Category: Economy
Steve Keen on the Australian economy and housing bubbles in Australia, Canada, UK and Hong Kong
Good video with Steve Keen, the Australian economics professor with Max Keiser. Steve not only talks about the Australian economy and that country’s housing bubble but also about the bursting of housing bubbles in Canada, the UK and Hong Kong
Portugal Gradually Shuffles Its Way Up Towards The Front Of The Debt Queue
Naturally austerity isn’t popular, and evidently it doesn’t work as intended, but then this was already known before we started on this course, so it isn’t really a surprise. But what alternative do the Euro Area’s imprisoned periphery have, since if they leave the currency and default on their debts they will be in a real mess, and if they stay they are in a real mess too
Tough medicine and a hard landing for China
Michael Pettis predicts a hard landing in China. How much will growth slow? The World Bank report apparently doesn’t say, but the consensus has been slowly moving down towards 5-6% annual growth over the next few years. That’s better than the crazy numbers of 8-9% most analysts were predicting even two years ago (and some still are), but it is still too high. GDP growth rates will slow a lot more than that. I still maintain that average growth in this decade will barely break 3%. It will take, however, at least another two or three years before a number this low falls within the consensus range
Chart of the Day: Monetary Transmission Mechanisms
If and when the demand for credit increases, so too will the money supply
Chart of the Day: Growth!
The chart below tracks the economy of the United States and selected European economies, demonstrating the varying impact of the financial crisis there. March 2007 is the reference point where Real GDP is re-based at
On Homeric Similes And Spanish Debt
Spain is on a bad course, with recognised debt about to surge rapidly, while investor confidence in the current administration is slipping. Time for another “game changer” I think, since otherwise this car is about to crash
Economy Still Burdened With Excessive Consumer Debt
For some time we have maintained that the economy, following the severe 2008 credit crisis, would grow at an exceeding slow and uneven pace, and this is the way it is playing out. This is unlike the garden-variety post-war inventory recessions that were mostly short and shallow, and followed by robust rebounds that quickly exceeded prior peaks. The crisis was caused by an extraordinary debt boom that will take many years to work off and create severe headwinds to economic growth. Household debt as a percentage of GDP averaged 55% over the past 60 years, but soared to 99% by 2008. It has now declined to 87% and still has a long way to go before returning to anything near normal
Why Portugal
Portugal’s aid package assumes it can return to the capital markets in the second half of last year. This seems less likely with each passing day
Miserable Wants Company
For entities not awarded illusory funding by the ECB, U.S. Treasury Department, or the State of California, reality pounces like a thief in the night, sometimes literally
An Agreement That Few Believe
According to their own public comments, the EU, ECB and IMF do not have much confidence that their agreement with Greece will avert default. Instead they are apparently trying to isolate Greece, delay its eventual default, prevent contagion, and hope that somehow they can muddle their way out of a seemingly insoluble problem. Even at best, however, Europe will go through a recession, and possibly, a very deep one if everything doesn’t go exactly right
Four Key Economic Developments and Their Market Implications
There have been four noteworthy developments today that will shape the investment environment
When will China emerge from the global crisis?
In 2008 and 2009 I argued that the crisis we were undergoing would affect every major economy in the world, but not necessarily at the same pace. I said that China would be the last major economy to emerge from the crisis. Why? Because the huge increase in investment it engineered to postpone the domestic impact of the global crisis exacerbated the imbalances within the economy and increased its already-excessive reliance on debt and investment to generate growth