Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Wednesday, July 04, 2012
What Next For The Euro-Zone? / Economics / Eurozone Debt Crisis
By: Victoria_Marklew
The European Union has just completed its 20th "make or break" Summit in a little over two years, and actually managed to beat expectations. Two key agreements were reached on June 28-29: expanding the remit of the two bailout funds - the temporary European Financial Stability Facility (EFSF) and permanent European Stability Mechanism (ESM) - to include sovereign debt purchases and eventually direct banking sector support; and creating a unified banking regulator for the Euro-zone under the auspices of the European Central Bank (ECB). These apparently-small steps are actually quite far reaching. The Summit outcome also indicates that, faced with really significant risks - in this case, unsustainable funding pressures on the Spanish and Italian sovereigns - the politicians are still willing to make some of the compromises necessary to support the Euro-zone. In our opinion, this combination of muddle-through and compromise in the face of crisis will lead to a closer fiscal union over the coming years. However, we also think that the likelihood that Greece will not be a member of the Euro-zone by end-2013 has risen to over 60%.
Wednesday, July 04, 2012
Krugman's Icelandic Economic Miracle Debate, Round 2 / Economics / Economic Theory
By: EconMatters
Paul Krugman has long been an advocate of Keynesian economics, and a proponent of aggressive and expansionary fiscal policy drawing parallels between Japan's decade-long deflation and the current Great Recession. Krugman also has also been writing quite extensively using Iceland as the poster child on the benefits of currency devaluation. Krugman's latest endeavor on the so-called 'Icelandic Miracle' was when he posted on his NYT blog last month with the following chart showing the seemingly much better GDP growth from Iceland compared to Ireland, Estonia, Lativa, and Lithuania, the countries either in Euro or has a currency pegged to the Euro. He then rhetorically remarked:
Wednesday, July 04, 2012
Italy and Spain: Hard to Ignore Economic Facts / Economics / Euro-Zone
By: Asha_Bangalore
The euphoria of the EU summit of June 28-29 is fading as markets comprehend that the eurozone has only bought time but not addressed the fundamental fact that economic growth is necessary to secure the future of the eurozone. In other words, economic facts are hard to ignore. First, outstanding Italian sovereign debt is in the neighborhood of €1.8 trillion and that of Spanish sovereign debt is approaching €600 billion. Therefore, the firepower of the European Stability Mechanism (ESM) of €500 billion is inadequate, even if the differing maturities of these securities are taken into consideration, in the current economic environment.
Tuesday, July 03, 2012
Factories Across the World Shift Gears / Economics / Economic Recovery
By: Asha_Bangalore
The US Institute of Supply Management (ISM) manufacturing survey results for June were disappointing; with the Purchasing Managers’ Index (PMI) at 49.7 in June, down from 53.5 in the prior month. This is the first monthly reading below 50.0 since July 2009 (see Chart 1). Index readings above 50 denote an expansion, while those below 50.0 point to a contraction in activity.
Tuesday, July 03, 2012
Unmasking China, the Asian Giant / Economics / China Economy
By: Frank_Holmes
Chinese operas have been keeping audiences enthralled for hundreds of years with mythical characters, enchanting stories and elaborate masks that add drama and mystery. While this fantastical treatment is appreciated in the theatre, it isn't in global markets. Investors don't like mystery--think of how uncertainty has spooked markets in recent years.
Global investors are rarely privy to every detail about the economy; that's why it's necessary to rely on multiple data and research to make decisions and be cautious of extreme views that unnecessarily arouse suspicion, skepticism, and criticism. These opinions may grab headlines, but rarely do they help investors' portfolios.
Read full article... Read full article...
Monday, July 02, 2012
Hiding Inflation Results in Perma-Recession, The Next Great Keynesian Failure / Economics / Great Depression II
By: Andy_Sutton
As we enter Round 15, give or take a couple, of the heavyweight battle between economic laws and the (not so) Great Keynesian experiment at Normandy and elsewhere in Euroland, one must really begin to wonder what exactly the outcome will be in social terms. There is one point in the entire goings on that has been mentioned by several other analysts in covering the big picture of what ails the financial world that needs more attention and that is aggregate demand. We’re also going to take a look at some of the other tools that have been used in the past to ‘hide’ the effects of rampant monetary inflation, namely the deindustrialization of America and the rise of consumer credit.
