“Mega” is not the sort of word one usually associates with economic analysis. It’s the domain of popular books and obesity-inducing sizes of junk food. The normally sober blog VoxEU may be drifting into pop economics usage, although the focus of its article is straightforward. Dennis J Snower argues that the credit crisis, and more […]
Read more...In a post at the Telegraph, Ambrose Evans-Pritchard reviews the case for why the credit markets might be on the mend and finds it wanting. While some of his arguments are familiar, the part I found interesting was his belief (contrary to Wolfgang Munchau at the Financial Times’ piece “Pessimism about the eurozone is misplaced”) […]
Read more...What a difference five weeks makes. Around the ides of March, we had the mind-focusing spectacle of the possible implosion of Bear Stearns, which was feared to take down a lot of the financial system. But Fed and JP Morgan to the rescue, Lehman presents earnings that depend entirely on accounting rather than business activity, […]
Read more...OK, that isn’t what Wolfgang Munchau said in his Financial Times article today. His piece, “The princess’s cake gets an added crunch,” starts with the theory that inflation and our asset bubbles were ultimately monetary phenomena. While the rest of Munchau’s piece, which focuses on why we should be worried about inflation, is useful, I […]
Read more...Bloomberg gives us a pretty downbeat assessment from the Government of Singapore Investment Corp. (note that Singapore has two sovereign wealth funds, the other being Temasek): Government of Singapore Investment Corp., a sovereign wealth fund that manages more than $100 billion, said the world economy may be facing its worst recession in three decades as […]
Read more...John Authers of the Financial Times uses Passover as a pretext for discussing four perplexing questions related to the markets. They’ve been bugging me too, so I appreciate him having a go at them. From the Financial Times: Passover starts tonight. The world’s Jews gather to commemorate the Hebrews’ flight from Egypt and eat a […]
Read more...The New York Times, in “Workers Get Fewer Hours, Deepening the Downturn,” presents data and anecdote that indicate that low unemployment masks a deteriorating labor market. Some employers are cutting their workers’ hours; the self employed are finding less demand for their services. While this article provides some useful insight into the state of the […]
Read more...Paul Krugman, commenting on a Wall Street Journal article that invoked, then tried to dismiss, concerns about resource scarcity, defended Malthus: Malthus was right about the whole of human history up until his own era. Sumerian peasants in the 30th century BC lived on the edge of subsistence; so did French peasants in the 18th […]
Read more...As the credit crisis progresses, the estimates of the total damage march relentless upward. Reader Scott passed along a note by Frank Veneroso, Market Strategist for the Global Policy Committee of Allianz Dresdner Asset Management, which gives a top-down and bottoms-up estimate of credit losses. Note that this estimate is based strictly on US consumer […]
Read more...Gee, wonder why it took so long for someone to connect the dots. Scarce credit, high commodity prices, and a economy that’s weakening despite the Fed pulling out all stops do not bode well for corporate earnings. Yet consensus earnings forecasts predicted a rise in profit for the S&P 500 in 2007 and and an […]
Read more...Before we get to the meat of this post, I hope readers will bear with me for another day or two. I’m regrouping after being out of town, and have a busy next couple of days. On top of that, my subscription to the WSJ online expired over the weekend, and I can’t renew on […]
Read more...Storied investor George Soros believes that the credit crisis is far from over, and sees regulatory failure as a major cause. From Bloomberg: Billionaire George Soros said the global credit crisis will get worse before it gets better. Soros, who said lack of oversight is partly responsible for problems in the financial markets, criticized regulators […]
Read more...The IMF issued a stark forecast in its Global Financial Stability report of the damage resulting from the credit crisis, an eye-popping $945 billion. Note that unlike John Hatzius of Goldman’s $2 trillion estimate, this total does not include knock-on economic effects of reduced lending. In addition, the IMF also cited permissive regulation as one […]
Read more...As the credit crisis has worsened, regulators are increasingly abandoning their usual anodyne statements in favor of blunt assessments and plainspoken calls for action. But even in this new age of supervisory candor, the call by Dominique Strauss-Kahn, the IMF head, for global fiscal action to combat the decline in growth, reveals that the IMF […]
Read more...Martin Wolf takes a discursive route to make a fairly straightforward observation: no matter how the US deals with its debt hangover, the consequences are likely to be contractionary. But a rapid move to a sustainable savings rate (6%? 10%?) would produce tremendous dislocations. Hence, the public sector will throw sand in the gears, which […]
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