Tuesday , September 17 2019
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John Mauldin



Articles by John Mauldin

2020 Will Be The Most Volatile Year In History

6 days ago

The last few weeks marked a turning point in the global economy.
It’s more than the trade war. A sense of vulnerability is replacing the previous confidence—and with good reason.
We are vulnerable, and we’ll be lucky to get through the 2020s without major damage.
Let’s talk about the risks facing us in the next year or so and the economic environment in which we will face those risks.
Supply Shocks Ahead
In a recent Project Syndicate piece, NYU professor and economist Nouriel Roubini outlined three potential shocks, any one of which could trigger a recession:
A slower-brewing US-China technology cold war (which could have much larger long-term implications)
Tension with Iran that could threaten Middle East oil exports
The first of those seems to be getting worse. The second is getting no

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Mauldin – Trump, You’ve Got It All Wrong

13 days ago

I’m going to start with a story.
There is a drug produced in China that works well on strokes and numerous other less devastating medical issues.
It is derived from pig pancreases or human urine. It isn’t approved in the US due to justifiable regulatory issues, but it is used in Europe as well as China.
A small biotechnological firm in the US has the technology to synthesize this drug without using pancreases or urine. This would be safer and cheaper.
The Chinese company agreed to pay the US company $4.5 million upon the meeting of certain guidelines and then to purchase the drug from the company at a fraction of its Chinese production cost.
The US company spent a great deal of money and met its guidelines, providing the Chinese company with everything required under the contract. The

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Mauldin – MMT Could Destroy This Nation

25 days ago

I am back from my 14th annual Maine fishing camp.
The private event at Leen’s Lodge is generally called Camp Kotok in honor of David Kotok of Cumberland Advisors who started these outings many years ago.
CNBC and others began calling it the “Shadow Fed,” but it is really just a meeting of wickedly smart people focused on economics and markets. (I am allowed to attend for comic relief.)
We discussed the world’s problems and the general mood was that many of those problems are beginning to catch up.
Among other topics, there was an open “debate” about Modern Monetary Theory (MMT) and US fiscal strategy.
There was the usual pushback, but I have to admit that I was struck by the private conversations after the debate.
Many smart, well-informed thinkers agreed MMT may be actually attempted in

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Corporate Debt Is At Risk Of A Flash Crash

26 days ago

The world is awash in debt.
While some countries are more indebted than others, very few are in good shape.
The entire world is roughly 225% leveraged to its economic output. Emerging markets are a bit less and advanced economies a little more.
But regardless, everyone’s “real” debt is likely much bigger, since the official totals miss a lot of unfunded liabilities and other obligations.
Debt is an asset owned by the lender. It has a price, which—like anything else—can go up or down. The main variable is the lender’s confidence in repayment, which is always uncertain.
But there are degrees of uncertainty. That’s why (perceived) riskier debt has higher interest rates than (perceived) safer debt. The way to win is to have better insight into the borrower’s ability to repay those loans.
If a

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Are We In A Recession Yet?

July 31, 2019

I’m often asked if recession is coming.
For quite some time now, my answer has been: “Yes, but not just yet.”
That’s still what I think today, but more of the early warning signals I have used in the past are beginning to flash again.
I see some leading indicators weakening. I see smart people like Dave Rosenberg argue we may already be in recession today.
And I see Wall Street not really caring either way, so long as it gets enough rate cuts to prop up asset prices. None of that is comforting.
The storm clouds are gathering. Someone is likely to get hit. It might be you.
Growth Has Stalled
I think we all agree this recovery cycle has been both longer and weaker than in the past. Any growth is good, of course, and certainly better than the alternative. But the last decade wasn’t a

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The Problem With Keynesian Economics

July 13, 2019

In The General Theory of Employment, Interest and Money, John Maynard Keynes wrote:
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”
I think Lord Keynes himself would appreciate the irony that he has become the defunct economist under whose influence the academic and bureaucratic classes now toil, slaves to what has become as much a religious belief system as an economic theory.
Men and women who display appropriate skepticism on other topics indiscriminately funnel facts and data through a Keynesian filter

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Why Ray Dalio Is Wrong On Capitalism

June 15, 2019

Ray Dalio is the thoughtful, somewhat controversial founder of the world’s largest hedge fund, Bridgewater Associates, which he started in 1975.
While much of his writing is private, I (and many others) peruse every word we can of his and the Bridgewater team’s thinking. I find it to be some of the most interesting market commentary I read.
Lately, Ray has been far more open with his thinking, posting books and essays. He posted on LinkedIn rather controversial stories: Why and How Capitalism Needs to Be Reformed, Parts 1 and 2 and a follow-up piece titled It’s Time to Look More Carefully at ‘Monetary Policy 3 (MP3)’ and “Modern Monetary Theory”.
On first reading those, I will admit to thinking, “Ray Dalio is kinda, sorta wrong.” I agreed with much of Part 1, with a few quibbles. Ditto for

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