Category Archives: Bond Market

IMF stops bailout talks with Greece

Some headlines rattling markets a bit, citing IMF spokesperson Rice:

* Greek bailout talks stopped amid failure to make progress

* There are major differences between the IMF and Greece in most key areas

* No progress in trying to narrow those differences

* Talks are deadlocked over taxes, pensions and financing

* Greece pension system is unsustainable; state is contributing 10% of GDP versus 2% for the EU

* Greece government should broaden the tax base; VAT structure is highly complex

* The ball is in Greece’s court

* All technical work with Greece is stopped; technical team has returned to Washington

* IMF MD Christine Lagarde will participate in EuroGroup meeting on June 18


This is a serious breakdown of negotiations (and the IMF wants it to be seen as such). The IMF (and, most likely, the other creditors) are upset about Greece’s strategy of not agreeing to much reform, dragging out the negotiations and surviving thanks to ever increasing ELA (Emergency Liquidity Assistance) from the ECB:

History of Greek ELA use

The ECB is basically filling up capital fleeing from the Greek banking system. The amount has reached almost 50% of Greek GDP, a huge number. As Prof. Sinn pointed out in recent interviews, a Greek default would be costly as the ECB’s claim against the Greek banking system would not be worth much.

Greece is bankrupt, and everybody knows it. Mrs. Merkel had hoped to keep Greece (financially) alive until all Euro-zone debt was to be merged into common Euro Bonds. But time is running out, and Greece is not cooperating.

What can be done to avoid a default?

The Troika (IMF, EU, ECB) will have to announce a debt moratorium, suspending all payments until a later date. They will be embarrassed, but what can they do? It will be interesting to see if the IMF will be able to get out (at the expense of EU and ECB), but that’s a detail.

The Greek bailout was botched from the beginning. The ECB made a particularly stupid move by buying Greek government bonds in the secondary market. It didn’t provide any fresh money to Greece, but effectively subordinated all other holders of Greek bonds. A first debt restructuring was only allowed to happen once German and French banks were able to get their Greek loans off their books. They might have collapse otherwise, which is a worrying fact in itself. The ECB excluded its holdings from restructuring, making the necessary haircut for everybody else even harsher.

The ECB then repeatedly lowered its standards for acceptable collateral, finally ending up with junk-rated Greek bonds, only to exclude them again at the worst possible time.

The Greek debt fiasco will go down in history books as an example of how *not* to do it. It almost caused the Euro project to collapse, which would have thrown back Europe decades on its path to unity.

The EU, with roughly 500 million consumers, is the area with the most purchasing power in the world (and the only one able to oppose the United States). If the Euro project fails, Europeans have only themselves to blame.

Banker landed on a taxpayer


“Good evening, Mr. Bond” – Jim Rickards

Interesting article by Jim Rickards on falling bond market liquidity. He cites the flash crash in US Treasury bond yields last October:

T-Bond flash crash 2014-10


Falling yields mean rising bond prices. So the flash crash in yields actually was a flash rally in prices. Usually, investors only get hurt when prices fall (apart from a few short sellers). Because the vast majority of investors are long-only. So a flash crash in yields might have caused some head scratching, but no systemic damage.

However, the story might be different once bond prices are crashing (= rising yields). The German 10-year government bond yield has already risen from 0.05% to 1.05%. The volatility of the BUXL future (underlying  = 30-year German government bonds) is now exceeding that of stock indices. Meaning that, from a risk manager’s perspective, the 30-year German government bond is more risky than a stock market investment.

BUXL realized volatility 2015-06-11


(h/t @JSBlokland)

For the past 34 years, investors and borrowers have only known falling bond yields (with brief interruptions). Treasury Bonds once yielded over 15%. Very few in the business today remember those times (I happen to remember buying a corporate bond yielding 11% in Deutschmark in 1981 or 1982).

10yr T-bond yield since 1962

There is no collective memory of painful episodes (via losses) in the past. Brains have been conditioned by recent history. “All-weather funds” or risk parity strategies (“hedging” stock market exposure by leveraged bond market investments) are everywhere. Insurance companies, pension funds, bond fund managers and private investors are searching for yield in despair. Projects and companies are able to access financing that would normally not have been able to do so. This period of easy / free money guarantees bad investment decisions, which will come to haunt in the near future.

