Satyajit Das: The Truth of the Matter
Satyajit Das reviews three books about our current economic and political woes.
Read more...Category Archives: Economic fundamentals
Has the U.S. Reached Peak Car?
Yves here. This post is a workmanlike compilation of trends in the driving habits of Americans. Some of the data shows that use of public transportation has been rising faster than population growth…yet budget stresses mean those services are regularly targeted for fare increases and schedule cutbacks.
Read more...James Boyce: Limits to Growth – of What?
Average national income is a notoriously imperfect measure of the average person’s well-being.
Read more...US: Desperately Seeking Income
By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness
Westpac Institutional Bank yesterday released a sobering note (below) on the ongoing income squeeze taking place in the US.
Read more...Mortgage Rate Shock Likely to Dent the Housing Market
As regular readers know, your humble blogger, along with a lot of investors, was taken by surprise when the typically dovish Bernanke not only started using the taper word a month ago, but then made the demise of Fed heroics sound even more imminent by talking about higher unemployment “thresholds,” namely 7%, than had been voiced previously. And the reading of Fedwatchers like Tim Duy and (even before the FOMC statement) James Aitken is that the central bank wants out of the QE business sooner rather than later.
The impact on mortgage rates already looks very likely to throw a big bowl of cold water on the housing party.
Read more...The BIS Loses Its Mind, Advocates Kicking Citizens and the Bond Markets Even Harder
If anyone doubted that Ben Benanke’s “we’re convinced the economy is getting better, so take your lumps” press conference after the FOMC statement last week was awfully reminiscent of 1937, the newly-released Bank of International Settlements annual report is tantamount to a kick to the groin. And to change metaphors, if the Fed’s sudden hawkish posture is playing Russian roulette with the real economy, the BIS just voted loudly for putting a couple more bullets in the cylinder.
Read more...Monday DataDive: Fedspook, May Reports on Consumer Prices, New Home Construction, and Existing Home Sales
By RJS, a rural swamp denizen from Northeast Ohio, and a long-time commenter at Naked Capitalism. Originally published at MarketWatch 666.
Lambert here: rjs does what he does every weekend: Covers the most important economic releases from the previous week. Thanks, readers, for your feedback on formatting from last week; I hope you see some improvements. Don’t hesitate to make more suggestions. Also, the FRED geekery is fun.
Fedspook
The financial news of the week came as a result of the two day meeting of the Fed’s Open Market Committee, which really produced no news on its own. The statement barely changed from the statement issued after the last meeting, and Bernanke’s responses to questions at his press conference after the meeting (pdf transcript) were pretty much a reiteration of his statements in testimony before the Joint Economic Committee of Congress roughly 4 weeks earlier, i.e, that the economy was improving and they would soon be starting to taper off the from the $85 billion a month they’ve been injecting into the financial system, mostly by buying mortgage backed securities and reinvesting the interest proceeds of the Treasury bonds and MBS that they already hold on their balance sheet. However, market players must have not believed the first iterations, because as soon as the statement was released and Bernanke began to confirm what he’s already said previously, financial markets started heading south, and by the time the planet had spun once on its axis, prices in every market around the world & for most every asset class were down by 2% or more.
Read more...Bill Black: How Ecuador Won By Defying Neoliberal “Washington Consensus” Playbook
Heritage Foundation’s distorted reporting of Ecuador’s economic success illustrates the lengths neoliberal loyalists will go to promote their bankrupt theories.
Read more...Warren Mosler: Consumer Borrowing Has Kept Economy Afloat, but for How Much Longer?
Yves here. Warren Mosler, who is one of the leading writers on Modern Monetary Theory, circulated an e-mail with his assessment of the state of the economy and the impact of quantitative easing and agreed to letting me publish it.
Read more...“The Political History of American Inequality”
Inquality.org, which is a portal for news and data about income inequality, has published a particularly well-presented paper, The Political History of American Inequality, by Colin Gordon, a professor of history at the University of Iowa who has focused on 20th century American public policy and political economy. I’ve sampled it, and it’s clear and engagingly written and has great interactive chart porn,
Read more...The Taper is Too Sharp
Yves here. I have to say I’m still gobsmacked by the Fed’s belief that the labor markets are showing meaningful improvement, and the further “clarification” that this means the central bank thinks it’s on track to start easing up on bond buying this year.
Read more...Pepe Escobar: Why American Worries about “Containing China” Are Off the Mark
Yves here. As China has become more powerful economically, and is building up its navy (a substantial navy is a precondition of being a true superpower), some pundits have taken to anticipating a world where US cedes dominance to China over a protracted and likely unstable transition period, using the decline of the British Empire and the rise of American influence as a guide.
That’s unlikely to be the right frame of reference.
Read more...Bernanke Kills Fed Credibility and the Confidence Fairy in One Shot
How many markets are in upheaval right now? We’ve pointed to several things that have been troubling about the Fed’s apparent view prior to the FOMC statement yesterday and the Bernanke press conference, which only rattled investors further.
Read more...Chinese Interbank Markets Having a Heart Attack, Repo and Shibor Skyrocket, Could Trigger Bigger Unraveling
The Chinese central bank is playing very high stakes poker. China’s interbank markets have been highly stressed for the last two days. An effort by the central bank to tighten in order to put a crimp on shadow banking activities looks to be spiraling out of control as one-week repo rates hit nearly 8.3% up 144 basis points in a day, and one-week Shibor has risen from its June 5 level of 4.8% to just shy of 8.1% today.
Read more...Robert Wade: Elite Denial of Corruption and Inequality – World Bank Case Study
Yves here. While readers may think development policy has limited relevance to US and advanced economy readers, the IMF and World Bank have been and continue to be vehicles to make the world, particularly smaller or otherwise more influenceable regimes, more friendly to the interests of US multinationals. And at the same time US companies are taking down a record share of GDP in profits, the country’s ranking in inequality is worse than that of many developing economies. New York City is more unequal than China, and as the chart below shows, is also more unequal than Russia, famed for its oligarchs, and India, which still has hundreds of millions living in abject poverty.
So the World Bank’s efforts over time to exclude issues like corruption and inequality from its analysis have direct and obvious parallels to policy discussions here. Wade’s anecdotes of the way the World Bank refused to even allow the “c” word to be acknowledged are striking.
Read more...