Nouriel Roubini, in his latest post, “With the Recession Becoming Inevitable the Consensus Shifts Towards the Hard Landing View. And the Rising Risk of a Systemic Financial Meltdown,” takes his somber views one step further and discusses the possibility of a crisis in some detail. Even by Roubini standards this is grim reading. I have […]
Read more...Two contrasting stories on Bloomberg: Federal Reserve Governor Randall Kroszner made the most explicit statement by a Fed official to date, saying that further rate cuts aren’t needed to get the economy through its “rough patch.” Although Fed futures declined, the implied expectation of a rate reduction is 84%. Yesterday, Goldman’s chief economist Jan Hatzius […]
Read more...Members of the Fed officialdom are doing their best to preserve the Fed’s policy options (i.e, not cave in to market pressures at the next FOMC meeting) by talking down expectations of another rate cut. Dallas Fed President Richard Fisher, in Sydney, spoke of solid US economic fundamentals and increasing inflation risks. Note that Fisher […]
Read more...By coincidence of timing, two economists, Nouriel Roubini and Willem Buiter, who have sharply contrasting temperaments, writing styles, and analytical approaches, came out with posts that both argued that US growth prospects look weaker than mainstream forecasts suggest. Readers who follow economics blogs doubtless know full well that NYU economics professor Roubini is a very […]
Read more...A story in the New York Times, “Homeowners Feeling the Pinch of Lost Equity,” reports that consumers are having to rein in spending now that they can no longer use their home as a piggy bank. Why is this story noteworthy? Yours truly, along with others whose feet are in the real world, like Joseph […]
Read more...Nouriel Roubini is a bit self-congratulatory in his latest post, and one can’t begrudge him. He took a lot of heat for his early prediction that the housing market would deteriorate badly and pull down the broader economy. So far, since growth has slowed only somewhat, some economists still hold out hope that the impact […]
Read more...The New York Times, in “Reports Suggest Broader Losses from Mortgages,” does a workmanlike job of providing an update on the losses likely to result from the housing slump. Nevertheless, the piece feels woefully incomplete. It’s not the authors’ fault, but the bad news is coming in faster the experts can update their estimates. Today, […]
Read more...At the Economics Club of New York, Fed chairman Benjamin Bernanke, gave a nuanced speech about the economy (meaning he showed as few cards as possible without pulling a Greenspan of hiding behind tortured sentence structures). But nevertheless a few revealing statements were made. The Wall Street Journal and Bloomberg both focused on his cautionary […]
Read more...The Financial Times’ Lex column today, in reflecting on the coming anniversary of the 1987 crash, dashes cold water on those who continue to be optimistic about corporate earnings. Independent of the outlook for housing, it seems quite remarkable that analysts can come up with forecasts of meaningful aggregate increases in earnings over the next […]
Read more...Even though members of the Adminstration and the financial media keep insisting that the economic fundamentals are sound, executives at major companies, who see what is happening in the real economy (admittedly through the window of their comany’s activity) before it is captured in statistical releases, are finding it hard to read the trajectory of […]
Read more...As the housing market has deteriorated, some observers expected to see a slowdown in consumer spending, since mortgage equity withdrawals have provided a boost in a period of stagnant real wages for average workers (last year, an exception to a longstanding trend, saw a wee pickup). But defying this logic, consumer spending has continued to […]
Read more...I must have problems with authority. One of my forms of recreation is looking out for statistics, particularly government releases, that don’t seem to comport with reality. Fortunately, I have plenty of good company in this endeavor, including (but far from limited to) Barry Ritholtz, Michael Shedlock, Dean Baker. A frequent target is the nonfarm […]
Read more...The Financial Times notes in a story today,”Credit squeeze pushes ECB to peg rates,” that the European Central Bank refrained from its inclination to increase rates to combat increasing inflation. One has to wonder whether the failure to increase rates is out of the recognition that a hike would put more downward pressure on the […]
Read more...Two gloomy sightings on the housing front at Bloomberg. The first was the release of wretched existing homes sales data for August, which followed a July that also showed serious deterioration. The only possible positive spin is that the rate of decline was lower in August than in July, but the August figures were an […]
Read more...Bill Gross. chief investment officer of bond investment giant Pimco, uses his monthly newsletter to tackle the question of whether the Fed and the Treasury really understand what they are up against. Although he reaches no definitive conconclusion, he suggests they have a bank-centric, and therefore badly outmoded, view of the world. We’ve raised this […]
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