ShareSeveral notable economists prognosticated on what Japan should do to get out of their malaise in the 1990s but none of them understood the problem or the options available to the sovereign government. They all gave poor advice. The way Japan recovered after that decade of poor economic outcomes was through fiscal policy. Monetary policy [...]

ShareThe data released this morning by the U.S. Department of Commerce’s Bureau of Economic Analysis on personal income somehow managed to show weakness in income and consumption as well as savings.  I see this as proof that Americans are not saving and hence not deleveraging, but they are also so income constrained that their consumption [...]

ShareThis is a cross-post from an article I wrote at the finance site New Deal 2.0, a one-stop-shop for current news, sharp analysis and potential solutions of the country’s fiscal crisis. Edward linked to this in this morning’s links, saying “I don’t agree 100% but this is a good overview” – tied to the Austrian business [...]

ShareLast year at this time I posted “The Economy’s Four Horsemen,” which described macro cause and effect leading into and out of recessions.  When looking at income, spending, output and employment, it is income which is the steer variable going into a downturn.  Year-on-year changes in income precede changes in spending, output, employment and recession. [...]

ShareYou have probably heard a lot of chatter from the media about a newfound thrift amongst American consumers.
The general take is that Americans, faced with lost incomes and wealth and burdened by record levels of debt, have moved away from the asset-based consumption models of yore. Instead of using the 401(k) or the house to [...]

ShareI found the recent consumer credit data unsatisfying because the data seemed to point in two directions. The seasonally-adjusted data showed a large $12 billion decrease in consumer credit which received headlines. Meanwhile, the non-seasonally adjusted data showed a large $7 billion increase in consumer credit. I suspect this divergence has a lot to do [...]

ShareBut, everywhere I look, everybody is saying it is.
I would like to be true to the data and not just take the government’s seasonally-adjusted numbers at face value.
Judge for yourself. Here’s the data:
This is what everyone is focused on – the seasonally-adjusted data. The part in red shows consumer credit down $12 billion.
 

But, what [...]

ShareThe Federal Reserve has just released the most recent data on consumer credit. The data show outstanding consumer credit falling to $2.47 trillion in August from a December 2008 peak of $2.59 trillion – on a non-seasonally adjusted (NSA) basis. That is down 4.4% from the year ago period, continuing the acceleration of the year-on-year [...]

ShareThe following is a re-print of the latest monthly newsletter from Niels Jensen of Absolute Return Partners, published with the express permission of the author. Visit www.arpllp.com to learn more about Absolute Return Partners.  You can reach the firm  by email at info@arpllp.com.
The Absolute Return Letter
October 2009
A Country for Old Men and a Bit of [...]

ShareBill Gross has a piece out now on Pimco’s website suggesting we are about to witness a sea change in saving and spending habits, government intervention, and a host of other issues. This is not a buy-the-dips kind of atmosphere and it will last for, oh, 20 years.
Gross says:
This “new” vs. “old” normal dichotomy was [...]