QE in any language has enthralled the mainstream media and economics profession so much that what should be so simple to interpret winds up as uncritical mush. For example, in the Washington Post with Bloomberg yesterday, the “business” section had this to say about Japan’s export data release for July: “Japan’s exports jumped by the most since 2010 in July, [...]
The old military axiom that battle plans never survive first contact with the enemy appears to have a corollary in the central banking world of interventionist finance. The allure of QE in Japan was an irresistible impulse to believe that a durable solution was to be had by retrying old ideas in a different scale. While that appeals to the [...]
On March 28, 1997, the Bureau of Economic Research downgraded economic growth estimates for the fourth quarter of 1996. Over the course of the two months between the advance estimate, preliminary estimate and final estimate, the BEA reduced GDP by a rather large 0.9%. The reduction in GDP then was similar in absolute size to the current revisions to Q1 [...]
The operative theory behind QE relates to the academic exercise of overcoming the real world constraint of nominal interest rates, called the zero lower bound (ZLB). Once the offending central bank has pushed rates to the ZLB, conventional monetary science posits only extraordinary means to overcome this limitation. After all, central banks cannot be impotent in the face of the [...]
The global supply chain is pretty well established at this point, particularly in the years since the obvious dollar devaluation (Y2K and forward). Commodity countries like the BRICs (South Africa only gets included in BRICS when gold is mentioned) ship to manufacturing centers in the east, primarily China, that assemble and manufacture for further embarkation to end markets in the [...]
The bounce for Germany seems to be over, and, much like US manufacturing, there appears the mini cycle. Markit PMI for Germany: Both the ZEW Indicator of Economic Sentiment and IFO Business Climate Surveys disappointed expectations, as sentiment in Germany looks to have passed an inflection and rolled over again in sympathy with manufacturing. For an economy coming off a [...]
While last Friday’s jobs report had a decent headline number (if little else), the wholesale report is nothing but trouble. Start with wholesale sales, down 1.2% from September on an adjusted basis, while inventories rose 0.5%. Automobile sales fell 3.1%, dragging durable goods sales 0.9% lower on the month. Even nondurable goods had a difficult month, largely due to petroleum [...]
By now commentators have focused on the rather dramatic reversal in government “contributions” to GDP for the initial Q3 2012 estimate. Nearly all of that government spending came in the defense category, so that will get reversed rather quickly – sequestration or not. The private economy continues to move in the wrong direction, as GDP growth ex-government was the lowest [...]
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