I know too well that the current thinking on the economy and labor is that any activity is “good” activity, and thus better something happens than resources remain idle. I think that notion is easily disproved by common sense, as waste is not just “wrong” but harmful over the longer run. But economics is impervious to anything related to the [...]
After having been subjected to the serious temper of the “dollar” for much of the past few years, with requisite calm periods interspersed, the Brazilian economy is finally reaching the epic inevitability of it all. “Inflation” in January broke out of the “band” set by Banco do Brasil’s policy target to the highest level, in the IPCA series, since 2011 [...]
It wouldn’t be “reform” if it wasn’t seemingly contradictory and confusing. It is increasingly apparent that investors and observers look at everything in binary terms; something either isn’t or it is. In China, the entire premise of what they are doing takes more than one form, as it can look to be conflicting in the sense that the PBOC both [...]
With the Chinese manufacturing indications “unexpectedly” disappointing over the weekend it was absolutely no surprise that US estimates of income and especially spending would as well. These overall, broader figures align closely with other indications of a dangerously weak household sector, very much explaining why the rest of the world is screaming about impending contraction. For all that intuitive sense [...]
On January 20, the Chinese National Bureau of Statistics released its full-year report on Chinese GDP. The introduction makes no mistake about what the Chinese government wishes to see out of the Chinese economy: In 2014, faced with the complicated and volatile international environment and the heavy tasks to maintain the domestic development, reform and stability, the Central Party Committee [...]
For the first time in thirty-five months, overall lending in Europe was higher year-over-year. Not since January 2012 had that been the case, as shrinking in lending was a de facto monetary limit on where the ECB wants the European economy to go. And while one month is not necessarily the start of a durable trend, indications had been for [...]
The dissection of the economy as it exists right now is usually limited to a narrow cross section of only GDP and the unemployment rate. As long as both are moving in the “right” direction, even if relatively sluggishly, the mass conclusion is that a recovery is in force and will remain so absent any “shock.” Theoretically, that owes to [...]
GDP as an econometric measure is designed to be most favorable toward growth. It accumulates all forms of spending, in dollar terms, treating them exactly the same regardless of source or destination. That is consistent with orthodox theory which holds onto the concept of “aggregate demand”, meaning that all demand is supposedly interchangeable. Thus whatever the source or reason for [...]
There may be something to December after all. It was credit markets that shifted downward (bearish yield curves and credit spreads) dramatically around the end of November and the first few days of December. Given the persistence of large players moving credit and funding markets, this may not be all that hard to fathom with the close proximity of credit [...]
I always believed that at some point “markets” would view the announcement of yet another “extraordinary” monetary program with actual candor rather than conditioned disbelief more befitting a magician’s audience. The primary focus would be not about future conditions, which is the entire point of monetarism in the rational expectations age, but what the “need” for more “stimulus” says about [...]
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