A side note: The US government will always be able to finance its debt; the group of “Primary Dealers” (P/D) is required to purchase any securities the US Treasury sells, even if other investors do not want them. Those primary dealers cannot run out of money, since the Federal Reserve Bank may lend them money via its Primary Dealer Credit Facility. It’s a perfect circle. The US government cannot go bankrupt.  P/D’s will always buy its bonds, and the Fed will always extend credit to the P/D’s if things get dicey. What happens to the Dollar, however, is a different story.


April JOLTs (Job Openings, Layoffs, Terminations) showed an increase in job openings to 5.38m, the highest since the beginning of the series in 2000. At the same time, the number of unemployed continues to decline (8.67m).

Hence, the number of unemployed per job opening is falling rapidly (1.73):

JOLTS 2015-04

Does this mean the US labor market is getting “tight” (possibly leading to wage inflation)? I don’t think so. Because more than 92 million Americans of working age are currently not in the labor force (compared to just 79 million at the beginning of the last recession in December 2007). This is a huge pool of potential workforce that might come back onto the labor market.

A first sign would be a stabilization of labor force participation rates, especially among men:

LFPR 2015-05

CONCLUSION: It looks as if inflationary threats are unlikely to emerge from the labor market. Which also means that real income gains will remain very limited for the average US consumer.

September data reveals increased risk appetite among ETF investors

Tracking flows in and out of major exchange-traded funds (ETF) can reveal investors’ risk appetite.

The 23 largest ETF’s by assets under management represent approximately 50% of all US ETF assets.

In September, the largest inflows in percent of assets were registered by domestic equity (SPY), gold mining stocks (GDX) and high yield bonds (HYG):

Source:, own calculations. Note: we eliminate the performance effect on AuM, hence end-of-month AuM will differ from actual numbers (which include performance effect).

Largest outflows relative to assets were seen by Inflation-protected Treasuries (TIP), Nasdaq (QQQ) and 2x inverse S&P 500 (SDS).

We smooth out monthly noise by grouping ETF in asset classes and looking at flows cumulative over the last twelve months:

You will notice the dollar amount flowing into international equities coming close to the one for domestic equities, and risky bonds attracting almost as many dollars as “safe” bonds. This is an expression of investors’ risk appetite. In “risk-off”-times, investors seek to repatriate investments (rather domestic equities than international) and prefer the safety of Treasury bonds over high-yield or junk bonds.

By looking at growth in percent of assets, the picture becomes even clearer:

Risk appetite is then calculated on the basis of various ratios (all on 12-month rolling data):

% risky bonds: net flows into HYG, JNK relative to TLT, TIP, BND, LQD, MUB

% international equities: EFA, EEM, VWO versus SPY, VTI, IVV, DIA, QQQ, IWR

non-investment grade versus investment grade: HYG, JNK versus LQD

emerging markets equities versus developed markets equities: EEM, VWO versus EFA

Short equities versus long equities: SH, SDS versus SPY, VTI, IVV, DIA, QQQ, IWR.


While US investors are less keen on international relative to domestic equities, choices within the international equity asset class and short versus long point towards a high risk appetite.

Within fixed income, risk appetite, while not at record levels, is rising since May/June as investors flock towards riskier bond ETF’s and corporates rather than Treasuries.

“Who moved my recession?”

Lakshman Achutan, ECRI (Economic Cycle Research Institute) made a recession call for the US on September 30, 2011 (and confirmed it multiple times since then).

Gary Shilling, titling his August letter “Global Recession”, says “We are already in a global recession.”

However, equity markets don’t think so, with the S&P 500 trading less than 10% away from a new all-time high. Only one side can be right. Could this be a repeat of October 2007, when the S&P 500 hit new all-time highs mere six weeks before the “Great Recession” began? Are so-called leading indicators, as used by the Conference Board, still reliable?

According to Mish Shedlock, these are the CB’s 10 leading indicators:

As seen above, the stock market (#7) is a terrible indicator of future economic performance. While the slope of the yield curve (#9) was a very good leading indicator in the past, it would be difficult for the yield curve to invert in the current environment. Long bond yields would have to go negative as the Fed promised near-zero interest until 2014, and possibly longer.

Usually, central bankers ‘hit the brakes’ (raise interest rates) for fear of inflation induced by strong demand and brisk economic growth. The yield curve inverts, a recession follows, and inflation recedes.

