Money figures show there's trouble ahead - By Ambrose Evans-Pritchard - Private credit is contracting on both sides of the Atlantic. The M3 money data is flashing early warning signals of a deflation crisis next year in nearly half the world economy. Emergency schemes that have propped up spending are being withdrawn, gently or otherwise. ... Yet hawks are already stamping feet at key central banks.  Are they about to repeat the errors made in early 2007, and then again in the summer of 2008, when they tightened ... - Telegraph.co.uk

Japan tips ever deeper into deflation - By Ambrose Evans-Pritchard - Japan is sliding into the deepest deflation since the Second World War, forcing the new-broom Democrats to abandon their strong yen policy within weeks of taking office. - Telegraph.co.uk

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Bond Traders Are Doubters, Lemmings or Sissies: Caroline Baum - ... Where are those gunslingers of yesteryear, ready at a moment’s notice to assert themselves in the marketplace, challenge the Fed on its easy-money stance and punish the federal government for its profligate spending? ... - has 5 reasons - Bloomberg

IMF Cuts Forecast for Global Losses to $3.4 Trillion - By Timothy R. Homan and Sandrine Rastello - ... citing improvements in credit markets and initial signs of economic growth.  The tally, released in a semiannual report today, was based on a new methodology after criticism of an April estimate of about $4 trillion ... - Bloomberg

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Federal Reserve reverse repurchases - James Hamilton - ... The question under discussion at the moment is the extent to which the Fed could continue to rely on these two devices-- Treasury borrowing on its behalf and banks' willingness to simply hold the ballooning reserves-- to contain the monetary consequences of its expansion. ... Just as the Fed converted the use of repos, which had historically been used on a small scale to temporarily add reserves, into a much larger operation with which it could lend broadly on a long-term basis, it is now contemplating using the reverse repo, which had historically been used on a small scale to temporarily drain reserves, into a much larger operation with which it could borrow broadly on a long-term basis. ...  - Econbrowser

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You Don't Know The Math - Michael Maiello - The complexities of the financial markets are beyond your broker's abilities.  Four years retired from Yale, Benoit Mandelbrot, the inventor of fractal geometry, is still trying to teach the essential lesson of his life's work--nature and markets defy easy description - (good article for non mathematicians BC) - Forbes

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MysteryHedgie: Behold The Flattening Yield Curve!  - Not widely discussed is the flattening of the US yield curve (see below – 10 year less 2 year yield), caused primarily by the rally in the “long end”, as the Fed has stated its intention to leave short rates close to zero for an extended period.  Intuitively this flattening could be viewed as a sign of economic softness ahead. - Outside the Box Blog