Monday, July 02, 2012
Can the U.S Economy "de-couple" from the Eurozone Debt Crisis? / Economics / US Economy
By: Money_Morning
Martin Hutchinson writes:
As the Eurozone teeters on the edge of a breakup, it begs the question: Can the U.S economy "de-couple" from the Eurozone debt crisis?
Ultimately, the answer comes down to fate of the euro. It's the linchpin to everything.
Read full article... Read full article...
Sunday, July 01, 2012
Lords of Finance: The Bankers Who Broke the World, Learning From the Great Depression / Economics / Economic Depression
By: Jesse
Liaquat Ahamed, author of Lords of Finance, The Bankers Who Broke the World, discusses the parallels between the Great Depression and the Financial Crisis of today at The American Academy of Berlin.
I concur heartily with Mr. Ahamed on the primary causes of the bubble and collapse, especially with regard to the enormous policy errors of the Greenspan Fed.
Read full article... Read full article...
Friday, June 29, 2012
U.S. Economy Real GDP Composition Modified, Though Q1 Headline Remains Unchanged / Economics / US Economy
By: Asha_Bangalore
Real GDP of the US economy grew at an annual rate of 1.9% in the first quarter, unchanged from the preliminary estimate. Although the headline was not changed, contributions of several components were modified. Consumer spending (+2.5% vs. +2.7% previous estimate), equipment and software (+3.5% vs. +3.9% previous estimate), exports (+4.2% vs. +7.2% prior estimate), inventories, and imports (+2.7% vs. +6.1% prior estimate) were revised down. Residential investment expenditures (+20% vs. +19.4% prior estimate) and structures (+1.9% vs. -3.3% prior estimate) were raised. In addition to the upward revisions, a smaller trade gap also helped to offset the downward revisions and leave the headline unchanged. There were upwards of each of the inflation measures.
Friday, June 29, 2012
Europe Seeking Exit from Economic Woes / Economics / Eurozone Debt Crisis
By: William_R_Thomson
Investment Round Table of Singapore Business Times
PANELLISTS:
Charles Dallara: Managing director, Institute of International Finance
Richard Koo: Chief economist, Nomura Research Institute, Tokyo
Eisuke Sakakibara: Former vice-finance minister for international affairs of Japan
Read full article... Read full article...
Friday, June 29, 2012
U.S. Economy GDP, The Hood Looks OK But It's A Mess Underneath / Economics / US Economy
By: Tony_Pallotta
This week the final revision to Q1 2012 GDP was released. The headline is simple, GDP remains unchanged at 1.9%. Not great but not horrible either, right? I mean 2% growth amid outright contraction in Europe is good. Perhaps the US has finally decoupled?
You don't need an economics degree (trust me on that one) to look underneath the hood and see that this "unchanged revision" was actually indicative of something more sinister. That the US economy is not only in trouble but is clearly "coupled."
Read full article... Read full article...
Thursday, June 28, 2012
Forget QE3, America Needs a Real Road and Job Stimulus / Economics / Economic Recovery
By: EconMatters
How is the condition of roads that you drive On? Well, the roads that I drive on are so bad that they require a large truck or SUV to navigate at anything close to normal speeds. The potholes are alignment killers, and the horrible patches were slapped on so poorly that they become uneven speed bumps. And I reside in one of the top 5 largest cities in the U.S. with a lot of petro money that has done much better than most of other cities (e.g., the newly bankrupt Stockton, CA) during the financial downturn in the economy. It gets better yet; I'm talking about the better part of town instead of the lower revenue districts. So the question is how did we get to this state? And what are the likely solutions?
Thursday, June 28, 2012
Here Comes the Hyperinflationary Bailout Endgame / Economics / HyperInflation
By: Midas_Letter
In 2009, I wrote that the stimulus, tarp, and zero interest rates were going to result in a rally in the stock market, but that the fundamental causes of the 2008 financial crisis, of which the housing bubble collapse was only one outcome, were still present, and that the financial stimulus, which is effectively a tax on future generations, would compound those symptoms.
