I’m surprised the little conundrum has not dawned on the officialdom sooner. Any return to safer practices means less leverage and less freely available credit. Less freely available credit, short term and maybe even intermediate term, means less rapid growth (with a binge as big as we had, the drying-out will take time), although it […]
Read more...By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0 and Yves Smith Conventional wisdom holds that the Chinese are due (as in overdue) for a revaluation of their currency, the renminbi. For instance, a recent report from Goldman argues that China will raise the value of the RMB against […]
Read more...The latest move in the “so what are we gonna do about Greece?” EU vs. Greece drama was that Greece was playing non-negotiable, saying it had agreed to reduce its fiscal deficit by 4% of GDP (from over 12.7% to 8.7%) and it was premature to talk about doing more at this juncture. That posture […]
Read more...Several readers pointed to a recent post by Michael Pettis, which mainly discussed how expected wage increases in China are a hopeful sign that China is taking steps to become more consumption-oriented. But as much as this is a move forward, changing the mix of China’s composition of demand is at least a decade-long project […]
Read more...A fair number of policy commentators are hewing to the view that somehow the EU will cobble together some sort of solution to the Greek fiscal mess because the alternatives look vasty worse. As Paul Krugman noted: Now what? A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As […]
Read more...As readers no doubt know all too well, the market premium versus safer ones contracts in robust times and widens in downturns. And since credit markets typically signal downturns months before the equity markets, junk bonds are one place to look for advance warnings of changes in economic fortunes (albeit with a risk of false […]
Read more...The markets did not react well to the Friday combo plate of weaker than expected European growth, Chinese tightening ahead of the anticipated schedule, and less than convincing remarks regarding what if anything the EU intends to do about its little looming sovereign debt crisis. And top it off by having Greece PM Papandreou launch […]
Read more...Can someone shut these banking industry narcissists up? The one and only time I met Steve Schwarzman was in 1986, when he and Pete Peterson had just started the Blackstone Group. I was a manager (meaning a mid level working oar) at McKinsey. We had teed up a deal and were assisting our foreign client […]
Read more...The February report from the Congressional Oversight Panel makes for sobering reading. It forecasts $200 to $300 billion in losses coming from commercial real estate loans, and notes these were not considered in the famed stress tests, since that process looked only through 2010, when the losses from CRE will peak later. Some snippets (hat […]
Read more...Reader Swedish Lex points out an important implication of a recent VoxEU post on the Nordic economic model and how it fared in the crisis: The Nordic countries – Denmark, Finland, Iceland, Norway and Sweden – are champions of free trade and open markets… The Nordics have all had different monetary regimes since the euro. […]
Read more...Victor Shih has done some serious analytical work to try to get a handle on the magnitude of China’s local debt. His post, which included extracts from his op-ed in the Asian Wall Street Journal, shows that some of the narratives about China are woefully incomplete. The whole post is very much worth reading, but […]
Read more...By L. Randall Wray, a Professor of Economics at the University of Missouri-Kansas City who also writes for New Deal 2.0 Whenever a demagogue wants to whip up hysteria about federal budget deficits, he or she invariably begins with an analogy to a household’s budget: “No household can continually spend more than its income, and […]
Read more...By Tim Iacono, who publishes a weekly investment newsletter on natural resources and the blog The Mess That Greenspan Made It seems that, once again, former Fed Chief Alan Greenspan has grown tired of listening to his critics who have increasingly laid blame at his feet for the inflation of (and, more importantly, the subsequent […]
Read more...On the one hand, as we noted in an earlier post, EU president Herman Van Rompuy has made no bones about his view that the EU needs to have more clout in economic affairs. Per the Telegraph: Herman Van Rompuy, the EU’s new president, has submitted a text calling for the creation of an “economic […]
Read more...Equities and commodities markets rallied on the belief that Greece would be rescued, and that notion is increasingly looking accurate. The Telegraph provides an update (hat tip Swedish Lex): Wolfgang Schäuble, Germany’s finance minister, has asked officials to prepare a plan in time for a summit of EU leaders on Thursday, according to reports in […]
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