Category Archives: Economic fundamentals

Mr. Market’s Temper Tantrum Over Fed Tapering Talk

Lordie, the market upset we’ve had over the past week plus over Bernanke using the T, as in “tapering” word, is escalating into a full-blown hissy fit. We now have the Wall Street Journal and other finance-oriented venues telling us how unbelievably important today’s job report is. Huh? One jobs report is just another in a long series of data points.

So why has this one been assigned earth-shaking importance?

Nathan Tankus: Memo to Paul Krugman on the Eurozone – Read Your Own Research!

Normally, I’m a harsh critic of neoclassical economics and neoclassical economists. However, sometimes the most frustrating things about neoclassical economists is their lack of familiarity with neoclassical models (especially older ones) and current neoclassical research. Monday provided a rather extraordinary example of this trend: Paul Krugman is apparently not familiar with Paul Krugman’s research!

Mortgage Rate Increases Starting to Bite

Bloomberg reports that that staple of mortgage funding, the 30 year fixed rate mortgage, has seen its interest rate increase from 3.48% a month ago to 4.16% as of yesterday. By contrast, the highest rate the 30 year mortgage reached in the previous year as of mid-March had been 3.85%.

One analyst, Mark Hanson, sees evidence that the dropoff in refinancings has been impressive

Puzzling Economic Sightings

Now and again I ask readers for input on what they are seeing locally, a sort of regional check on the statistics and media reports on how the economy is faring.

I’ve seen some things in my backyard that have me puzzled and wondered if readers see similar patterns.

Sasha Breger: How Commodities Hoarding Distorts Food Prices

Despite financial firms’ pious claims to the contrary, their commodities machinations extract wealth from agricultural providers, and thus also ultimately from consumers.

Nikkei Disses Third Dose of Abenomics, Falls Nearly 4%

The financial media and investors were waiting tonight for Prime Minister Abe’s latest announcement on the extreme economic sport known as Abenomics. But his new installment dashed hopes, and after a short-lived rally, the Nikkei is down over 3%. But after the wild ride since May 22, when the Japanese index plunged 7.3%, a 3% decline is coming to look almost like normal daily volatility. (Well, now that it’s down nearly 4%, it might be a beast of a different color).

Yanis Varoufakis: Mixed Messages from the IMF

Yves here. Note how the need to pretend Deutsche Bank is not undercapitalized, mentioned in passing in this post, is playing into policy.

An interview by Yanis Varoufakis, Professor of Economics at the University of Athens, with Tomas Hirst of Pieria. Cross posted from Yanis Varoufakis’ blog.

Sasha Breger: How Big Finance is Eating the World’s Lunch Agricultural Wealth

If you hear a kind of whooshing, rushing noise, don’t worry—it’s not US jobs moving to China. Today’s great sucking sound is the sound of agricultural wealth being siphoned off into the global financial system.

So Who is the Dumb Money Ruining the Rental Housing Market?

The head of Carrington, which is known as an established distressed debt investor and more recently, an early entrant in the single family home rental business, said this week it was no longer buying houses for lease because dumb money had ruined the market.

Richard Alford: The “Dutch Disease” and Once and Future Economic Crises in the US

By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side.

The term Dutch Disease refers to negative macro-economic effects on a country of a boom in commodity exports or other developments that result in large capital inflows. It may be that the Dutch Disease contributed to the recent US recession and that the prospective energy-led US economic recovery could amount to nothing more than another bout of the Dutch Disease.

The Case for 4% Inflation

Yves here. Some readers are likely to recoil at the idea that more inflation might be a good thing. But the flip side is that economists are still fighting the war of the 1970s.

The Fed Has Painted Itself in a Corner

I welcome readers telling me I’ve missed something, but looking at the Fed’s problem from 50,000 feet, it appears that the the monetary authority appears to have set boundary conditions for its QE exit that it can’t meet.

Yanis Varoufakis: Greek Success Story: The latest Orwellian Turn of the Greek Crisis

Greece’s Prime Minister recently flew to China, to woo Chinese investors. In his bid to be persuasive, he adopted a radical narrative: Greece is a Success Story. A country that almost perished in 2012 is now on the mend; on the road to stabilisation and growth; a wonderful opportunity, currently, for investors to pick up ultra cheap investments and to benefit from the forthcoming growth. How much of this is true, however?