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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 deficit left behind by Bush. What […]

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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 periods during his reign, but Greenspan […]

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A few more quick thoughts on GDP

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 and gasoline and distillate stocks the U.S. […]

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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 anything less. Look, California has been […]

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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.

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The GDP’s inflation metric is clearly bogus

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 growth rate in Q2 when […]

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GDP revisions are out

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 data back to 2005. The BEA […]

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Misleading jobless claims data

Misleading jobless claims data

Jobless claims hit a 5-year high of 448K last week, leaving everyone under the impression that the employment numbers are deteriorating rapidly. However, the massive increase in jobless claims for the past week is very misleading because actual claims fell.

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Commodity prices are dropping across the board

One reason I believe inflation pressures will slow going forward is that the global economy has already slowed enough to have a measurable impact on oil demand and all commodity prices across the board. As July comes to an end, the month is shaping up to be the worst in commodities for 28 years. Tumbling prices for natural gas, nickel […]

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Even Buffett hit by higher funding costs

Berkshire Hathaway, the company led by Warren Buffett, is offering a five-year debt deal for the highest spread over treasurys in its history. As Berkshire is a low-risk AAA company, this fact reinforces the magnitude of credit market dislocations. Even Warren Buffett can’t escape the credit crunch. Top-rated Berkshire Hathaway Inc. offered the highest yield over benchmark rates it’s paid […]

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UK house price falls are accelerating

Nationwide Building Society released its monthly house price index for the UK showing an annual rate of decline of 8.1%, the highest since UK house prices began falling last year. This suggests that UK house prices are accelerating through their first year much as they did in the U.S. earlier. Regarding the UK economy, Nationwide Chief Economist Fionnuala Earley said: […]

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Deutsche Bank and HBOS hit by writedowns

The major European banks have gotten into the swing of things with their own reporting season. Today, Deutsche Bank and HBOS reported earnings. Deutsche Bank recorded a pre-tax profit of 642 millioneuros after writedowns of $3.6 billion due to the credit crunch. This takes Deutsche’s total writedowns toover $10 billion since the credit crunch began. This is not a Merrill, […]

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