The UK’s GDP is a direct casualty of its housing slump. From the Telegraph: The Office for National Statistics reported that Britain’s gross domestic product grew by only 0.2pc in the second quarter – the slowest quarterly growth for three years… They also warned that the figures showed that although strong growth in April helped […]
Read more...Big state budget shortfalls are an inevitable side effect of a weak economy. The Wall Street Journal reports that the decline is projected to leave states with an aggregate deficit three times the level last year, and suggest that the economy may be weaker than the GDP stats suggest. FYI, I was just on a […]
Read more...As he is often wont to do, Ambrose Evans-Pritchard worries, in dire terms, about the poor prospects for growth and stability, It would be easy to dismiss him as histrionic were it not for the fact that some commentators who have been right so far about the progress of the credit crunch, are also hyperventilating. […]
Read more...The headline of this International Herald Tribune article (hat tip reader Saboor) is a real sign of the times. The short answer is our policies assume the answer is yes, but if we don’t course correct, that assumption is likely to be tested. Specifically, the argument goes, our trading partners will continue to be willing […]
Read more...Full disclosure: I have a great deal of respect for both Tim Duy and the hedge fund manager Scott who is also quoted in this post. As you will see, Duy wrote an interesting post addressing a question posed by Brad DeLong, in essence “Since we are in the midst of the worst financial crisis […]
Read more...Even the rich are feeling the pinch of this downturn a bit. Some of it is that even the wealthy cut back in bad times (if nothing else, conspicuous consumption becomes a tad unseemly), but in addition, the rich are more levered generally speaking than heretofore, so some may also have good reason for caution. […]
Read more...The Bloomberg report on Minneapolis Fed president Gary Stern’s hawkish views noted that he has a more sanguine view of the health of the financial system than other FOMC members do. From Bloomberg: The Federal Reserve shouldn’t wait until financial and housing markets stabilize to raise interest rates, central bank policy maker Gary Stern said. […]
Read more...Ambrose Evans-Pritchard appears to be trying to corner the market in apocalyptic financial news. But his sources aren’t evangelicals, survivalists, or even goldbugs. The experts he cites are with respected financial firms, meaning they don’t sound alarms casually. Even more significant, the terms they are using to describe what might be coming are uncharacteristically dire. […]
Read more...It’s a no-brainer that as airlines are cutting service, slapping on new fees and surcharges, and raising prices in increasingly desperate efforts to achieve profitability, the last thing they need to do is strain their cash flows further by buying new aircraft. A Times story assesses the magnitude of the cutback in orders. From the […]
Read more...We’ve said that if oil prices don’t retreat significantly before year end, airlines will be asking for bailiouts. One travel agent who is a wholesaler tells me that premium seats (business and first class) are seriously undersold. That’s a major blow in combination with skyrocketing fuel costs. From Reuters (hat tip reader Saboor): There will […]
Read more...Ambrose Evans-Pritchard in “Monetarists warn of crunch across Atlantic economies” in the Telegraph points to a troubling development: a fall over last few months in M1 and M2 in the US, UK and EU. Many have criticized the Fed for “printing money” of late. But the evidence suggests otherwise. First, all of the cash injections […]
Read more...Blomberg columnist William Pesek plays out a line of thought that may have occurred to some readers: what if the resolution of the credit crisis and global imbalances isn’t a nasty recession or punishing inflation but Japan-like protracted low growth, with stagnant to deteriorating living standards? This idea may not be as much of a […]
Read more...Since I seldom am the bearer of upbeat news, I thought I’d pass along the cheery forecast from market strategists at Lehman and Deutsche Bank, namely, that the Standard & Poor’s 500 index will have its best six months since the second half on 1982 in the second half of 2008. I happen to remember […]
Read more...Wolfgang Munchau, in his latest Financial Times comment, “Recession is not the worst possible outcome” takes up a theme near and dear to our and many readers hearts: that policies to avoid recessions do more damage in the long run than letting slumps run their course. Munchau is hard on economists, but not the purely […]
Read more...The headline above, which comes from an article in the Telegraph by Ambrose Evans-Pritchard, might benefit from a better image. “Blowing up” doesn’t seem the right image to describe an economy at risk of a sudden drop in growth. But something more fitting, like engines going into stall, might have taken too much space. Aside […]
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