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 [...]
The biggest problem with “reflation” is that it doesn’t live up to what the word is supposed to mean. That has been true in each of the past attempts at it, but is even more the case in this latest one. Yet, to hear it described is as if we are the verge of an explosion in growth unparalleled at [...]
The rout in EM’s continued into this week, suggesting that the negative reactions last week may have been more than reflexive recoiling to whatever catalyst. The media is struggling to figure it out, and so has brought up the usual suspects even though there is great inconsistency in doing so. Expectations of fiscal stimulus, infrastructure spending and reflationary policies under [...]
China’s State Administration of Foreign Exchange (SAFE) reported a large drop in forex assets in October. This was unsurprising given what we already know of “dollar” conditions from the behavior of the exchange rate itself. The pattern is by now very well established and quite predictable. At -$45.73 billion for the month, it was by far the largest decline in [...]
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 [...]
Whether or not the Olympics in Brazil go off without any serious difficulties is actually an open question. There have been some athletes refusing to attend due to concerns over the Zika virus, while police and firefighters greeted travelers flying into the country through Rio’s airport with a sign that said “Welcome to Hell.” There are rumors reported in the [...]
It might be too early in the week, though not likely since only the irrelevant payroll report is really left, and too soon for definitive conclusions, but if I had to pick a chart of the week it would actually be this series. They declare a lot more about the potential intermediate term than the BLS numbers can or will. [...]
In yet another anecdote that proves the global recovery can only be political, acting Brazilian President Michel Temer appointed Ilan Goldfajn to be the next central bank head for that nation. Goldfajn is about as orthodox as they come: trained at MIT (saltwater, as if makes any difference), former director at the central bank who has “consulted” with the IMF, [...]
If China is most representative of the current state of the “dollar” economy, Brazil is surely most representative of its worst case. The country’s economy has been like China in slowing down steadily over the past few years, but unlike China it has descended already into a nightmarish level of distress. In other words, Brazil already has a Great Recession [...]
During the global end of the Great Recession, Brazilian GDP contracted year-over-year in just three quarters. The worst was about -2.5% in Q1 2009, but by Q1 2010 GDP was rising 9% again. With the latest update today, Brazil’s GDP declined by just less than 6% year-over-year in Q4, representing the seventh consecutive contraction that doesn’t look to be ending [...]
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