As the economy weakens, some of the authoritative media outlets are beginning to question some government statistical releases. We noted over the weekend (“Surprise! It’s Rough Out There in the Job Market“) that a New York Times seemed caught aback by weakness in the labor market. It had, like most of the media, focused on […]
Read more...The movement in Treasury Inflation Protected Securities is a sign of investor desperation to find any shelter from inflation. And TIPS are only a partial inflation hedge. Their yield adjustment keys off the consumer price index, which due to modification to the index (to contain CPI adjusted Federal benefits) lags broader measures of inflation. From […]
Read more...I’ve been meaning to discuss how increased income disparity is bad for economic growth, because in the end you wind up with insufficient labor income to fund consumption (note that America’s high consumption rate has been achieved by lowering its already low savings rate to zero) and too much capital chasing too few investment opportunities […]
Read more...Jim Hamilton, in his latest post at Econbrowser, uses as a point of departure the oft-invoked image that Bernanke is walking a tightrope between inflation and recession. Because Hamilton is a Serious Economist, he has to be measured and fact based, which sometimes means he can’t be as pointed as I suspect he might like […]
Read more...Many observers have noted that the US is unwilling to take its medicine. In the Asian financial markets crisis of 1997, nations with large current account deficits and domestic asset bubbles saw their prosperity unravel as asset prices collapsed, leading to borrowers defaults, a contraction of credit which spiraled into a crunch, and withdrawal of […]
Read more...This post by Christian Weller at Credit Slips, takes a different viewpoint than, say, that of those in the Nouriel Roubini camp who see an apocalyptic meltdown as possible, and a mere severe recession as possible. Weller instead argues for a scenario more like that of Japan: a grinding period of low growth, falling real […]
Read more...Martin Wolf of the Financial Times turns over today’s comment to uberbear Nouriel Roubini, who looks more and more prescient with every passing day. Wolf summarizes two recent Roubini offerings, one on the twelves steps of a financial meltdown, the second on why the powers that be are unlikely to pull themselves out of it. […]
Read more...Fedwatcher Tim Duy (posting on Mark Thoma’s Economist’s View) read Bernanke’s recent Congressional testimony as saying that further rate cuts really weren’t warranted give the Fed’s medium term forecast. However, Duy has muffed some calls before by assuming that the Fed would stick by its official pronouncements rather than be swayed by the baying of […]
Read more...The repeated rounds of Fed rate cuts have led the dollar to fall against most currencies save those maintaining currency pegs. While the yuan has appreciated somewhat, it hasn’t been sufficient to have much impact on Chinese trade surplus with the US (2007 was a record year). And because China and its peers are having […]
Read more...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 […]
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