Economic myths

As I read mainstream economic news

stories, I see a few myths that are

repeated without any evidence.

Here's a few:

1) housing recovery is robust

Nope, the market is bouncing off the

bottom without any robust growth.

Average resale price has climbed 6%

last year mainly because fewer houses

were foreclosed.  And the slowdown in

floreclosures was the legal mess caused

by Fannie/Freddie promoting paper-less

mortgage trading and judges requiring

paper documents.
http://www.reuters.com/article/interactive/idUSBRE92Q0M420130327?view=small&type=gc03

2) the Fed is printing too much money

Nope, they injected lots of liquidity back

in 2009 but the money printing has been

relatively slow since then.  Plus velocity
of money has been slowing.
http://jessescrossroadscafe.blogspot.com/2013/03/the-fed-is-printing-money-but-where-is.html

3) companies are sitting on lots of cash

Nope, while the amount of cash is higher

it is not really out of historical ranges when

compared to overall corporate valuations

or debt levels.
http://www.financialsense.com/contributors/neeraj-chaudhary/2011/12/15/the-corporate-cash-myth

Cyprus natural gas

Digging a bit into the Cyprus mess, I think the

key is natural gas.

Cyprus got into trouble by joining the EU, accepting

foreign accounts from Russia when had it had its currency

problems, and then investing the money in Greece.

All three mistakes probably seemed like good ideas

at the time but, as a group, they were dumb.

Now Cyprus needs a bailout of about $10B to cover

the bank losses.  Does it have enough assets?

However ... looking at its natural gas fields, it does

have the possibility of plenty of assets.

So far, the lease held by Noble Energy (NBL) looks like

it has about 5-8 trillion cubic feet of natural gas.

Plus several more areas are under exploration that

could contain 20-30 trillion cubic feet.  Or more.

At current prices, those reserves would be worth

at least 10X its debt.

Sooo, Cyprus could sell its family jewels to cover its

debts.  The question is who will buy it?  Russia

currently makes a lot of money selling nat gas to

Europe and wouldn't like the competition if another

country sells nat gas.  That's why Gazprom wanted

to lease the gas fields but its low-ball offer was

rejected.  Maybe somebody else will jump in.