Alan Greenspan made the mistake of resorting to a tired and increasingly ineffective move from the Bush playbook. Specifically, tell a big lie long and loudly enough, and quite a few people will come to believe you. But in Greenspan’s case, this tactic may be backfiring. Greenspan seems to have forgotten that some of the […]
Read more...Faithful readers, I have looked around quite a bit tonight, but I am not coming up with much grist for blogging. Yes, there is a Wall Street Journal front page story that tells us that homebuilders are putting up smaller houses. And there is some chat everywhere about OPEC’s small production increase, one that the […]
Read more...Robert Reich’s latest post, “The Way to Prevent the Looming Recession.” argues that monetary policy won’t prevent the coming recession and therefore policy makers need to consider tax cuts: With the economy heading for recession, all eyes are on Ben Bernanke and the Fed, and the question everyone is asking is how much the Fed […]
Read more...Below are some excerpts from a good piece by Kenneth Rogoff on the Guardian’s website, which discusses why Bernanke thinks the Fed has no business worrying about asset prices, but argues that the lousy quality of macroeconomic data means policy makers ought to consider the information embedded in market prices: A bit of intellectual history […]
Read more...Financial Times columnist Wolfgang Munchau, in “Prepare for the credit crisis to spread,” tells us that the credit crunch is likely to get worse, since credit problems will spread to credit card receivables and car loans, both of which are typically securitized, and collateralized loan obligations (read takeover debt) also look shaky. Munchau argues that […]
Read more...The Bear Stearns/CDO drama has taken attention away from other worrisome conditions in the economy, and the biggest one is “global imbalances,” which is shorthand for the US running continuing, large current account deficits that are financed for the most part by foreign central banks, particularly those of China, Japan, and Saudi Arabia. We’ve lived […]
Read more...It turns out you have every reason to be confused. Even the data watchers can’t agree, which makes one wonder how the Fed can make sense of our situation. Barry Ritholtz at Seeking Alpha give us this recap: Over the years, we’ve looked at — and coined one or two — terms for the current […]
Read more...Martin Wolf, in a Financial Times comment, “Villains and victims of global capital flows,” looks at the two competing theories of the causes of global imbalances. One is the savings glut story, in which parsimonious Chinese and Japanese force the US to consume to keep the world from falling into recession. This view is favored […]
Read more...We have been muttering on this blog for some time that the powers that be should take more interest in money supply, and it appears that European central bankers are coming around to our point of view. David Altig in “Putting The Money Back In Monetary Policy” at Macroblog has a very useful, detailed without […]
Read more...The Financial Times on Monday had two stories on inflation, one a lengthy story, the other a a comment, “The problem with inflation indices,” by Gideon Munchau, triggered by the fact that the Bank of England missed its inflation targets of 2% by over a percentage point (their Consumer Price Index increased at an annualized […]
Read more...Kudos for an excellent post, “Inflation Targeting is Flawed,” by Michael Shedlock at Mish’s Global Economic Trend Analysis. Like many other observers, we’ve criticized the Fed’s failure to consider, or even acknowledge, asset price inflation in its monetary policy decisions. Instead, the Fed and other central bankers focus on traditional price inflation, and stick their […]
Read more...There is quiet distress within the Democratic Party that the need to rein in the burgeoning Bush deficits will severely limit their ability to tackle issues near and dear to their heart, such as health care. As Mark Thoma reports in “Democrats and Deficits,” citing Brad Plumer of the New Republic and Greg Anrig, Nobel […]
Read more...A provocative article by Jeff Faux at the Economic Policy Institute argues that US trade deficits have become so large and so chronic that we need to put the brakes on further trade liberalization until we get our house in order. And getting our house in order means increasing our domestic savings rate. For those […]
Read more...This story in today’s Financial Times, “As America falters, policymakers must look ahead,” is remarkable because, as far as I can tell, it is the first time a prominent economist has come out and said the unwinding of the housing bubble is likely to have nasty consequences (actually, take that back, Paul Krugman had a […]
Read more...So says Washington Monthly in “Red and Blue Economies,” citing some work by Cactus at Angry Bear. In his five part series on ” God Punishes Us When We (Collectively) Vote Republican” (here is part five) Cactus uses as his measure real GDP growth (growth less the increase in national debt) and determines that this […]
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