Category Archives: Economic fundamentals

Marshall Auerback: Troubles in the EuroZone – Will the Contagion Affect the U.S.?

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. A recent poll by Douglas Schoen and Patrick Caddell suggests that swing voters in the US, who are key to the fate of the Democratic Party, care most about three things: reigniting the economy, reducing the deficit and creating jobs. […]

Was Greece Rescue Futile, and is Portugal Next?

We met last week with a savvy German investor, one who unlike many of his peers, is well aware of the German bank exposure to Greek and other Club Med debt. He argued that Greece will default within six months. That view might have seemed extreme a week ago, but as Wolfgang Munchau points out […]

Is Obama Winning in DC and Losing the Country?

A pair of articles, one at the Washington Post, the other at Politico, look at the significance of continuing slide in Obama’s poll ratings. At the WaPo, pollsters Douglas Schoen and Pat Caddell are firmly of the view that Obama is out of touch with the mood in the heartland, and needs a sharp course […]

The Origins of the Next Crisis

William White, the former chief economist at the Bank of International Settlements (BIS) gave an important speech at George Soros’ Inaugural Institute of New Economic Thinking (INET) conference in Cambridge. While everyone is casting about for the one magic bullet solution which would have prevented this and future crises, he placed the blame for the […]

Gonzalo Lira: “Systemic Contradictions”: The Eurozone De Facto Currency Peg, and the Death Spiral We Are Currently Witnessing

By Gonzalo Lira, a novelist and filmmaker (and economist) currently living in Chile Critics of free-market capitalism, especially of the Marxist persuasion, love talking about its “systemic contradictions”. Especially European critics—they adore using that steam-roller phrase: “systemic contradictions”. It sounds so thrillingly lapidary, so discussion-ending, so terminal. Nothing can escape its grasp, or the base […]

Soros, Galbraith and Stiglitz on resisting inevitability in Greece

Yves is holed up at the Institute of New Economic Thinking (INET) conference in Cambridge. The effort, sponsored by George Soros, is a much needed collaboration of ideas to help prevent a crisis like the one we are now experiencing. She claims they are working hard of course. Hence, her lack of posts. Marshall Auerback […]

Throwing in the towel on policy makers

A post by Edward Harrison. Earlier today, I had a brief e-mail exchange with Marshall Auerback in which I said that I had basically thrown in the towel on US (and global) policy makers. Early on in this crisis, I had advocated a number of policy paths which I think would have been infinitely superior […]

Guest Post: What Do We Have to Show After a Year of “Extend and Pretend”?

By Gonzalo Lira, a novelist and filmmaker (and economist) currently living in Chile In 1982, many of the banks hit by the Latin American debt crisis were effectively insolvent. Paul Volcker, as the then-Chairman of the Federal Reserve—charged with overseeing the banking system—effectively cast a blind eye on this banking insolvency. Volcker’s reasoning seems to […]

Geither Defers “Currency Manipulator or Not” Determination on China

As expected, Treasury has put off a decision on whether to label China a currency manipulator for a few months, pending negotiations with China. The problem is, however, is that China has been signaling that it is pretty non-negotiable (yes, there has been the occasional conciliatory remark, but they have been notably few and far […]

Why the fall in the savings rate means something

A post by Edward Harrison Recently, I wrote a post which examined three different reasons the savings rate in the US could have been falling over the last year. Rebecca Wilder thinks this is a meaningless exercise: Edward Harrison at Credit Writedowns is theorizing why the saving rate is falling when it should be rising, […]

More Evidence of Lack of Competitiveness of Many Chinese Exporters

One argument we have made, which some readers find difficult to accept, is that China’s keeping its currency, the renminbi, at artificially cheap levels is tantamount to an across-the-board export subsidy (the proof that the RMB is artificially cheap comes via the fact that China has had to engage in massive dollar purchases to keep […]

China’s Debt Bubble: When Will the Ponzi Unravel?

Independent Strategy’s latest report, “China’s credit bubble: the missing piece in the jigsaw” makes a persuasive case that China’s debt fueled growth model is due for a hard landing, but the timing is uncertain, since the debt is funded internally. China is barely past an episode of dealing with banks chock full of bad loans […]

Alford: Time to Stop Giving the Fed a Free Pass

By Richard Alford, a former economist at the New York Fed. 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. Wide swaths of families, businesses, investors, taxpayers, and others have had not just their net worth but their lives […]

Auerback/Parenteau: Operation Twist, Part Deux?

By Marshall Auerback, a fund manager and investment strategist and Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute Who funds our budget deficit? It is a question taking on increasing significance, given the recent back up on longer-dated bond yields, which […]

Auerback: Greece and the EuroZone: Angie, Ain’t it Time to Say Goodbye?

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Arthur Conan Doyle’s literary creation, Sherlock Holmes, once solved a murder by noting the dog that didn’t bark. It doesn’t take Holmes’s ingenuity to see that the plan on offer for Greece is clearly a rescue package which doesn’t rescue. […]