But what if the economy went into recession with short-term interest rates being near zero already (as seen, for example, in Southern Europe)?

Over the past 50 years, all recessions were easily explained by central bank action and oil price shocks:

The following chart shows how the Fed increased interest rates ahead of each of the last 9 recessions. Black line: absolute level of Fed Funds rate; blue line: increase in %-points from the prior post-recession low. Right-hand scale for absolute data, left-hand scale for percentage changes (negative absolute numbers merely for better formatting):

The same logic applies to the crude oil price (log scale):


I have looked at many indicators from every angle. Some have to be smoothed to cancel out short-term “noise” in order to prevent false signals (used mostly 3-months moving average). Some data do not give good signals unless you look at decline from recent peaks. Other data need to be trend adjusted (number of miles driven, for example, benefits from rising number of cars and population).

The following indicators have been tested for false positives (calling for a recession when there was none), missed recessions, the confidence I have in to work in the future, possible lead time, what it said in H2 2011, the current likelihood of a recession and the importance (1-3) I assigned to it for a weighted overall recession probability:

Not all recessions are equal, and no single indicator is perfect. It is therefore hard to draw the ‘trigger’ line. Set it too low, and you will miss some recessions. Position it too high, and you will get a lot of ‘false positives’ (indicator signals a recession when there is none).

I have drawn boxes shaded in red. The upper end of the box is the highest level necessary to catch all recessions; the bottom end is the lowest setting necessary to avoid all false positives. The taller the box, the less confidence the indicator deserves. If the read-out is somewhere in between those bands, recession probabilities are assigned.

At the risk of boring you with details, here are the remaining charts:

Want to build a house? Need a permit! Any decline in permits of 25% or more from prior peak and you can bet on a recession. Missed the one in 2001 though. 2011 was a close call. Absolute level still below the lows of 1990/91 recession. Population was 250m then compared to 315m today.

UoM Consumer Sentiment: One false positive (2005), one miss (1981). 1980-82 were back-to-back recessions, so let’s not be too harsh about that. Declines of 25%+ indicate recession. 2011 was a close call, but currently out of the woods.

If you run a business you need electricity. Sure, weather has an impact (electricity use in the US peaks in summer due to air conditioning), but this thing seems to work. If electricity usage drops by 1% or more, it’s a recession. Limited historic data, but no misses and no false positives. Currently a close call.

The CB’s Consumer Confidence is similar to the UoM Sentiment. Two false positives (1992, 2003), but it did catch all recessions including the ones in 1981/2 and 2001 (difficult for a lot of other indicators). 2011 was a “close call”. Currently no red flag. Would have to decline to 45 to trigger recession call in 2013.

Retail sales (ex food services) fell annualized 2.7% over the three months to July. Falling retail sales for three consecutive months indicated a recession 27 out of 29 times since the data series began (1947), according to Gary Shilling. Year-over-year, the chance is still positive, but add a few weak months and the economy would be in the tank.

Before you fire employees you reduce their working hours. A drop in average weekly working hours in the manufacturing sector of 2% or more indicates a recession. Except for 1996. According to this indicator, the US economy is currently sailing smoothly.

The Institute for Supply Management (ISM) regularly asks company executives about orders, sales, inventories etc. A level of 50 indicates no net balance for participants seeing stronger and weaker business activity (economy stagnates). The current level (48) points to a slight contraction. However, the decline from prior peak is not yet large enough to raise recession alarm. One false positive (1989).

Unemployed people usually don’t drive to work. But the US population increases approximately 1% per annum, so traffic increases constantly.

If total miles driven grow less than 0.1% versus its own trend, you are likely to be in a recession.

The 2001 recession was missed. This indicator says we had a recession in 2011 (which is theoretically possible – we might not know it yet). Is the prolonged decline in miles traveled since 2007 due to online shopping? According to data from the Census Bureau, electronic shopping and mail order houses amounted for 5.9% of retail sales (ex autos) in 2004, increasing to 9.0% in 2011. However, additional trucks are needed to deliver the additional volume, partially negating fewer trips to the mall by individuals. The number of non-farm employees was approximately the same in 2011 and in 2004, eliminating reduced employment as a source of the decline.

The steep drop in 2011 is puzzling. Mish Shedlock recently looked at possible reasons for the decline in gasoline consumption.

