New Zealand ‘enters recession’ – BBC News (Add New Zealand to Denmark which is already in recession)
UK pensions are ‘back in the red’ – BBC News (I haven’t focused nearly enough on this issue. It never really went away. The bear market ally of 2003-2007 made it seem so.)
GDP cut holds up German [...]
News Tidbits: 6 Aug 2008
Unrealized gains in wealth
I’ve been thinking a lot about unrealized gains and their effect on the global economy. if you remember, I wrote a few weeks ago about a new debit card that lets people tap the money from their 401(k) plan. I think these cards are a bad idea. I don’t like them because [...]
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News Tidbits: 5 Aug 2008
Riches to Rags – NY Times (article about Kevin Phillips’ Bad Money — great book)Credit crunch: The blame game – BBC News (Interesting compilation of pundits’ take on who caused the crunch)Wary investors see banks as cheap – BBC News (I think some banks are not cheap — they are going to zero.)
Repel the calls [...]
Fiscal policy limited in the UK and the US
Clive Crook of the Financial Times rightly takes on the Bush Administration and its squandering of hundreds of billions of dollars of fiscal surplus on war in Iraq and ta cuts for the wealthy. In this time of economic crisis, the U.S. is severely limited in its potential fiscal response by the massive budget [...]
Is Alan Greenspan self-serving?
In today’s Financial Times, former U.S. Federal Reserve chairman Alan Greenspan has taken the unusual step of playing market pundit even while his successor struggles to deal with the mighty financial turmoil he engendered. It is highly unusual to see an ex Central Bank head talking about market turmoil and contrasting it negatively to [...]
A few more quick thoughts on GDP
Looking more closely at the data on U.S. GDP, a number of things emerge. First, I should add that the GDP deflator does not include import prices. So, one good reason it was so low last quarter is because it didn’t factor in the 28% rise in import prices which includes the oil [...]
Lightning commentary round: I can’t stay away
You thought I was on vacation? Well, I am, but I want to make a few comments about the goings on today as a lot of data came out. Here is the lightning round in no particular order (sorry Cramer, I’m stealing your tag line)
Thousands face sack in California: Should we have expected [...]
Summer Holiday
The day has finally arrived. It’s August and time for a holiday in the sun. I am off with the family for a little rest and relaxation through next week. I will be blogging intermittently, so please check back in.
Have a great week.
The GDP’s inflation metric is clearly bogus
Lately, it seems the U.S. economy is flat on its back, with companies going bankrupt left and right. Yet, government statistics say quite the opposite. In the second quarter, the U.S. economy supposedly grew 1.9% annualized q-o-q. Sounds pretty good, huh?
The sceptic in you might be asking, “how did we manage a 1.9% [...]
GDP revisions are out
GDP stats came out for Q2. I’ll get to that in a later post. We had 1.9% growth on the quarter, which was a decent lift from the stimulus package.
But, what is really interesting is that the Bureau of Economic Analysis (BEA), which does the GDP statistics also released revisions of the GDP [...]
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- “Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.”
-- Alan Greenspan, American Enterprise Institute, Dec. 1996 Federal Reserve
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