Category Archives: Economic fundamentals

Mathew D. Rose: Merkel’s Götterdämmerung, Victory in Ukraine and Draghi’s Old Trick

Yves here. Mathew’s post describes the political and ideological dynamics that continue to drive failed austerity policies in Europe. But even more important, it also explains why Europe, and German leaders in particular, have fallen in line with the US and are escalating the conflict with Russia over Ukraine. As we’ve discussed, they’ve convinced themselves that Russia will suffer from the economic sanctions imposed by the US and EU before Russia can play its energy card. And some analysts further believe that Russia would not dare restrict gas supplies to Europe, that it cannot afford to lose the income.

Ilargi: EU Gas Supply Is In Real And Imminent Danger

Yves here. This post, while informative, omits a critical piece of the calculus made by the West (or at least the US, in pushing Europe to fall into line) in its escalation of the conflict in Ukraine.

Putting the Con in Consumer Confidence

Is the “Consumer Confidence” index really a good proxy for the health of “the economy”?

Deconstructing Fed Chair Janet Yellen on Unemployment and the Unemployed

I would have liked to see some table pounding and shouting about pseudo-scientific constructs like the “Natural Rate of Unemployment” — what’s “natural” about it? — or a heartfelt plea for a well-funded study to find out how the permanently disemployed actually eat, and find shelter, and stay alive — System D? — or even a dim recognition that regulating the economy by throwing people out of work is just as barbaric and inhumane as the medieval remedy of bloodletting.

Blog Roundup: Does Mario Draghi’s Speech at Jackson Hole Signal Policy Shifts?

ECB President Mario Draghi is recognizing that the recovery in the Euro area remains uniformly weak.

UK Rail Shows Pitfalls of Natural Monopoly Privatization

Railway privatization was sold to the public on the basis it would “provide better value for money for the public who travel by rail.” Who could have predicted it wouldn’t work out?

How Significant is the BRICS New Development Bank?

Yves here. Quite a few readers have contended that the commitment by the BRICS countries to create a developing country challenger to the World Bank represents a serious blow to the dollar hegemony.

While rising anger against the US use of its currency/banking system dominance to further geopolitical ends is well warranted, translating that into effective counter-measures is something else completely.

Wolf Richter: Fannie Mae Sledgehammers Housing Forecasts

You’d think the housing market is in fine shape, based on the sizzling optimism of the National Association of Home Builders, which just released its Housing Market Index. It rose to 55 in August – above 50 means more builders view conditions as good than poor – the third month in a row of gains, and the highest level since January.

Think again.

Blogs Review: The Forever Recession

As the recovery takes hold in the US, Europe appears stuck in a never-ending slump. With the ECB systematically undershooting its inflation target and recent signs that inflation expectations could become de-anchored, the bulk of commentators in the blogosphere are again calling for more monetary actions. Noticeably, some have completely lost hope in the ability of the European institutions to turn this situation around and are now calling for countries to simply break away from the EMU trap.

Ukraine’s Next Crisis? Economic Disaster

Yves here. While it’s not hard to imagine that war is bad for economies as well as living things, this post gives an overview of some of the costs that the proxy war in Ukraine is inflicting on the economy and hence on the population. Note that this tally does not include the impact of the efforts to render cities in the east uninhabitable by destroying water supplies and other critical infrastructure.

Deconstructing Fed Vice Chair Stanley Fischer on the Disappointing Global Recovery

People have no money. So there’s no aggregate demand. So there’s no recovery.

Is the West Risking Financial Blowback From Sanctions on Russia?

The spectacle of insanely authoritarian policing in Ferguson, as well as media jitters over ISIS and ongoing reports of action in Gaza and Ukraine, has shifted attention a bit away from simply lousy economic results from Europe. That fragility could play in a nasty way into blowback from sanctions against Russia.

Philip Pilkington: Financial Times Contributors Understand ‘Liquidity Trap’ Better Than Neo-Keynesians Like Krugman

I have long complained that the likes of Paul Krugman have grossly misinterpreted the meaning of the term ‘liquidity trap’. These economists seem to think that we are currently in a liquidity trap despite the fact that yields on bonds are extremely low across the board.

Don Quijones: Spain Cranks Up Political Repression

Yves here. In contrast with the way that political repression is gradually becoming the new normal in America, Don Quijones chronicles how rapidly it is being put in place in Spain to curb protests against austerity and bank-favoring policies. The extreme form of shredding democracy to protect commercial interests was Chile, where as a writer put it, “People died so markets could be free.”