Defense and aircraft orders are lumpy and distort trends, so we exclude them here. “Medium” confidence in this indicator due to limited historic data. If you set the trigger at 0%, we had a false positive in 1998 and are currently in recession.

Electricity production should be linked to economic growth. This indicator, unfortunately, had many false positives (1983, 1992, 1997, 2006), so confidence is “medium”. Setting the trigger below -0.5% would eliminate false positives, but make you also miss 1990/91. Regardless, electricity production suggests we are in a recession as I type.

Finally, the least confident indicators. First, the ISM manufacturing supplier deliveries. The current reading of 48.7 suggests a mild contraction. Multiple false positives (1985, 1989, 1995, 1998, 2005) muddy the water.

Cars need gas, and gas needs to be delivered to gas stations. Inventory effects are unlikely because of high turnover. “Low” confidence because of false positive (1996) and limited historic data. Can the recent decline be explained by online shopping?

SUMMARY: Established leading indicators incorporate questionable input. While there is no perfect indicator, a combination of the ones tested above, weighed by accuracy, confidence and timeliness should produce a good reading.

The higher-confidence indicators say that 2011 was a “close call”, but we are currently not in a recession. However, a lot of lower-confidence indicators are showing readings consistent with a severe recession.

It is entirely possible we narrowly avoided a recession in 2011 and are heading towards another one in 2013. Currently, however, combined indicators suggest only a 10% likelihood of being in a recession at this point (September 2012).

The US economy is experiencing the slowest recovery of the past 50 years (both from an employment perspective as well as from GDP growth). After looking at total credit market debt outstanding I concluded this was due to a decline in the marginal utility of additional debt (see this post). Some readers have mistaken me for an advocate of more quantitative easing. I should have been more clear about this: I do not think printing money is an appropriate remedy for economic woes. Enabling the government to finance fiscal largess at artificially low rates is unlikely to cure problems related to excessive debt levels.

A pdf version of this post can be found at Scribd

Analyze this: The Fed is not printing enough money!

Before you trash me in the comments, hear me out.

It started off with Ray Dalio’s “beautiful deleveraging”, which inspired this post.

Since the financial crisis, the Fed has increased its balance sheet from $900 billion to $2.9 trillion (red line in below chart). The difference is $2 trillion (or 13% of GDP).

When the asset side of the Fed’s balance sheet grows, so must liabilities. The Fed’s liabilities consist mostly of money in circulation. So we can assume that $2 trillion in additional money has been pumped into the economy.

Or has it?

When the Fed buys bonds, it does so from “Primary Dealers” (21 global financial institutions). They hand over the bonds and get a corresponding credit on their account with the Fed. The Primary Dealers might then purchase some other securities with that money (which then gets credited to another bank’s account with the Fed).

And that’s where the buck stops. Three quarters of the money “printed” never make it into the economy. They remain as excess reserves (reserves in excess of banks’ minimum reserve requirements, blue line) in accounts at the Fed.

Hence, of $2 trillion additional money, only $500 billion (yellow line) ended up outside the Fed. Why? Banks could use those reserves for lending, but there is no demand for additional loans (from customers with sufficient debt bearing capabilities).

So if the money can’t find its way out of the Fed – how is money created then? What is money?

To understand, we have to take the example of buying a car.

In the US, literally nobody purchases a car with money form a savings account. The ability to purchase a car depends on the availability of credit. No credit, no car.

Credit availability depends on issuance of debt. Take a look at debt outstanding by ABS (asset-backed securities) issuers over the last 30 years:

ABS Credit market debt outstanding fell from $4.5 trillion at the peak in April 2007 to $2 trillion. That’s a decline of $2.5 trillion. This is money not available for purchases. It dwarfs the $500 billion pumped into the economy by the Fed.

Debt is money. The amount of debt outstanding controls the amount of money available for purchases, and hence for the size of the economy.

In addition ABS issuers there is debt by households, non-financial and financial corporations as well as the government sector. By adding them up you get the big picture: the total credit market debt outstanding (TCMDO):

TCMDO is the blue line, on a log scale. The red line is the change in the annual growth rate of TCMDO, measured from the prior post-recession peak growth rate. You will notice that every recession over the last 60 years, with the exception of 1970, coincides with a slowing of the growth rate by at least 2%-points. The red triangle depicts the 1987 crash, which followed a period of serious slowing in the rate of TCMDO growth.

