost many clients during that time, but he's a fighter, and just doesn't back down from a deeply held conviction. ...