Ambrose Evans-Pritchard in “Monetarists warn of crunch across Atlantic economies” in the Telegraph points to a troubling development: a fall over last few months in M1 and M2 in the US, UK and EU. Many have criticized the Fed for “printing money” of late. But the evidence suggests otherwise. First, all of the cash injections […]
Read more...Larry Summer’s latest comment at the Financial Times, “What we can do in this dangerous moment.” is troubling both for its analysis of our economic mess and its remedies. Start with his first paragraph: It is quite possible that we are now at the most dangerous moment since the American financial crisis began last August. […]
Read more...There is a nice little post at VoxEU, “(At least) Three simple reasons to fear inflation,” by Tommaso Monacelli, Associate Professor of Economics at Università Bocconi, Milan. While the entire article is worth reading, I thought his discussion of the interaction between growth and inflation was particulalry useful: In the plethora of comments on the […]
Read more...We have the specter of two CEOs, each heading a firm that is a leader in its businesses and a debt powerhouse, making close to polar opposite statements about the prospects for the credit markets. Lloyd Blankfein, Goldman’s chief, said today that the credit crisis was half to two thirds through its course. While there […]
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...Although Robert Reich is a smart fellow (and I mean that sincerely), like a lot of Beltway types, he isn’t as well versed in the ways of the world of finance as he is in the workings of public policy and opinion. Thus I found his recent post, “The Politics of an Economic Nightmare,” intriguing […]
Read more...It wasn’t enough that the Administration’s fiscal stimulus plan announced last Friday was sufficiently off beam so as to precipitate a global stock market rout. The Fed then put its credibility and some of its remaining firepower on the line to try reverse the gap-downward stock market opening with the in-panic-mode pre-session 75 basis point […]
Read more...I have a great deal of respect for people who take the time to do real analysis, and Menzie Chinn is one of them. In his current post at Econbrowser, “Why One Percent of GDP? Opportunity Cost Illustrated (Part III),” Menzie looks into where that arbitrary-seeming figure came from. He first goes through the history […]
Read more...Although a good deal can happen between now and January 31, the date of the next Fed Open Markets Committee meeting, a 50 basis point rate cut looks more consistent with present economic conditions than do deeper cuts. Most important (and widely ignored) is that the seize-up the money markets is largely a thing of […]
Read more...A fine post by the thoughtful Jim Hamilton argues that listeners heard what they wanted to hear in Bernanke’s Congressional testimony Thursday, namely, that the good doctor ordered up a bit of fiscal tonic. He notes that the Fed chief in fact set forth cons as well as pros of budgetary measures. Hamilton raises two […]
Read more...While there is some debate about whether and how much fiscal stimulus is warranted to combat a likely recession (yours truly thinks that we are in a no-win situation, with side effects likely to be as bad as the disease), some sort of program seems inevitable, particularly since this is an election year. So then […]
Read more...We are glad to be in such august company as Willem Buiter’s, professor at the London School of Economics who has also held a number of positions with various monetary authorities. Early this week, former Treasure Secretary Larry Summers, in the Financial Times, argued that the US needed a fiscal stimulus to ward off a […]
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...While a number of analysts, investors, and commentators have said for some time that the credit crisis is serious and is likely to damage the real economy, the only views that the Fed takes seriously are those of highly regarded economists, fellow regulators, and senior industry executives (oh, and of course, that of Fed futures […]
Read more...Menzie Chin at Ecnobrowser supplied this chart from the Congressional Budget Office November Budget Review: The red line is receipts, and if you are an optimistic sort, you might persuade yourself that the gap has gotten smaller and therefore will continue to shrink. The fly in the ointment, however, is obvious. Receipts are a function […]
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