Wednesday, June 27, 2012
Global Economic Stalemate? / Economics / Global Economy
By: Ian_R_Campbell
Why Read: Because the referenced article is a well-balanced, well-written, very brief - albeit somewhat simplistic - overview of the economic models of the United States and the Eurozone. The article also speaks to China and briefly references Brazil and India.
Featured Article: An article Monday written by Robert Samuelson, a Washington Post syndicated columnist. In this article, Mr. Samuelson describes the economic model of:
Read full article... Read full article...
Wednesday, June 27, 2012
The Great Depression Again? / Economics / Great Depression II
By: Ian_R_Campbell
Why Read: Because it is foolish not to consider the possibility of depression, particularly in the face of the preponderance of commentary over the past many months that rampant inflation is on the horizon
Tuesday, June 26, 2012
The Black Hole of Deflation / Economics / Deflation
By: Julian_DW_Phillips
The Global Picture and Where We Are Now
For the last few years we've watched as the Credit Crunch morphed into the Sovereign Debt crisis in Europe, which may re-cross the Atlantic to hit the U.S. Treasury market. During that time, we have watched a series of patch-up jobs on the crisis that have only succeeded in prolonging the crisis without any real structural remedies. We've also watched how central bankers have seen the 'buck' passed to them, when their role is strictly in support of government action that should have led the way. Central bankers are running out of tools to tackle the task they should never have been asked to tackle alone.
Read full article... Read full article...
Tuesday, June 26, 2012
What's Stifling U.S. Job Creation / Economics / Employment
By: Money_Morning
David Zeiler writes:
Excessive government regulation and uncertainty over tax policies are what's restraining companies from hiring, former General Electric (NYSE: GE) CEO Jack Welch said on CNBC last Wednesday.
Welch joins a large number of economists and pollsters trying to sort out why the U.S. economy in 2012 hasn't rebounded more strongly from the 2008-2009 recession.
Read full article... Read full article...
Monday, June 25, 2012
Just A Cyclic Economic Ripple Or Structural Long Term Recession ? / Economics / Recession
By: Andrew_McKillop
For global media, the 2008 crisis was signalled by the so-called "near collapse" of banks, insurers and
mortgage lenders like the UK's RBS and Northern Rock, the USA's JP Morgan, AIG and a string of
smaller players like Bear Stearns, but was above all symbolized by the outright collapse of Lehman
Brothers in the autumn of 2008. Since the start of 2012, revealing the supposed "surprising weakness"
of the OECD economies, and the more (or really) surprising weakness of the Chinese and Indian
economies, the events of recent months ram home the basic facts. Emerging from what in 2008 was a
finance-sector crisis in the OECD, easily explained by the perils of casino capitalism operating on debt
to get and then lose its betting chips, the subsequent and present financial collapse: 1) is systemic not
temporary; and 2) is global, affecting every country in the world. Through globalization of the
economy, and supposed "global integrated capitalism" we now have a globally integrated catastrophe.
Sunday, June 24, 2012
An Austrian Defense of the Euro, Hayek versus Keynes / Economics / Euro
By: MISES
Introduction: The Ideal Monetary System
Jesús Huerta de Soto writes: Theorists of the Austrian School have focused considerable effort on elucidating the ideal monetary system for a market economy. On a theoretical level, they have developed an entire theory of the business cycle that explains how credit expansion unbacked by real saving and orchestrated by central banks via a fractional-reserve-banking system repetitively generates economic cycles. On a historical level, they have described the spontaneous evolution of money and how coercive state intervention encouraged by powerful interest groups has distanced from the market and corrupted the natural evolution of banking institutions. On an ethical level, they have revealed the general legal requirements and principles of property rights with respect to banking contracts, principles that arise from the market economy itself and that, in turn, are essential to its proper functioning.[1]
Sunday, June 24, 2012
The Unseen Economic Hand / Economics / Economic Theory
By: Alasdair_Macleod
The assessment of economic growth based on Gross Domestic Product is a fallacy, because GDP is merely a measure of the amount of money in an economy. The one thing it does not measure, which is central to economic progress (note progress, not growth), is the level of entrepreneurial activity. This has important implications for the efficacy of government interventions and solutions to the current economic crisis.
Read full article... Read full article...