Category: Weekly

Are we in a global financial crisis?

With financial markets tanking across the board, there is a whiff of panic and some people might be thinking that the next global financial crisis is already upon us. I don’t think this is the case. Certainly, the European sovereign debt crisis has entered round two but this can easily be overcome. Turbulence and a simmering crisis in Europe, yes. An acute crisis, no.

Read more ›

The German view of the Euro crisis

This is an abbreviated version of a post first published at Credit Writedowns Pro on 15 Oct. The Germans got into the eurozone out of a desire to increase European integration and to strengthen Europe as an economic area that rivalled the United States. Yet, now we are in a period where the Germans are being blamed for everything that’s […]

Read more ›
The roots of the Italian stagnation

The roots of the Italian stagnation

It’s currently very trendy in Italy to blame Angela Merkel, Mario Monti, and austerity measures for the current recession. This column argues that while the severity of the downturn is clearly a cyclical phenomenon, the inability of the country to grow out of it is the legacy of more than a decade of a lack of reforms in credit, product and labour markets. This lack of reform has suffocated innovation and productivity growth, resulting in wage dynamics that are completely decoupled from labour productivity and demand conditions.

Read more ›
Does The Secular Stagnation Theory Have Any Sort of Validity?

Does The Secular Stagnation Theory Have Any Sort of Validity?

By Edward Hugh In a number of blog-posts (Paul Krugman’s Bicycling Problem, On Bubble Business Bound, The Expectations Fairy) I have examined some of the implications of the theory of secular stagnation. But I haven’t up to now argued why I think the hypothesis that Japan and some parts of Europe are suffering from some kind of secular stagnation could […]

Read more ›

The rise in periphery bond yields is sovereign debt crisis, round 2

I have long warned that the euro crisis was going to return. But recently the concern I voiced in posts here was more concrete i.e. that the renewed recession fears in Europe would force a decoupling between the periphery and the core in the Eurozone. This seems to be occurring.

Read more ›
Eurocrisis Round Two, Blame the Germans Edition

Eurocrisis Round Two, Blame the Germans Edition

What southern Europe needs is a revolution in the mindset and more “better quality” stuff, and no amount of blaming Germany for the situation can get over that. The extractive networks who hold back growth need reforming out of existence. At the same time the under-investment over-saving phenomenon that characterizes Germany bears a remarkable similarity to what has been happening in Japan, with the strange difference that these days Japan is normally sympathized with and not blamed for all the world’s ills.

Read more ›
Is Japan Back In Recession?

Is Japan Back In Recession?

“People should seriously consider that Japan’s economy may have fallen into recession despite the weaker yen and a stock rally from the BOJ’s easing and the flexible fiscal policy by Abe’s administration,” said Maiko Noguchi, senior economist at Daiwa Securities. “Initial expectations that the economy could withstand the negative effects of a sales tax hike through a virtuous circle seem to be collapsing.”

Read more ›
The Japanisation Of Europe

The Japanisation Of Europe

By Edward Hugh By now it should be clear that the monetary experiment currently being carried out in Japan (known as “Abenomics”) is fundamentally different from the kind of quantitative easing which was implemented  in the United States and the United Kingdom during the global financial crisis. In the US and the UK QE was implemented in order to stabilize […]

Read more ›
Six Months of Nothing

Six Months of Nothing

Even if there are good reasons to believe that the prolonged rally can continue for a little longer, there are equally good reasons to believe that the current equity bull market may end in tears. I am not predicting a repeat of 2008-09. A much more modest decline, but still a decline, is a likely outcome at some point over the next 12-18 months.

Read more ›
Everything you always wanted to know about gold

Everything you always wanted to know about gold

Last Thursday, we ran a unique half-hour segment on gold, gold investing and the gold standard over at Boom Bust. The panel was made up of four investors: Marshall Auerback, Rick Rule, Cullen Roche and Peter Schiff. I moderated the panel with regular Boom Bust host Erin Ade. I really enjoyed this format and think we could or should have run the segment for a full hour because there was a lot more ground to cover.

Take a look.

Read more ›
Deleveraging, What Deleveraging? The 16th Geneva Report on the World Economy

Deleveraging, What Deleveraging? The 16th Geneva Report on the World Economy

The world has not yet begun to deleverage its crisis-linked borrowing. Global debt-to-GDP is breaking new highs in ways that hinder recovery in mature economies and threaten new crisis in emerging nations – especially China. This column introduces the latest Geneva Report on the World Economy. It argues that the policy path to less volatile debt dynamics is a narrow one, and it is already clear that developed economies must expect prolonged low growth or another crisis along the way.

Read more ›
Rising global debt levels will trigger the next crisis

Rising global debt levels will trigger the next crisis

The conclusion of the recently released Geneva report is that debt is the Achilles heel of this cyclical recovery. The Geneva economists warn that, despite the widespread belief that a general deleveraging has occurred due to the Great Financial crisis, in reality debt levels are higher today on a global basis than they were when the crisis began. They, rightly, worry that this debt will precipitate another global economic crisis. Some thoughts below

Read more ›