Freudian slip? In decrying high debt levels in China, the Economist points out US and Europe are in worse shape

In a bit of possibly unconscious revelation, the Economist in its "Special Report" on finance in China, provided the graphic image below:

On the right you will note that debt levels have been rising rapidly in China and are now about the same as in the US and the euro area.  Everyone's debt level is too high, but the fact is that high debt levels are manageable in fast-growing economies like China's and a real problem in low growth areas like the US and Europe.  We all have a problem, then, but ours is worse.

I am reminded of this pretty smart passage from the Bible:

Matthew 7:3-5New International Version (NIV)

3 “Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye? 4 How can you say to your brother, ‘Let me take the speck out of your eye,’ when all the time there is a plank in your own eye? 5 You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye."

Question to US investors: How safe is it to be invested in the world's most expensive stock market?

It's probably not very safe.

(Click on graph for full story in the Wall Street Journal.)

The ECB and Germany play a confusing blame game

German finance minister Schauble blames the ECB for the rise of populist parties, which he attributes in part to the ECB's easy money policy. He thinks they should tighten up.

In reply, ECB Chairman Draghi mostly blames Germany for Europe's woes and for making the ECB adopt an easy money policy. According to Draghi, Germany's high savings rate compared to its neighbors is somehow forcing the ECB to stimulate because Germans are refusing to go into debt and splurge on consumption items.

Meanwhile, Europe's first quarter economy grew at a 2.4% annual rate (0.6%) with no inflation. This is a great result and the previous quarter was also good. Draghi, however, is unhappy because the inflation rate is too low in relation to the growth rate. (WSJ, A14)

I find this all very Kafkaesque.

1st Q US GDP: Right for the wrong reasons

1st quarter US GDP was reported at +0.5% yesterday, which is weak but still positive. This graphic from the WSJ shows that consumer spending on services, residential investment, and state and local government have accounted for more than all the increase.



Here is are some factoids from the "Contributions to Percent Change" table of the BEA press release:



Without the housing bubble (thanks, Fed), Obamacare, and government spending, 1st Q GDP would have been down .82% This does not seem like a productive economy to me, or am I missing something?

What, after all, is truth?

From today's Wall Street Journal:

Encouraging decline in gun-related deaths in the USA

among suiciders, according to yesterday's Wall Street Journal.

Although the suicide rate among both men and women in the USA is rising rapidly, it is good news that fewer suicides are using guns. (for men from 61.7% in 1999 down to 55.4% in 2014) The big increase in method has been in "suffocation," which I take to mean hanging. (Assuming that the number of serial killer assisted suicides using pillows is not significant)

Should restrictions be placed on the sale of ropes?

The article states: "The report showed a surge in suicides among middle-age men and women, a factor noted in rising death rates among middle-aged people and a decline in white Americans life expectancy in 2014." The writer searches for an explanation but cannot come up with one. (Is Global Warming the cause?)

(Click on the graph to see the full article in the Wall Street Journal.)

Driving Lessons from Greece: The consequences of central bank policy

Central bank policy has evolved from unorthodox to downright strange as politicians have failed to take control of the post-crisis economy. Sooner rather later they will confront a stark choice signposted Greece or Ireland.

Full article: http://www.euromoney.com/Article/3543283/Inside-investment-Driving-lessons-from-Greece.html?printrequest=true&copyrightInfo=true