Bloomberg: “Consumers Aren’t Spending Even In a Booming Job Market”
The job market has allegedly disconnected in the last few months from retail spending. But is there really a divergence?
Read more...Category Archives: Economic fundamentals
Did Ireland’s 12.5 Percent Corporate Tax Rate Create the Celtic Tiger?
Offshore banking and tax haven expert Nicholas Shaxson has launched a new blog, Fools’ Gold, to look at issues of ‘competitiveness’ and so-called ‘competition’ between nations. We’ve often taken issue with that policy goal, since it gives precedence to crushing labor as a way of lowering product prices to stoke exports. This approach is dubious for anything other than small economies, since all countries cannot be net exporters. Undue focus on exports as a driver of growth results in increasing international friction, such as the currency wars that are underway now. Moreover, as we have discussed separately, trade liberalization has gone hand in hand with liberalization of capital flows, in no small measure due to US efforts to make the world safe for what were then US investment banks. Yet Carmen Reinhardt and Ken Rogoff pointed out in their study of financial crises, higher levels of international capital flows are associated with more frequent and severe financial crises.
In addition, lowering wage rates reduces domestic demand. In countries like the US, where the domestic economy is much larger than the export sector, lowering internal demand to stoke exports is misguided.
Here we look at a first case study, the real reasons behind the growth and meltdown of the famed Celtic tiger, Ireland.
Read more...Gail Tverberg: The Oil Glut and Low Prices Reflect an Affordability Problem
Tverberg argues that low oil prices likely to be with us for a long time, due to the fact that demand will remain relatively weak. Given the reluctance of governments to engage in aggressive enough spending measures, the idea of that more economies will become mired in a Japan-like slump or weak demand is entirely plausible. And that’s before you get to the wild card of a Eurozone unraveling.
Read more...Bernie Sanders Blasts “Robin Hood in Reverse” Subsidies to the Rich, Calls for Full Employment
Bernie Sanders gave a forceful, if sobering, assessment of the state of the economy from the perspective of working men and women, as well as retirees, and focused on the hypocrisy of corporations and the wealthy that poor-mouth as a way to extract even more subsidies and tax breaks.
Read more...Michael Hudson: Quantitative Easing for Whom?
Michael Hudson recaps the theory, or perhaps more accurately, political justifications for quantitative easing, as opposed to how it works in practice.
Read more...Dear Federal Reserve: *Now* is the Time to Raise Interest Rates? Really? Seriously?!?
I am at a complete loss as to why the Federal Reserve might think that now is the moment to begin raising interest rates. I cannot see a scintilla of hard evidence in support, and potent evidence against.
Read more...Connections in the Modern World: Network-Based Insights
Lambert here: For people who like to “connect the dots,” there is actually a mathematically grounded discipline that studies such networks (or graphs) formally.
Read more...Troika Tightening the Noose on Greece as Government Cash Crunch Worsens
The Troika and Eurogroup look to be working towards the Greek government to start having similar thoughts. However, given the high level of popular support for Syriza, and press reports that Greek citizens fully expect that the new government to at best only be able to deliver on a small portion of its campaign promises, the end game for Greece is looking more and more likely to be a failed state rather than a more neoliberal-friendly government.
Read more...Corporate Greed is Killing Investment
How the dubious “maximize shareholder value” thesis, an economic theory, and not a legal requirement, hurts investment and undermines growth.
Read more...Robert Parenteau: The Large Fly in Krugman’s New Keynesian Soup
Why New Keynesians look a lot like Friedmaniacs.
Read more...Impotent Western Sanctions Fail To Disrupt Russian Energy Exports
Who has won and lost from the Western sanctions against Russia?
Read more...Could Oil Prices Plummet A Second Time?
Are oil prices heading for a double dip?
Read more...The Administration’s Dishonest Response to Elizabeth Warren’s Attack on Secret Investor Arbitration Panels in Trade Deals
Elizabeth Warren is clearly getting on the Administration’s nerves.
Read more...Austerity Kills: Economic Distress Seen as Culprit in Sharp Rise in Suicide Rate Among Middle Aged
I’m surprised, but perhaps I shouldn’t be, that a recent study hasn’t gotten the attention it warrants. It points to a direct connection between the impact of the crisis and a marked increase in suicide rates among the middle aged.
Read more...The Alternative in Greece
Let us begin with what should be indisputable: the Eurogroup agreement that the Greek government was dragged into on Friday amounts to a headlong retreat.
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