Category Archives: The Spellman Report

Warren Buffet and the New Calculus of Gold

Posted on April 21, 2012 by Lew Spellman

There has long been a disconnect between gold and institutional investors. The instincts of these managers of large sums are typically tied to the generation of cash flows to feed the monster — that is, the institution’s cash flow needs. … Continue reading →

Posted in The Spellman Report | Tagged BRK.B, BRKA, Collateral fails, Debt crisis, Default hedge, Fiat money, financial crisis, GLD, Gold, Gold asset class, Gold bonds, Gold prices, Gold Standard, Inflation hedge, Money, Reserve currency, Scarce collateral, Store of value, Warren Buffett, Warren Buffett and gold | Comments Off

The Supply Side

Posted on March 30, 2012 by Lew Spellman

Since the housing and mortgage expansion reached its unsustainable zenith nearly five years ago, economic headwinds and financial contraction have been at the forefront of financial market discussions. Two years ago, the sovereign debt problems of the developed world further … Continue reading →

Posted in The Spellman Report | Tagged Employee productivity, Keynesian economics vs. the supply side, Real wages, Supply side, Trade surplus or deficit | Comments Off

Preserving the Debt: The Helium Express

Posted on March 9, 2012 by Lew Spellman

How much country debt is too much? This is an issue of relativity. In this case relativity depends on the income flows from which debt service can be paid. Whether the debt belongs to the consumer or the government, the … Continue reading →

Posted in The Spellman Report | Tagged Banking crisis, Economic analysis, Financial market trends, Flight to quality, Investments, Reserve currency, Safe haven, Sovereign Default | Leave a comment

Financial Repression: The Unintended Consequences of Saving the Sovereign

Posted on February 4, 2012 by Lew Spellman

What’s new has often been lived before, but sometimes it’s not pretty. Presumably that’s what Clarence Darrow meant when he said, “History repeats itself, and that’s one of the things that’s wrong with history.” It is becoming increasingly clear that … Continue reading →

Posted in The Spellman Report | Tagged Debt crisis, Equity prices, European financial crisis, financial crisis, Financial repression, inflation, monetary policy, Negative real interest rates, Sovereign debt | Leave a comment

Liquidity and Asset Bubbles, But Only if the Dam Holds

Posted on December 26, 2011 by Lew Spellman

The ECB lending program to banks is off and running. On the first day offered, low interest rates loans were subscribed by banks in the amount of $635 Billion, an amount greater than the Fed’s QE2 which took nine months to complete. This is a battle of whether liquidity will trump insolvency and stabilize government debt prices. If it does, it will set off an asset bubble in assets that thrive in low and stable interest rate environments. Continue reading →

Posted in The Spellman Report | Tagged ECB lending, Euro debt crisis, Euro financial crisis, insolvency, Liquidity, monetization | Leave a comment

How Monetization Happens: Being at the Helm When the Ship Goes Down

Posted on November 18, 2011 by Lew Spellman

The consequences of excess debt are now facing the leaders of Europe head on, and a monumental decision must be made whether explicitly or implicitly. Excess debt leads to a long chain of D words: Deleveraging in an attempt to … Continue reading →

Posted in The Spellman Report | Tagged Banking crisis, Economic analysis, Euro financial crisis, Euro sovereign debt, Financial market trends, Flight to quality, Investments, monetization of government debt, Reserve currency, Safe haven, Sovereign Default | Leave a comment

The Dumpster for Toxic Euro Sovereign Debt

Posted on November 1, 2011 by Lew Spellman

Some might be wondering why the euro zone rescue focus turned to saving banks as opposed to saving governments. The reasons are illuminating. Consider the following: When a government has a debt bulge, the debt must be held as someone … Continue reading →

Dominos: From Financial Crisis to Economic Crisis to Government Crisis

Posted on October 4, 2011 by Lew Spellman

The dominos are falling. It’s the modern version of a 1930’s bank run. Since everything is bigger (the leverage) and faster (the computers) these days, so is the downfall in financial prices and institutions. The lead domino is an asset … Continue reading →

Posted in The Spellman Report | Tagged Banking crisis, Economic analysis, Financial market trends, Flight to quality, Investments, Reserve currency, Safe haven, Sovereign Default | Leave a comment

Turn Out the Lights, the Party’s Over

Posted on September 7, 2011 by Lew Spellman

Invitation: Unchartered Waters Ahead: I will be giving a McCombs Alumni Lecture/Discussion (open to the public) Wednesday, Sept. 14, starting at 7:30 p.m. at the AT&T Conference Center just off campus. The content will be the likelihood and effects of … Continue reading →

Posted in The Spellman Report | Tagged Banking crisis, Economic analysis, Financial market trends, Flight to quality, Investments, Reserve currency, Safe haven, Sovereign Default | Comments Off

A Return to the Grand Tetons: Perspective on the Economic Obstacles Ahead

Posted on August 20, 2011 by Lew Spellman

Last month, I made a personal odyssey to the Grand Tetons Mountains and Jackson Hole, Wyoming. It’s the place where I discovered the American West while in college. It is a mountain rising abruptly from its flat surroundings (the Hole) … Continue reading →