An interesting post at VoxEU by Yoonsoo Lee at Cleveland’s Fed and Toshihiko Mukoyama, economics professor at the University of Virginia, looks into the question of whether the the Schumpeter theory of “creative destruction,” that recessions are good because they clear out the excesses of boom phases, holds water. Their research is far from exhaustive. […]
Read more...In the Financial Times, former Treasury Secretary Larry Summers calls for the implementation of a fiscal stimulus package in the US in the first half of 2008. He argues that the question is not whether to prop up the economy, but how, that is, whether via monetary or budgetary actions. His view is that a […]
Read more...An article in Asia Times, “Shopping ‘zombies’ offer US hope,” supplies middling analysis (the author believes the depth of the subprime mess has been dimensioned, which means the bad news has already been reflected in prices. That’s a long winded way of saying that now is a time to buy. That perspective is not shared […]
Read more...Anyone who has worked in a large organization knows the syndrome: top executives are briefed by their subordinates and go and make pronouncements even though they are stretched too thin to have a full understanding. A study by two University of California (Berkeley) economists concludes that that pattern applies to the Fed. Christina and David […]
Read more...There was some hope that the season’s disappointing retail sales might be somewhat offset by better Internet sales, particularly since nasty weather curtailed visits to stores. Alas, while the results aren’t in, the pattern so far is that Internet activity has similarly been more sluggish than hoped. From Bloomberg: U.S. Internet sales rose at the […]
Read more...Martin Wolf, the Financial Times’ highly regarded economics editor, looks at a fundamental and troubling issue in his latest article, “The dangers of living in a zero-sum world economy.” From the Industrial Revolution onward, the world has enjoyed economic growth, producing rising living standards and making possible an extension of democracy (Wolf argues that the […]
Read more...Wolfgang Munchau provides a sober comment at the Financial Times. He agrees with our view (shared by other) that the central bank actions of last week to try to stimulate more interbank lending (which will show up as a fall in the spread between Libor and risk-free rates) are likely to be ineffective and that […]
Read more...Martin Wolf, the Financial Times’ lead economics writer, is often most interesting when he is agitated. In his current offering, “Why the credit squeeze is a turning point for the world,” he is sufficiently charged up that he has dashed off a piece that in some way is more impressionistic than his usual offering, but […]
Read more...The headline above isn’t precisely how Gilles Saint‑Paul of the Toulouse School of Economics states his conclusions in his article at Vox EU, “How the US imbalances can be corrected.” But he makes a solid case that a US recession is likely the better way to deal with our current economic mess than rate cuts. […]
Read more...Willem Buiter, the London School of Economics political economy professor who blogs at the Financial Times, asks the provocative question in the headline above, and after a very length discussion, that they probably shouldn’t yet, but they most assuredly should not cut rates. But what is more interesting about this post, and I’ve excerpted those […]
Read more...Today’s GDP release showed third quarter growth at 4.9%. That number was such a howler that it promptly elicited the contempt it deserved. From Barry Ritholtz, in “GDP=4.9% (also, I have a bridge for sale in Brooklyn)“ This 4.9% number is one of the more “fanciful” government releases you will see in your lifetime, (outside […]
Read more...The New York Times is having a good week. Today, in “Lenders’ Belt-Tightening Stifles Growth in Economy,” Peter Goodman examines the recent sharp fall in credit extension to commercial enterprises, particularly small businesses. It’s a solid piece of reporting, and reading it, one wonders why the Federal Reserve’s Vice Chairman Donald Kohn didn’t allude to […]
Read more...In the interest of (occasionally) balanced reporting, I thought to include this post from Willem Buiter, currently a Professor of European Political Economy at the London School of Economics, blogging at the Financial Times, on whether the credit crunch will damage the real economy. This piece makes for an interesting contrast to the New York […]
Read more...Charles W. Calomiris, the Henry Kaufman professor of financial institutions at Columbia’s business school, has an interesting but ultimately frustrating post at VoxEU in which he argues that the trouble we are seeing in the credit markets is not yet a Minsky moment (in very simplistic terms, the point at which an overlevered and highly […]
Read more...An article in Business Week, “The Coming Consumer Crunch,” had a bit of information that was news to me. The government, that is the Bureau of Labor Statistics, includes some rather large items in consumer spending that many of us would not include: The reason is that much of what the government counts as consumer […]
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