You get the impression often that these guys have no idea what drives the dollar. They cling to all sorts of theories, of course, from interest rate differentials to perceptions of economic strength. That seemed to be the case in 2017 and its “weak dollar” environment. Globally synchronized growth would mean potency pretty much everywhere, thus, in this view, a [...]
The reasons why the IMF stepped in to rescue Argentina were perfectly clear back on June 8. The peso was in freefall and though the Argentine government had spent two years fortifying the country’s reserve position, by borrowing heavily in the Eurobond market, that was merely orthodox thinking. Reserves are widely believed to be something like insurance. Insurance against what? [...]
It’s amazing how in a world of supposedly separate, closed economies they all seem to congregate anyway toward the same events. In early 2000, the US dot-com bubble ran into its own contradictions, the rationalizations holding it together no longer so tempting to what was for years insatiable investor appetite. Not even a year later, a mild recession began. What [...]
The primary reason I focus so much on time is that I believe it is running out. No one possesses a crystal ball, least of all me, and while making such a statement might presume to be intensely negative (doom and gloom) it’s not always that way and it certainly doesn’t have to be. For all the innumerable frustrations, there [...]
The IMF like so many others appears to have been caught up in “reflation.” Its models had in its April 2017 WEO outlook upgraded US growth prospects for the first time in a long time. In their final 2016 WEO, the institute projected US real GDP growth of 2.20% for calendar year 2017, and then just 2.10% for calendar year [...]
The whole point of any “stimulus” is to buy time. The idea is to keep the economy busy or, in the case of more purely monetary policy, happy during that time so that the economy on the demand side can on its own heal. In the parlance of orthodox economics, “stimulus” reduces the output gap, the difference between current output [...]
When we talk about or estimate long run growth rates, we intend to encompass entire cycles. In other words, whatever the long run average of real GDP growth, for instance, it takes into account both recession and recovery to harmonize into what would be a constant trend or potential. From that view, we would expect that while growth would be [...]
There can be little doubt now outside of orthodox economics that the global economy is actually slowing, not accelerating as has been predicted. Economists themselves, however, continue to claim that things are getting better when the data strongly suggests otherwise. The latest depressing figures are from a pair of (orthodox) supranational organizations. First, the World Trade Organization (WTO) drastically reduced [...]
In April 2009, the new Obama administration created somewhat of a political controversy when it was originally reported by the Wall Street Journal that the US was providing $2 billion or more to fund offshore drilling – in Brazil. To many on the “right”, that seemed quite hypocritical given the public stance on all things oil. My interest is entirely [...]
The IMF released the first 2016 edition of its World Economic Outlook (WEO). Titled Too Slow For Too Long, it seems as if the institution has finally caught on to the fact that the global recovery never really was a recovery. Throughout the report you get the sense that they are starting to figure out what is going wrong but [...]
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