As readers well know, we think the depth of the credit crisis means that the economy will be in low-to-negative growth territory for some time, but we did not want to deny you other points of view. And a positive reading from the credit markets is rare indeed. From Bloomberg: Before you can say “Barack […]
Read more...This is a very well done piece, presented as a letter from the chairman of GM, that gives an overview of the fall from grace of what was once America’s premier corporation. The real source is Porter Stansberry of Stansberry & Associates Investment Research (via colleague Paul S) . The article ran last year, but […]
Read more...A very good Project Syndicate article by Thomas Palley highlights the way a shift in US policy priorities circa the early 1980s has lead to a lasting change in the foundation of economic growth in the US. Prior to that, the emphasis was on increasing incomes of workers and being wary of trade deficits. As […]
Read more...While the markets anticipate more aggressive cuts in target Fed funds rates soon, the central bank’s task is complicated considerably by rising inflationary pressures. A Wall Street Journal story says that remarks Fed officials show worry that monetary policy may become too expansive: Federal Reserve officials are acknowledging increasing weakness in the economy, signaling a […]
Read more...Once in a while, separate thinkers reach strikingly similar conclusion. It gets even more interesting when their observations come to light in a compressed timeframe. Yesterday, Willem Buiter pointed out a major difference in perspective between US and foreign economists. Americans are wedded to the idea of doing whatever it takes to forestall a recession, […]
Read more...Forbes and Bloomberg discuss Labor Department statistics that show that the hours worked by the self-employed fell at a 15.5% annualized rate in the third quarter of 207, the steepest drop in 15 years. The subprime crisis may be the big culprit, since construction workers and mortgage brokers are often in the ranks of the […]
Read more...Willem Buiter continues his quixotic campaign to extirpate lousy economic logic in the US. In a colorfully written post, he ridicules the refusal of any US economist (as far as he can tell) to consider that an American recession is necessary. He points to the obvious fact (commented on repeatedly in this blog) that the […]
Read more...Stocks were down today, largely in reaction to the release of the so-called ISM non-manufacturing report, which monitors activity in the service sector (primarily assesses banks, retailers and construction companies). The results showed the sharpest contraction since 2001. Paul Krugman, who is not the bearish type, said the report indicates a recession is underway: The […]
Read more...Sunday’s Washington Post has a long article on Japan, “For Japan, a Long, Slow Slide,” that is truly odd. Mind you, on the surface, there is nothing wrong with it. It makes the usual observations: Japan’s population is aging, productivity is falling, the country is losing its economic standing. It give the impression that Japan […]
Read more...Long term, the dollar is not a good bet unless the US increases its savings rate and reduces its current account deficit considerably. Monetary easing and fiscal stimulus only exacerbate the problem. But never forget the Wall Street saying, “Don’t fight the tape.” From Bloomberg: Ben S. Bernanke’s decision to lower interest rates 1.25 percentage […]
Read more...In a succinct and well argued Financial Times comment, Richard Duncan weighs in on the savings glut versus overspending (aka money glut) theories of global imbalances, and concludes it’s the spending, stupid. By way of background, let’s review the two competing notions of the causes of global imbalances, which is shorthand for “nice central banks […]
Read more...Readers probably know that among the data releases du jour was the Labor Department reporting an increase in unemployment claims to a 27 month high, a level not seen since Hurricane Katrina. Blogger knzn made note of an item mentioned in passing in some news reports, namely a sharp fall in the employment index maintained […]
Read more...A comment by Ricardo Hausmann in today’s Financial Times takes US policymakers to task for trying to prop up demand and stave off a recession. We’ve pointed out repeatedly, as have various economists quoted here, that consumption as a percentage of US GDP is unsustainably high and saving correspondingly too low. It can only continue […]
Read more...While the question of whether the Fed will lower interest rates again after its emergency cut last week is still up in the air, it is pretty clear that further cuts in the Fed’s target rates are in the offing. And the markets believe the Fed will continue to cut quickly, putting the odds of […]
Read more...There has been a fair bit of discussion of the so-called Minsky Moment, when an economy that has build a house of cards of speculation and over-leveraged “Ponzi units” (creditor that could never make good on their commitments, and are viable only by finding new suckers to give them new debt to pay old lenders) […]
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