Pimco’s El-Erian Warns of Central Bank Put Bubble
Earlier today, El-Erian in the Financial Times released a short and apt note on the limits of the central bank put.
Read more...Category Archives: Economic fundamentals
Richard Alford: Monetary Policy, Household Balance Sheets, and Recoveries from Financial Crises
By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side.
Five years after the financial crisis and halfway to a lost decade, economists, policymakers and the public are looking for answers that will restore economic health and vibrancy. Their concern has increased recently with the approaching “fiscal cliff” and the possibility of a double-dip recession. To find remedies, they’ve examined past financial crises that were followed by protracted economic downturns. In the US, the precedent studied and cited most frequently has been the Great Depression of the 1930s, including the double dip of 1938. Unfortunately, economists have produced a variety of inconsistent explanations for both the initial contraction and the prolonged period without a self-sustained recovery.
Read more...Mirabile Dictu! The Media Notices the Sucking Sound of Growth (What Little There Was) Leaving the Economy and Underplays IMF Malpractice
Starting late last week, there’s been a marked shift in the mix of headlines in the major media outlets. While it may simply be post fall equinox moodiness or a confluence of downer reports leading to a rare moment of sobriety, suddenly the big venues are concerned about the economic outlook.
Read more...Wolf Richter: Punishment of the Spanish Political Class by the People
Spanish Prime Minister Mariano Rajoy has a singular problem: 84% of all voters have “little” or “no” confidence in him. The fate of Alfredo Perez Rubalcaba, leader of the opposition Socialist party, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both.
Read more...“What if the Global Financial Crisis is Permanent?”
Yves here. I’m featuring a MacroBusiness post, “What If the GFC is Permanent?” despite its being a bit meandering, because it asks some Big Questions, and therefore will give readers something to chew over.
Read more...Randy Wray: The World’s Worst Central Banker
By Randy Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College, New York. Cross posted from Economonitor
OK, I know you think this is yet another critical column on Chairman Ben Bernanke.
Read more...Michael Hoexter: Deficit Hawks (Obama, Romney, Bowles, Boehner) Plan to Shrink YOUR Economy – Part 2
Michael Hoexter is a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency. Originally published at New Economic Perspectives.
Shrinking “Their” Economy Shrinks Yours
The word “economy” comes from the Greek “oikos” meaning “hearth” or “household”. Everybody has a household economy that looks slightly different from that of their neighbors. However, because of the nature of a monetary economy, household economies are linked quite tightly together and trends that effect one household start to have effects in other households soon or over the longer term. While within the same economy some households can prosper while others do not, generally there is a movement in tandem for some obvious reasons related to how society and the monetary system work.
Read more...Philip Pilkington: Three Reasons Why Endogenous Money Matters
By Philip Pilkington, an Irish writer and journalist living in London. You can follow him on Twitter at @pilkingtonphil
There’s been a bit of confusion of late in blogland about whether endogenous money really matters all that much. Endogenous money is, of course, the theory that, contrary to what mainstream economics would have you believe, private banks in modern capitalist economies actually create money out of thin air. In my experience, theoretical economists grasp very quickly how much of an impact such a theory would have if it were accepted as true. Less theoretically inclined commentators who are generally more interested in policy and practical matters, however, often express confusion over what exactly all the fuss is about. “Does endogenous money really matter?” they ask.
In what follows I will lay out the three leading reasons why endogenous money does, in fact, matter.
Read more...The German Economy and the European Crisis
Even though most economic commentators focus on the deterioration of the periphery and are nervously taking note of how that is coming to impair the core countries, the strength of the German economy is nevertheless seldom questioned outside the Eurozone.
This Real News Network segment focuses on a generally-overlooked issue: wage suppression and the increasingly precarious conditions that German workers face, and how that plays into Eurozone politics.
Read more...Spain is in Trouble
By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.
As I talked about yesterday the outcomes of the failing policies enacted by European leaders in the face of the economic crisis boil down to a lose-lose struggle between international creditors and national citizens.
Read more...European Optimism Fades
By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.
I genuinely thought the Europeans were getting somewhere in the last few weeks as I detected (or maybe that should be optimistically hoped) a change of rhetoric from some of the more hardened camps and a growing realisation that the current approach to “solving” the crisis is failing. My optimism was helped by the fact that the OMT, like the LTRO before it, has driven down sovereign yields which has given the European leaders yet another opportunity to sit down away from the fire fighting and discuss outcomes beyond a short term market window.
But alas, this is Europe and I appear to have been wrong.
Read more...The Disheartening State of American Incomes
Doug Short at Global Economic Intersection has a must-read post that pulls together some Census Report data on US incomes since 1967 and draws some conclusions. He looks first at real, rather than nominal, incomes, and shows how income in the top 5% and top quintile have grown faster than for the rest of the population
Read more...Michael Hudson: QE3 – Another Fed Giveaway to the Banks
In this Real News Network interview, Michael Hudson gives a high level discussion of why the Fed’s claim that QE3 will help employment needs to be taken with a fistful of salt.
Read more...Philip Pilkington: The 19th Century Long Depression: How it Fostered Oligopolistic Capitalism and Serves as a Model for Austerity
By Philip Pilkington, a writer and journalist who is in the process of moving to London. You can follow him on Twitter at @pilkingtonphil
You can live in this illusion
You can choose to believe
You keep looking but you can’t find the woods
While you’re hiding in the trees
– Nine Inch Nails ‘Right Where it Belongs”
Many people that I meet who are vaguely interested in economics – usually people in academia outside of the economics departments or working in lower tier sectors of banking and finance – are enamoured with libertarianism and its economic doctrines. Meanwhile the Republican Vice Presidential nominee – an Ayn Rand obsessive – has channelled such ideas into a truly otherworldly budget proposal.
Libertarianism-lite has become the last refuge for the ideological conservative.
Read more...Europe’s Economy Sinks from Sight
By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.
Probably best if you spike your morning coffee before reading any further.
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