Up until 2009, total credit market debt outstanding has never declined. The ratio of TCMDO to GDP continued higher and higher, at accelerating speed:

Has debt-to-GDP, or the debt-bearing capability of the US economy, hit a ceiling?

Look at how little additional GDP (blue area, below) we obtained in comparison to ever increasing amounts of additional debt (red area):

The dotted black line is the marginal utility of debt (right-hand scale). Think of it like this: how much additional GDP do you get out of one dollar of additional debt (in %). In 1992, for example, you get $0.30 in additional GDP for every additional dollar of debt.

Problem: this marginal utility of debt has trended lower and lower over the years, and actually reached zero in 2009.

Meaning: you can add as much debt as you want, and it still won’t give you any additional GDP.

To repeat: no amount of additional debt seems to be able to get economic growth going again.

That is a dramatic revelation. We might have reached the maximum debt-bearing capability of the economy. If true, no growth is possible unless debt-to-GDP levels fell back to sustainable levels (in order to restart the debt cycle). This could take years.

At this point, the only way to reset the debt cycle is to get rid of debt.

Ray Dalio correctly describes the three options available:

1. Austerity: this would be painful and take quite some time (the Europeans are going down this path)

2. Restructuring: requires write-downs and losses for bond investors (which are not being allowed to happen for fear of systemic risk)

3. Printing money: Inflation. Better yet: hyper-inflation. You have to destroy the value of debt fast enough before debt service costs, due to rising interest rates, drive the government into insolvency.

In the US, (1) and (2) are not happening. That leaves (3).

As shown above, the amounts needed for the Fed to be able to create inflation are much, much higher than what we have seen so far. And it is not guaranteed to work. Destroying the trust in the value of a fiat currency is a dangerous experiment with mostly adverse consequences.

The “beautiful” deleveraging

Some of my clients like to challenge my (admittedly gloomy) views, forcing me to think – which isn’t such a bad thing to do.

It started off with Cam Hui’s “A Dalio explanation of Evans-Pritchard’s dilemma“. After laying down his strategy on winning the game of Monopoly, Dalio goes on to model the economy onto the board game. So far so good.

Then, Dalio is quoted in a Barron’s interview, describing the current phase of the U.S. deleveraging experience as “beautiful”. He goes on to explain the three options for reducing debt: austerity, restructuring and printing money.

“A beautiful deleveraging balances the three options. In other words, there is a certain amount of austerity, there is a certain amount of debt restructuring, and there is a certain amount of printing of money. When done in the right mix, it isn’t dramatic. It doesn’t produce too much deflation or too much depression. There is slow growth, but it is positive slow growth. At the same time, ratios of debt-to-incomes go down. That’s a beautiful deleveraging.”

That sounds pretty good and makes sense. Or does it?

  • I think Mr. Dalio would not be too upset if we labeled him a “Keynesian” (believing the government has to step in where private sector spending falls short).
  • You could respond that it was Keynesian policies which brought us to the current situation in the first place (to which Keynesians will respond that their policies did not work out because there was not enough spending. Which is like saying “the kid is not behaving because you didn’t hit it hard enough“).
  • Furthermore, how is the government sector on a different “planet” than the household sector? In the end, isn’t government debt (and hence fiscal deficits) supported and borne by taxpayers (read: household sector)? No sovereign entity in the world would be able to issue debt unless backed by taxpayers (or, for that matter, gold).
  • As governments incur additional debt it is actually taxpayers’ future income that is on the block (as tax rates will have to go up to pay for additional debt service burden). Leverage is simply being shifted around. Oh, and for that time-shift argument (“tax receipts will have increased by the time the debt comes due”) – I believe it when I see it. There has been not a single country which has paid back its debt incurred under the fiat money system.
  • If the future rate of inflation is below the interest rate paid on additional government debt, the net present value of deficit spending is negative (we are neglecting the argument over whether government can spend efficiently or not).
  • Interest rates at issuance are fixed (exception: floaters). The decision whether to run fiscal deficits boils down to the following question: will future inflation exceed the interest paid (in order to devalue debt faster than accrued interest)?
  • This makes the success of Keynesian policies dependent on elevated inflation. Governments are motivated, in a perverse way, to work towards reducing the value of money.
  • This is in contradiction of central bankers’ (presumed) goal of preserving the function of money as a store of value, setting them up for a clash with governments (assuming they are not in cahoots anyways).
  • However, there is no known case of a government successfully printing its way out of excessive debt (while there are plenty of examples for the opposite).
  • It’s a loose-loose-situation: Should the government succeed in creating inflation, (1) financially prudent savers are punished, (2) low-income families are hurt (as they have no means to invest in assets benefiting from inflation) and (3) debt service costs are likely to increase as existing debt matures and needs to be rolled over.
  • Should the government not succeed in creating inflation, future consumption will be burdened by additional taxes, lowering future growth and making excessive debt unsustainable.
  • Will printing money “compensate” for money destroyed by debt write-offs? Turned the other way ’round, was money ever “un-printed” to compensate for money created from fractional banking and/or increased levels of debt?
  • Cullen Roche of Pragmatic Capitalism states “QE [quantitative easing] doesn’t do much – it’s the great monetary non-event” (“Why QE is not working”).
  • In the comments section of above article Cullen points out that

“It is flawed economic thinking to target nominal wealth. Stock prices are not real wealth until realized gains are taken. More importantly, stocks are based on the underlying value of the assets they represent. Pushing stock prices up does not make the companies more profitable. So hoping that people will spend more of their current income because of a false price appreciation in the market is a misguided policy.”

  • So let’s take a look at Mr. Dalio’s “beautiful deleveraging”. Here’s US debt by sector:


  • Households are de-leveraging; so are financial corporations.
  • This happens at the expense of the government sector, which continues to lever up.
  • Total debt (government + households + corporations) is actually higher (by $800bn) than when the “beautiful deleveraging” began.
Let’s look at the numbers in percent of GDP:
  • Peak debt-to-GDP has been reached in Q1 2009 for households, financial and non-financial corporations.
  • Since then (latest data Q1 2012), households have de-levered by 11%-points of GDP (or $654bn).
  • Non-financial corporations reduced debt by 3%-points (or $406bn).
  • Financial corporations, however, de-levered by a stunning 33%-points (or $3,375bn).
  • The flip-side of this: Federal debt-to-GDP increased by 27%-points (or $4,030bn).
  • While the household sector has done “it’s thing” it usually does during recessions (de-lever), it become clear who the main beneficiary of additional government debt is: the financial sector.

Looking at quarterly changes in sector debt visualizes it nicely:

  •  Mr. Dalio and his firm (Bridgewater Associates, the world’s biggest hedge fund) are part of this financial sector. No wonder he describes this kind of deleveraging as “beautiful”.
  • Mr. Dalio, who, according to a recent Bloomberg story (Connecticut offers millions to aid Bridgewater expansion), “was paid $3.9bn in 2011” is taking all kinds of tax breaks / “forgivable loans” to be lured to move from Connecticut to… Connecticut (at least UBS and RBS moved to the state when receiving tax breaks).
  • I have walked through the waterfront area of Stamford. A lot of low-income families, often minorities, living in simple homes. The city is building new, expensive apartments for the new, well-paid arrivals, gentrifying the area.
  • From Bloomberg:

“If the region [Fairfield county]  were a country, it would be the world’s 12th-most unequal in terms of income, ranking just below Guatemala.”


While Mr. Dalio’s narrative reads well, it doesn’t stand up to common sense. Unfortunately there is lingering suspicion his views on government spending are a mere ploy to advocate fore transferring even more debt from “his” sector onto taxpayers, while at the same time transferring taxpayers’ money to his firm via tax breaks.

You got Bernanked: Three years gone in three weeks

US Bond market:

  • Over the last three weeks, 10-year US government bond yields increased from 1.4% to 1.81% (green line below) while 30-year went up from 2.46% to 2.93% (red line in second chart):

  • To put things into perspective: Here are those movements on a longer time scale (together with 5-year yields, blue, and the 3-months yield, yellow):

  • And this is what this “minor” increase in yields does to long-term bonds:

  • The 20+ year Treasury bond ETF (TLT) declined 7.7% from the top. That’s more than three years worth of interest, gone in just three weeks.
  • Yes, there is a flip side to central bankers artificially depressing bond yields. And you thought you were smart, not falling for Bernanke’s siren songs to push you into “risky” investments.